What’s the Secret to Selling to Superfans? Ask the Grateful Dead — Or a K-Pop Act

For the past decade, on-demand streaming drove incredible gains in recorded music revenue, which climbed from $6.7 billion in 2014 to $17.1 billion last year in the U.S. alone. Now there’s only so much room for growth in the U.S. and Europe, and developing markets aren’t as predictable. But look, up in the sky, it’s a nerd, who could help an artist buy a plane, it’s SUPERFANS!

Basically, now that the music business takes in a modest amount of money from an enormous number of people, it needs to find ways to also capture much larger amounts of money from smaller numbers of more dedicated fans. A July 2023 Goldman Sachs report said there was a $4.2 billion “addressable market opportunity for superfan monetization,” and Billboard just reported on how this same excitement is sweeping labels — as well as some of the challenges they will face. Of course, this is just an MBA’s way of saying what most fans already know: They want to buy more from their favorite acts than access to their music on a streaming service. The question — besides who actually qualifies as a superfan! — is how to find them and what they want.

To get sense of what this business might look like, let’s look at the iconic group that pioneered one kind of superfan model, as well as newer stars that have turned a very different model into something of a science: the Grateful Dead and K-pop groups. Both are very popular — phenomenally so by some measures — but neither is exactly mainstream in the way that Taylor Swift or Beyoncé is. Their popularity is deeper than it is wide. Neither the Dead nor K-pop is for everyone — both tend to inspire either devotion or disdain — but the fans who like them tend to go all-in.

Those fans help these acts overperform by different measures. The Dead only ever had one hit single, but the band had the highest-grossing tours in 1991 and 1993, partly thanks to hardcore Deadheads who saw multiple shows, and the 2023 Dead & Company tour grossed as much ($114.7 million) as the last BTS tour ($113.6 million), according to Billboard Boxscore. K-pop acts dominate the sales market. In 2023, K-pop acts had seven of the top-selling CDs in the U.S., three of the top-selling albums, and none of the top albums by total consumption, once streaming was included. On a relative basis compared to other acts, their fans buy more than they listen — a great business considering that many of those buyers probably listen to those albums on streaming services as well. (K-pop is far more popular internationally.)

Both the Dead and the K-pop groups essentially doubled-down on what they do well in order to super-serve their fans. The Dead built its reputation as an improvisational live act, the best in popular music, and it never completely captured that same magic in the studio. So after the group broke up in 1995, it started to release more live recordings, and a 2006 deal with Rhino led to increasingly-ambitious reissue projects — a 73-CD set of the 1972 European tour, a series of reissues available every quarter on a subscription-first basis, and an 80-CD set of one show from each year of the band’s 30-year career. Recently the group broke a record for having the most albums on the top 40 spots in the Billboard 200. This undercounts their business success, though, since some of the box sets Rhino releases sell for more than $100.

K-pop acts tend to focus on selling merchandise, and given the declining number of CD players, many young fans probably see CDs as more of a souvenir than a way to listen to music. K-pop is all about fandom — having it, displaying it, and in some cases arguing about it — so those acts tend to sell merchandise that appeals to a collector’s mentality. (I find it odd that some fans buy CDs in different colors, but I probably have a dozen live versions of the Grateful Dead’s “Dark Star,” and some people find that a bit much, too.) K-pop fans spend a considerable amount of money on merchandise — $24 a month, according to research from Luminate, which is 140% more than the average U.S. listener. From a financial perspective, K-pop acts are basically in the tchotchke business; BTS sells clothes, jewelry and even Uno cards. And while the Dead sells more than its share of merchandise, including “drinkware” and “home goods,” it has always really been a live band, in both art and business terms.

The music industry tends to see these business models as exceptions, since it’s dominated by labels that are very much in the recorded music business. But they might also offer inspiration on how to turn a star-level audience into a superstar-level career. (The Dead’s business, which is still overseen by Warner Music’s Rhino, also shows that many superfans don’t fade away — I saw a few concerts in 1991, and I plan to buy the next vinyl box set, too.) Charts change much faster than loyalties.

What can the rest of the business learn from these successes? Most important, that it’s both possible and potentially difficult to monetize superfans — they’re willing to spend money, but only on the right items; BTS live recordings might not do as well as an expanded clothing line. And that requires expertise. Rhino president Mark Pinkus works closely with the Dead, as does archivist Dave Lemieux. They choose the shows fans want to hear and know which to sell as part of the Dave’s Picks reissue series and which belong in box sets. K-pop fans are enthusiastic, but also demanding — they want to buy branded hoodies, but only if they’re designed the right way.

Selling streaming subscriptions to a mass audience requires executives who could focus on the mainstream. Getting part of that audience to spend twice that much money on a single act is certainly possible — but it takes a different skill entirely.

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