Widespread Panic

I’ve been pointed to this Fortune Small Business article (be sure to check out the sidebar), How Panic Spreads [pdf,], which describes in some detail how a “Grateful Dead”-like business model works today.

What’s happening onstage at a Widespread Panic gig is only a small morsel from a big, flaky feast. Therein, dudes, lies the key to its ongoing profitability: In an era in which the piracy of recorded music has leeched away revenues, the band’s ability to turn live shows into its primary distribution channel may turn out to be the wisest of business decisions.

[…] Widespread Panic doesn’t sustain itself by selling a shrinkwrapped product. Like business consultants and tax attorneys, these folks make money only when they work–that is, up on stage providing “the soundtrack to this big party that’s going on,” as drummer Todd Nance puts it. Widespread Panic sells the experience of seeing its live performance, which is even airier than it sounds. “You’re calling nothing something, and you’re selling that,” explains John Bell, the band’s 41-year-old co-founder. “It’s like Seinfeld.”

[…] Making money from nothing is harder than it looks. The band’s company, Brown Cat, does have an official merchandising department (annual revenues: $500,000, with 20% margins) working out of its headquarters in Athens, Ga., selling everything from T-shirts to faux Georgia license plates.

[…] One group Widespread Panic won’t ever try to unplug is the amateur tapers. With the music industry suing individual fans for downloading songs over the Net, it’s jarring to see a special section at the band’s concerts reserved for these guys—right behind the soundboard, where they’re out of the way of most Spreadheads. (To get closer, tapers have been known to mount tiny microphones on their eyeglasses.) These fans, the logic goes, create new acolytes by sharing their CDs with them.

[…] Driving with Nance to the gig that afternoon, I ask him as we approach Red Rocks, Wouldn’t all these folks lining the streets explode into, well, widespread panic if they knew you were in the car? Not at all, he insists. To prove it, he turns and waves out the window. One fan, draped in tie-dye, smiles broadly and then—of course—points. “It’s not like we’re the Beatles or anything,” Nance says quietly. “Here, the band and the audience are responsible for each other’s existence.” Finally, I’m convinced he’s right.