I would have to caution anyone who wanted to learn from the Grateful Dead. You see, what they did is not something to be learned. Anyone whoís out there looking at what the Grateful Dead did and attempts to duplicate it is already kind of lost. You donít do it that way. The success of this organization is not the result of learning from anybody. Itís based on the commitment of the original band members to themselves alone, and thatís what itís all about. So itís kind of a short storyÖ.be true to yourself and donít compromise. Donít take the advice of people in the industry. Just do what pleases you the most and keep doing it. And in the end you have this tremendous following.
Thereís only one corporation now. When I arrived there was GDP and GDM. GDP was the entity that was most involved with the concerts and tours. GDM was the company that was concerned with the development of products like GD records, licensing and so forth, and direct sales.
Ice Nine is an independent entity but very closely related to us. The owners of GDP, the band members, have an ownership interest in Ice Nine, which is their publishing company. GDTS is an independent entity as well.
It was never the intention to make a lot of money. It was simply a hope a belief, and I think, a certain amount of skepticism about the outside worldÖa belief it could be done better. It think that whatís behind 30 years of success and allows this thing to go on has a lot to do with the fact that the band has remained from the very beginning a self managed entity. They never entered into conventional relationships that other artists did with managers. Those other artists would be under contract to a manager to steer their career and let them know what was happening in the entertainment industry and what they should be doingÖall in exchange for a percentage of their income. It was handled very differently hereÖ.the band always made the decisions. Decisions were never made on behalf of the GD that could ultimately be questionable regarding what the real benefits were here. The band decided for themselves what was right or wrong. To the benefit of everyone here today, they were primarily concerned with making music. That was it. That was what they wanted to do. They didnít compromise their performance. Whatever it took to create the best production, they would spend it. They kept their ticket prices down. They were never worried about the bottom line. An independent management entity would be. After 30 years they became a unique attraction, and the loyalty to this brand is now, of course, legendary.
I was previously a partner with my brother in a company in SF that worked on merchandising projects on behalf of a lot of different organizations. It was through that involvement that back in the mid 80s that I got to know some of the people here. And we worked on a couple of merchandising projects when the band was under contract to Winterland Productions as their licensee in merchandising. That was in 1985-1990 or so.
Itís generally true that there was a long period of getting to know someone and their capabilities before any job would be offered. But in my case it was a little bit different. It was a process that I had to go through. It was a series of meetings that were, for the most part, conducted by an independent consultant. What I do and what I was hired to do here was something that hadnít been undertaken by anyone else. I donít think there was anyone who was interested in providing structure and bringing in accounting systems and gearing up for the eventual taking back of all the bandís intellectual property in house. But that made my coming here more consistent with the history, the way friends and family members had been brought on board. They started their search for somebody in 1992, but I started in early 1993.
When Jerry died a lot of decisions were made that were sensibleÖsuspension of the tours, and it was pretty much a given that there would never be tours of the dimension that had been established in the early 90s. It was clear that the business was going to face more challenges and be based more on products in a much greater proportion than they had in the past. The experience of the live GD production was on hold for almost three years. In that period it was demonstrated that this was a business that could sustain itself on the development and distribution of products and licensing of the name and also lending certain skills that we had developed to serve the needs of the GD to other artists. Weíre doing tour/event merchandising, for example, on behalf of people now among them Bonnie Raitt and Alanis Morrisette. We also do the merchandising for the Oakland Raiders at their home games. We know how to do this sort of thing from the years it was done with the GD. This has happened in the last year and a half or so. Itís of interest to us because it broadens the business.
Weíve put out CDs on behalf of other artists. We released a CD for the Allman Brothers and another for David Crosby and Graham Nash. We just brought out a CD of the Sons of Champlin. So weíre doing a lot of fun things with entertainment entities that weíre friendly with. We hope to offer them services that have been developed from the artistsí perspective as opposed to services from a service providersí perspective. Thatís exciting.
With the activities from last summer with The Other Ones, we have confirmed in our minds that there is a tremendous demand for the GD trademarked form of entertainment. When they got up and play that music it was tremendously exciting, and it was a tremendous triumph for everybody. It was triumph for the musicians, the bands. There was no complaining. It indicated a strong potential for the future. The music can evolve, and with different players it can be presented in the same GD style, but perhaps in a slightly different context.
We currently have about 35 employees at GDP. It fluctuates somewhat seasonally with our mail order. A lot of our employees are involved with direct sales. So that kind of goes up and down.
For our mail order we need to offer service 24 hours a day, seven days a week, and we donít maintain those hours here. So have a hook up with a company that takes phone orders for us around the clock.
