It turns out they knew exactly what they were doing.
The Grateful Dead became the most successful band of all time not by making their work scarce, but by making it free. Subverting the traditional economic concept that value is inversely proportional to scarcity (consider diamonds, or art), the band encouraged fans to record their shows and pass those tapes to friends, who passed them to friends, who passed them . . . etc. A happy production line of dancing bears. Finally, The Atlantic comes right out and says it: the Dead were the original social networkers.
Connecting with the Dead meant connecting with the absence of constraint. This is why one felt cool--and "free"--at their shows. The band stood for a very specific freedom, one elegantly represented not only in their music but also via the crown jewel of their empire: the “show.” Two shows were never alike, and so the cult of knowing shows (and collecting tapes) was another way of indicating one’s depth of connection to the band. There were no rules in the world of the Dead, until the “free” patterns of how things worked became their own rules, and then everyone was pleased to follow along. In fact, to know the rules was to belong.
The Dead’s shows—their concerts—became gathering places for the like-minded, and participating in a show or a series of shows (“following” the band) was to participate in an idea: that somewhere a small group of people cared more about music and about one another than they did about the bullshit everyone else seemed to be obsessing over, like things. Or like Iran-contra. (The excerpts of the archive on the Atlantic's site are remarkable for being largely drawn from the 1980s.) The Deadheads were often uniquely serious, even when stoned. And whether the intellectualism one encountered on tour was pseudo or genuine, the aspiration to be thoughtful was there and, amidst everything else occurring, the aspiration was enough. Every deadhead was a scholar of her own unique archive: the shows she had attended, the shows she possessed.
Joshua Green’s Management Secrets of the Grateful Dead considers what might arise from future exegeses of the band’s vast archives, now set for the University of California Santa Cruz. Green tracks the (brief, to date) history of the relationship between the band and academics, and poses the question of whether their greatest legacy will be one taught in business schools, as well as academies of music. He writes:
As [business professor Barry] Barnes and other scholars note, the musicians who constituted the Dead were anything but naive about their business. They incorporated early on, and established a board of directors (with a rotating CEO position) consisting of the band, road crew, and other members of the Dead organization. They founded a profitable merchandising division and, peace and love notwithstanding, did not hesitate to sue those who violated their copyrights. But they weren’t greedy, and they adapted well. They famously permitted fans to tape their shows, ceding a major revenue source in potential record sales. According to Barnes, the decision was not entirely selfless: it reflected a shrewd assessment that tape sharing would widen their audience, a ban would be unenforceable, and anyone inclined to tape a show would probably spend money elsewhere, such as on merchandise or tickets. The Dead became one of the most profitable bands of all time.
The new Economist’s Special Report on Social Networking parses Davos and Facebook and Twitter, but never mentions what we now know was the original model for monetization of a social network: the tape of a Dead show. It was so simple. The band bore zero costs, and yet shared the gain with an ever-exponentially expanding pool of fans. As economists would say, they grew the pie.
And wouldn't we prefer to sit through economics class if we could consider the difference between revenues generated via Meadowlands 1989 and that Valentine's show at RFK? As Barnes puts it to Green, “People are just so tired of hearing about GE and Southwest Airlines. They get really excited to hear about the Grateful Dead.”