Questions 11-20 are based on the following passage.
Since the 1970s, the Grateful Dead has invited
SOCIAL SCIENCE: This passage is adapted from the article "Management Secrets of the Grateful Dead" by Joshua Green (©2010 by The Atlantic Monthly Group).
academic examination. Musicologists showed interest,
although the band's sprawling repertoire and tendency
to improvise posed a significant challenge. Engineers
5 studied the band's sophisticated sound system, radical
at the time but widely emulated today. Other disciplines
have also found relevant elements of the band's history
and cultural impact to be worth examining.
Oddly enough, the Dead's influence on the busi-
10 ness world may turn out to be a significant part of its
legacy. Without intending to-while intending, in fact,
to do just the opposite-the band pioneered ideas and
practices that were subsequently embraced by corporate
America. One was to focus intensely on its most loyal
15 fans. It established a telephone hotline to alert them to
its touring schedule ahead of any public announcement,
reserved for them some of the best seats in the house,
and capped the price of tickets, which the band distrib-
uted through its own mail-order house. If you lived in
20 New York and wanted to see a show in Seattle, you
didn't have to travel there to get tickets-and you could
get really good tickets, without even camping out. "The
Dead were masters of creating and delivering superior
customer value," Barry Barnes, a business professor at
25 Nova Southeastern University, in Florida, told me.
Treating customers well may sound like common sense.
But it represented a break from the top-down ethos of
many organizations in the 1960s and 1970s. Only in the
1980s, faced with competition from Japan, did Ameri-
30 can CEOs and management theorists widely adopt a
As Barnes and other scholars note, the musicians
who constituted the Dead were anything but naive
about their business. They incorporated early on, and
35 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 vlo-
40 lated 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 deci-
sion was not entirely selfless: it reflected a shrewd
45 assessment that tape sharing would widen their audi-
ence, 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.
50 It's precisely this flexibility that Barnes believes
holds the greatest lesson for business-he calls it
"strategic improvisation." It isn't hard to spot a few of
its recent applications. Giving something away and
earning money on the periphery is becoming the blue-
55 print for more and more companies doing business on
the Internet. Today, everybody is intensely interested in
understanding how communities form across distances,
because that's what happens online.
Much of the talk about "Internet business models"
60 presupposes that they are blindingly new and different.
But the connection between the Internet and the Dead's
business model was made years ago by the band's lyri-
cist, John Perry Barlow, who became an Internet guru.
In 1994, Barlow posited that in the information econ-
65 omy, "the best way to raise demand for your product is
to give it away." As Barlow explained to me: "What
people today are beginning to realize is what became
obvious to us back then-the important correlation is
the one between familiarity and value, not scarcity and
70 value. Adam Smith taught that the scarcer you make
something, the more valuable it becomes. In the physi-
cal world, that works beautifully. But we couldn't regu-
late [taping at] our shows, and you can't online. The
Internet doesn't behave that way. But here's the thing
75 if I give my song away to 20 people, and they give it to
20 people, pretty soon everybody knows me, and my
value as a creator is dramatically enhanced. That was
the value proposition with the Dead." The Dead thrived
for decades, in good times and bad. In a recession,
80 Barnes says, strategic improvisation is more important
than ever. "If you 're going to survive an economic
downturn, you better be able to turn on a dime." he
says. "The Dead were exemplars." It can be only a
matter of time until Management Secrets of the Grateful
85 Dead or some similar title is flying off the shelves of
airport bookstores everywhere.
Since the 1970s, the Grateful Dead has invited