In general terms, after Jerry died, the folks that were absolutely involved with the tours didnít have a place any longer. So it was very sad and very difficult for me. We are talking now about individuals who were part of a real family. I can only imagine how difficult it was for the band members to address that.
I think that GDP is a very unique entity still. It is a business and yet it always was. The perception was that it was completely opposed to business. I donít think that was actually the case. I think the band members actually are great businessmen when they sit down. Of course theyíve been able to do what they love the most which is play music. But theyíve done it profitably in a business, which is pretty unique. And itís a business thatís been forced to be more and more efficient. Thereís no way youíre ever going to approach the success that was established in 1993-1994 when the band was routinely selling hundreds of thousands of tickets. And the money that came in was subject to tremendous profit margins as you can imagine. But when youíre dealing with others, it changes a lot. The margins change. So we are hard pressed to become more and more efficient along conventional business lines. At the same time we do have people here that are part of the past and that spirit continues to make it a good place to work.
We have conducted a number of distribution experiments with Best Buy, Sony Signature, QVC, etc which were efforts to determine how we could more directly distribute product as opposed to licensing out. Take music, for example.† Rather than licensing out music masters to a company who would make CDs, sell them and pay us a royalty, weíd much rather sell them direct ourselves. The success of our Dicks Picks program has been tremendous. Weíve received proposals for years from those who would like to license our music and sell it direct. Our answer has been, ìWe already do this ourselves, thank you.î At the same time, why donít we try to see what happens on VH-1 or QVC? I think the jury is still out on whether we need to do that or not. Prior to VH-1 we did a program with a network called Burly Bear which is a network of college campus TV stations, a dormitory network, and that was quite encouraging as well. So weíll always be looking at ways where we can expose newcomers to this music and get them into our direct sales program.
Best Buy was also something of an experiment. Much of the product that was offered there was manufactured by us and taken to the distributor and the rest came from licensees. It was terribly encouraging when it started up. The problem had to do with Best Buyís difficulty in managing the boutique, the display that was created for the merchandise. Best Buy is a retailer thatís built its success on providing the customer with products in a way that didnít take a lot of in-store managing and merchandising. It was an ambitious project and when it ended, I was really disappointed. I think that with a retailer that was more geared up to the merchandising on the floor, it couldíve lasted a long time. We also questioned whether a large retailer was compatible with the GD and with the small retailers, the mom and pop operations that have sold GD merchandise for a long time. But what we found was that the customer who shops at Best Buy for GD merchandise is not the same as the one who shops the mom & pop. It could be that a couple in their 40s with a couple of kids is in Best Buy to buy a new TV. They may not have been to a GD concert in 10 years but nonetheless they have a tremendous affection for the experience. So what we were doing there was recapturing a customer who weíd fallen out of touch with through the music and now could present them with all the other life-style branded items we have. It all came down to being able to sufficiently merchandise the product in a store that wasnít staffed to do that.
I think GDP is less structured than the typical business. But weíre in a drastically different kind of business today, and I think weíre required to become more structured. Itís a gradual process. It will be more and more easy for people here to adapt to structure as they realize itís so necessary to our increased profitability and longevity and everything else. As I said, I think this is a good place for people to work. And to keep this opportunity open to us we have to be profitable. And we can be more profitable through better organization.
We have meetings with individuals and groups of people that work together periodically, and we have regular annual reviews and goals and salary reviews. Itís done with less structure than in most organizations, I would say. But weíre always getting more and more organized.
Everyone that works here, myself included, is blessed to be able to associate with this tremendous group of individual guys and be involved with such a unique and wonderful product. And thatís the bottom line. And thatís what makes this such a wonderful successÖthat they did not compromise their product in any way. It was an adventure with the band, and it still is. And thatís what itís all about.
One thing you should keep your eye on is the Terrapin Station project. Itís all about real estate now, frankly. All the components are in place. We have architects, development partners, financial people, corporate sponsors. Everyoneís in the wings waiting to move ahead, and itís going to come down to obtaining the site. Of course the site we want is going to be in the city of SF which is probably the single most expensive real estate market in the world, and itís very challenging with regards to the city government and the citizen groups and everything else there. So itís a tough place, but itís the right place. And weíre just diligently working to get the right site. Hopefully it will become the edification of all this stuff. And be a fine and grand example of our ability to provide for our fans directly through something that we create.
Everyone kind of cringes when itís referred to as Disneyland for Deadheads, but if youíre going to be compared to somebody, what the heck, why not the best.
The members of the board are only the original members of the band along with Hal Kant whoís been general counsel for about 28 or 29 years.
