The Grateful Dead invented freemium

February 24th, 2010

Now spool forward again to today, when the angst du jour is how to get people to pay for online “content”. Once again, the most perceptive insight may come from the music business – specifically from an iconic 60s band, the Grateful Dead, whose archives have recently been donated to the University of California at Santa Cruz. Marking the event in a recent article in The Atlantic, author Joshua Green reminded us of how the Dead pioneered ideas and practices that are only now being reluctantly embraced by corporate America. “One was to focus intensely on its most loyal fans,” Green observes. The band “established a telephone hotline to alert them to its touring schedule ahead of any public announcement, reserved for them some of the best seats in the house, and capped the price of tickets”. He adds: “Only in the 1980s, faced with competition from Japan, did American CEOs and management theorists widely adopt a customer-first orientation.”

Quite so. More significantly, though, the Grateful Dead decided that they wouldn’t try to stop people making bootleg recordings of their concerts, figuring that what they lost in royalties would be more than compensated for by being more widely known, and by the resulting sales of merchandise. It turned out that they were right. The band anticipated by decades the “Freemium” business model now being touted by expensive managerial gurus. Stand by for a best-selling business book entitled Management Secrets of the Grateful Dead. And if you want to know the future, ask a musician.

And I pointed out that it was a newspaper that invented the Tour de France to sell more newspapers, and yet traditional media seem completely in thrall of god knows what unable to reinvent themselves. Clinging to the wreckage in hope of salvation. Ten years ago SMLXL called such activity that, the Dead, or L’Equip undertook to achieve their commercial success engagement marketing.

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