So much to sell

The Washington Post Sunday - - BUSINESS - BY AN­NIE LOWREY An­nie Lowrey re­ports on eco­nom­ics and busi­ness for Slate.

The mu­sic in­dus­try might be dy­ing, but the Dave Matthews Band knows how to make it pay: Take those jams on tour.

As usual,the list of North Amer­ica’s top­gross­ing mu­sic tours of 2010 was heavy on AARP-el­i­gi­ble best-sell­ing rock­ers: Bon Jovi, Roger Wa­ters of Pink Floyd, the Ea­gles and Paul McCart­ney all fig­ured in the top 10. But tucked among them, tak­ing in $72.9 mil­lion, was the DaveMatthews Band, the ’90s-era jam-lov­ing col­lege-town rock­ers known af­fec­tion­ately as DMB (and less af­fec­tion­ately as the “Dave Matthews Bland”).

The band is noth­ing to sneeze at, of course. It has won a Grammy. Six of its seven stu­dio al­bums have hit No. 1 on the Bill­board charts. Still, com­pared with the other big tour­ing acts of 2010, DMB is a feath­er­weight— “Stay” is no “Livin’ on a Prayer.” Bon Jovi (who, to be fair, will not be el­i­gi­ble for AARP mem­ber­ship un­til 2012), Roger Wa­ters and Paul McCart­ney have helped sell 130 mil­lion, 200 mil­lion, and north of 1.3 bil­lion records, re­spec­tively. In the course of its two-decade-long ca­reer, DMB has moved a more mod­est 30 mil­lion.

But in an in­dus­try busy hav­ing its foun­da­tions rocked, in am­at­ter of speak­ing, it hardly mat­ters. An­a­lysts and ex­ec­u­tives have long lamented that the mu­sic in­dus­try is dy­ing. That is not quite true — it is the record busi­ness that is clearly done for, and in its place, tour­ing stands as the top mon­ey­maker for many in­dus­try par­tic­i­pants. DMBlives to tour, mak­ing them not just pop­u­lar but very, very profitable.

WhenI sayDMBlives to tour, Idonot­jest. Ev­ery sum­mer­for the past twodecades, the band has hit the road. In 2010, that meant play­ing 62 shows in 50 cities to 1,270,477 fans — more than any other artist tour­ing in North Amer­ica. The group also took trips toEuro­pe­andSouthAmer­ica, andthere was a DaveMatthews and gui­tarist Tim Reynolds mini-tour. Andthe year was hardly un­usual. Since 1992, Dave Matthews Band in its var­i­ous it­er­a­tions has played a whop­ping 1,692 shows.

So the pre­cip­i­tous de­cline in record sales in the past decade has hardly hurt DMB’s prof­itabil­ity be­cause it makes the bulk of its money tour­ing any­way, gross­ing more than $500 mil­lion. And it makes a lot of money do­ing it. Ac­cord­ing to Bill­board Boxs­core, be­tween 2000 and 2009, DMB­sol­dmoret­ick­ets to its shows than any other band on the planet, mov­ing a stag­ger­ing 11,230,696 tick­ets. (No other band sold more than 10 mil­lion tick­ets in the same time pe­riod.)

On top of that, of course, there are prof­its from mer­chan­dise, records and other rev­enue streams. As long ago as 1998, DMB re­port­edly pulled in $200,000aday in­mer­chan­dis­esaleson­tour. Plus, DMBhas a re­ported 80,000 fans pay­ing$35 a year for fan club mem­ber­ship. And it ben­e­fits from a large cat­a­log of cheap-to-pro­duce live-show discs and DVDs. “With­out any mar­ket­ing or pro­mo­tion,Live at Red Rocks de­buted at No. 3 on the Bill­board 200 chart and was in­stantly cer­ti­fied plat­inum,” the band boasts of its 1998 al­bum. “[It] pro­vided fans with a high qual­ity and rea­son­ably priced al­ter­na­tive to the over-priced, ill pro­duced, and il­le­gal liveDMBCDs.”

