ForbesGratefulDead1987

Forbes
May 18, 1987

HEADLINE: "We're a straight business now"

BYLINE: Allan Dodds Frank and Edward F. Cone

More than any other rock musicians, the six members of San Francisco's Grateful Dead have consciously put the building of goodwill among their fans before immediate profitability. Partly as a result, fans, friends and unscrupulous managers have stuck the bad with overpriced equipment, traded freely on the group's trademarks and copyrights and ripped them off in countless other ways. The Dead's rhythm guitarist, Bob Weir, reckons the band had piddled away anywhere from $ 20 million to $ 50 million over the last 20 years.

On the brighter side, no band's fans are as loyal as the Dead's fans are. This is a major reason, in a business where superstars become burned out novas within a few years -- where are the Bee Gees? the Byrds? Donovan? -- the Grateful Dead still sell out concerts after 22 years. The Dead, says legendary rock promoter Bill Graham, "are the closest thing to Living Theater, to the communal expression of breaking down the walls."

"Dead Heads," as the band's fans style themselves, congregate at concerts in such numbers, they've become a traveling sideshow, a veritable bazaar of tie-dyed T shirts and Dead paraphernalia. At the Grateful Dead's recent three-concert series over Easter weekend in Irvine, Calif., the parking lot undulated with a colorful tide of Dead Head vendors using card tables, car trunks and backpacks to hawk shirts, jewelry, Dead books and newsletters, bootleg records and tapes and food ranging from steaks to tofu. Psychedelic drugs and marijuana moved fast, too. "On a good day," said Bill Candelario, the Grateful Dead's merchandising manager, "we're losing $ 200,000 in sales out there."

But the band gets the money back in other ways. Those fans spend much of their parking lot earnings to buy tickets and gas to follow the band around. Inside the arenas, the Dead still sell perhaps 1,000 shirts per concert, at prices ranging from $ 10 for last year's T shirts to $ 20 for a golf shirt.

Operating with a staff of about 35 from two offices in San Rafael, Calif., the band maintains a "Dead hotline" to update fans about band gossip, concert dates and mail-order tickets. A separate line handles orders for Dead T shirts and other trinkets. More than 50% of all tickets are sold directly by the band. That means the Dead needn't split much of their take with ticket brokers, who generally get $ 1 or $ 2 a ticket. The Dead's ten phones handle from 1,500 to 6,000 calls per day, and a computerized mailing list reaches 150,000.

Unlike other rock groups, the Grateful Dead permit fans to tape concerts from a special seating section known as "tape city." This has spawned dozens on unauthorized records and drives record company executives around the bend. But it also gives fans a chance to relive their concert visions of the band and freshens demand for the group. So popular are Dead concert tickets that the group has swallowed some countercultural pride and called in the FBI to investigate wholesale counterfeiting of tickets.

All told, the Grateful Dead have done more than 1,600 live performances in 22 years. In the last two years alone, playing almost always to sold-out arenas and stadiums, the band has grossed more than $ 20 million, according to Amusement Business magazine. Says lead guitarist Jerry Garcia, "When we're on the road, we're at home."

In tune with the times, the laid-back Dead now pay stricter attention to business. In the last year the band reorganized its business operations, hiring a new comptroller, linking to one another by Apple MacIntoshes, and holding board meetings every two weeks.

The move comes as the Dead find themselves on the threshold of huge financial success. The band's first new album (In the Dark) and its first new single ("Touch of Gray") in seven years will be released on Bertelsmann's Arista Records in July. Arista Records President Clive Davis predicts the album will sell over a million copies within one week after release. His confidence is based on the knowledge that even if the record doesn't hit the top of the charts, it can't lose money; the band's million or so Dead Heads all but guarantee a minimum sale of several hundred thousand copies. A feature film for New World Pictures, budgeted at $ 3 million to $ 5 million, is also in the works.

By midsummer the Grateful Dead could easily become the biggest surprise in mainstream music this year. "This will be a great year for us because we finally have the business together," says Bill Kreutzmann, drummer and chief financial officer. "We're a straight business now."