Part ofDMB’s suc­cess un­doubt­edly comes from man­ag­ing its tour so well, be­cause gross ticket sales do not al­ways trans­late into prof­itabil­ity. Lady Gaga, for in­stance, was also in the Top 10 for 2010, gross­ing $51 mil­lion in North Amer­ica, charg­ing le­gions of fans about $100 a pop. But the shows proved enor­mously ex­pen­sive to put on, what with the army of scant­ily clad backup dancers and dozens of fancy cos­tumes — in­clud­ing a bra that shoots sparks, a feath­ered bird getup, and an enor­mous wear­able gy­ro­scope nick­named “ the Or­bit.” Add in the foun­tain of fake blood and the price of fly­ing such non­sense around the world, and ex­trav­a­gance cut into the bot­tom line. The tour ac­tu­ally lost money at first.

In con­trast, DMB’s tour seems down­right hum­ble. There is food. There is mer­chan­dise. There are video por­tions. But mostly, there are just the jams and the fans, and that’s how DMB ob­ses­sives like it. In­deed, the band cul­ti­vates en­thu­si­asts par­tic­u­larly well, a main se­cret of its suc­cess. It keeps ticket prices low in com­par­i­son with other big shows, anaver­a­geof $58.79com­pared­with $91.56 for arena-rock­ers Aero­smith. It of­fers a high pro­por­tion of plum tick­ets to fan club mem­bers and of­fers them tons of free­bies and spe­cial deals on­line. It also plays a sta­ble ros­ter of songs but jams or im­pro­vises at each gig, bring­ing fans back ev­ery year, of­ten­morethanonce. Thus, while even the biggest-sell­ing artists front the oc­ca­sional flopped tour, DMBn­ever does.

If that sounds fa­mil­iar — not the mu­sic, the strat­egy— it’s be­causeDMBis pulling an old trick pi­o­neered by the Grate­ful Dead, a band beloved of busi­ness school pro­fes­sors and folk-lovers alike. As de­scribed in the de­light­ful“Mar­ket­ingLes­sons From the Grate­ful Dead,” the famed jam band pro­duced only a few well-known al­bums and songs. But they toured con­stantly, play­ing about 200 shows a year from 1965 to 1995. And they courted their fans, treat­ing the con­cert like a ser­vice rather than a com­mod­ity and their fans like mem­bers of a com­mu­nity rather buy­ers of a prod­uct, be­com­ing one of the most suc­cess­ful bands of all time.

In many ways, DMB is the Dead’s in­her­i­tor: a se­ri­ous tour­ing­bandthathas­car­ingly cul­ti­vateda de­voted fan base and ended up be­com­ing an in­dus­try an­chor. Some an­a­lysts say tour­ing will even­tu­ally an­chor the whole mu­sic in­dus­try. In the past 10 years, as record sales have col­lapsed, the tour­ing busi­ness has tripled in size, to nearly $5 bil­lion a year in to­tal rev­enue. (That’s mostly due to higher ticket prices rather than more peo­ple at­tend­ing more con­certs.) But in 2010, ac­cord­ing to Poll­star, the top 50 tours net­ted only $2.9 bil­lion world­wide in ticket sales, down 12 per­cent from 2009. The in­dus­try ex­pects a stronger 2011, with con­sumer sen­ti­ment im­prov­ing in the United States and such huge acts as U2 sad­dling back up.

For the first time in decades, though, DMB won’tbethere. “[ We] want­edto let ev­ery­one­know that af­ter twenty years of con­sec­u­tive tour­ing, Dave Matthews Band will be tak­ing 2011 off,” the band wrote fans last year. “We feel lucky that our tours are a part of so many peo­ple’s lives, and wanted to give ev­ery­one as much no­tice as pos­si­ble.” But, it noted, we “ look for­ward to re­turn­ing to the road in 2012.”

JULIO GUIMARAES/REUTERS

Gui­tarist DaveMatthews and vi­o­lin­ist Boyd Tins­ley of the DaveMatthews Band, which has toured ev­ery sum­mer for the past two decades.

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