How Panic Spreads :

By Joshua Hyatt
October 1, 2003

(FORTUNE Small Business) – No sooner has the band Widespread Panic taken the stage at Colorado's Red Rocks Amphitheater than I notice that everyone in the audience is pointing at me. Some use both index fingers; others jab in my direction with just one. Okay, I know I stand out from the other 9,399 audience members. My new FSB baseball cap, with its stiff brim, is facing forward. While other heads bob to the opening bars of Neil Young's "Are You Ready for the Country?" mine builds up to a rhythmic quiver. I am wearing a blue blazer, which has been slapped with a yellow SCHOOLS' ZONE sticker, featuring the distinctively distended silhouette of Dave Schools, the band's bassist. Wherever I walk, fans tap the sticker, then give me a thumbs-up accompanied by a we-both-know-what-that-means glance. I don't, of course. And when I confess my ignorance to Kevin Teel, a 35-year-old diehard (104 shows) who is (I'm not making this up) an industrial hearing-testing program salesman and is sitting--actually standing, like everybody else--in the fifth row, he pats me on the back and puts me at ease. "The Schools' Zone," he assures me with a thumbs up, "is where you want to be." Whew!

I resume my awkward shuffling, only to feel something hit my back. A marshmallow lands at my overdressed feet--a tribute perhaps to "Cream Puff War," a punkish Grateful Dead song the band covers? That's what somebody tells me, but nobody's sure how the ritual began. Still, when I feel drops of water pelting me, I'm proud that I get it: The bluesy band has broken into Van Morrison's classic "And It Stoned Me." Folks reflexively flick their water bottles as soon as the sextet reaches the three-peated line: "Oh, the water."

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.

"The band really puts a lot into what it does," proclaims 33-year-old Laura Kelly (75 shows), a bookkeeper. "The audience feels it and tries to give it back." Fans position themselves nose to nose, shouting the lyrics into each other's wide-open mouths; they throw rubber duckies and dance with alien balloons; they claw and punch the empty air. As for the pointing? Well, there's a lot of it--at the band members, at one another, between any two people who make eye contact--and it's so obviously random that only an especially self-conscious soul could misinterpret it as I did. Such aggressive gestures are just outlets for all the energy and the unity and the ... hey, what's that sweet smell?

Should the audience stop sensing those vibes, these guys are goners. Nobody's going to be begging them to reunite for a Hall of Fame induction either. In their 11-CD career, they've sold maybe two million discs. And you aren't going to catch their tunes blasting out of a passing radio. "I wish I could say they got airplay," says Buck Williams, 57, the band's co-manager and agent. "But radio is awfully narrow-minded and jaded."

That being the case, 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."

Widespread Panic isn't the first band to make a go of it this way. The Grateful Dead is the granddaddy of role models, but even it scored a top-ten hit. And Phish, a better-known descendant of the Dead, can claim a Ben & Jerry's flavor named in its honor. Relatively few people, I'm guessing, own a pair of the Widespread Panties I saw being hawked outside. But the fans keep coming back and will keep doing so because--why, again? "They come because their buddy from Georgia or Washington State is here," theorizes Domingo "Sunny" Ortiz, 51, Panic's percussionist and a father of two. "They want to come out and see us screw up."

Maybe that's it; the spontaneity Widespread Panic cultivates is what has created such loyalty. After all, about half of the attendees of the three Red Rocks appearances used mail order to buy a three-ticket package for all the shows. Last year the band played 41 dates (this year it'll play around 90), grossing about $12 million, with an impressive 35% profit margin. The revenue's on par with Bonnie Raitt's, and better, for example, than either Alicia Keys's or Willie Nelson's, according to Pollstar, a music industry publication. Come Halloween, Widespread Panic hopes to turn Madison Square Garden into one of its haunts (it's playing New York City's big arena for the first time). "I feel in my gut the business is there," says agent-manager Williams. "We're going to give them a good product at a good price." Radical, yes, but it just might work.

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. Even so, "people call us all the time looking for certain T-shirts that turn out to be bootlegs," says Paul "Crumpy" Edwards, one of three employees in merchandising. "You just can't snuff the stuff out." Unless you co-opt it. Don Hess (180 shows) was once a pirate but then became a licensee, making promotional merchandise like ultimate Frisbees for the band. "They busted us, but we've gone legit," says Hess, proud co-founder of Mountain High Productions (for more on other businesses that have sprung up around the band, see the box below). The upshot for the group: better control over quality and higher profits.

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. "The people who make tapes are responsible for us having great crowds the first time we went west of the Mississippi," recalls Schools, 39. He joined the fledgling group--which took its name from its late co-founder Michael Houser's bout with panic attacks--in 1984. "They figured out early what their fans wanted," says Williams, whose clients include REM. "And they catered to that." That's why Travis Tarr, for one, has taped about 30 shows since 1997. Today he has $6,000 of equipment stashed inside a green waterproof bag. "None of us make a dollar on this," says Tarr, 31, reassuringly slipping his arm around me. "The band just wants us to spread it out."

By "it," he means the band's music, which isn't as marginal to the overall experience as you might assume. Widespread Panic's style is quite unlike the spacey and psychedelic drifting of other improvisational jam bands. The lyrics are sometimes silly and sing-songy ("And if I had my way / I'd give a coconut to everyone") and other times, uh, less so ("I got a real good mind to beat you senseless"), but nearly always stuffed with images. In "Travelin' Man," the last song on Ball, the CD that the band released last April, Houser seems to couch a reference to his terminal illness in terms more appropriate to a Star Trek episode ("Got a big hole / In my deflector screen"). He died of pancreatic cancer in August 2002 at the age of 40. At Red Rocks, the band performed that song as one of its encores during its Saturday night show. Fans knew that last year's Red Rocks show was Houser's second-to-last stage appearance, and the hard-core followers, who love to decode messages in what the band does during shows, deciphered a tribute to Houser. Not that anyone in the band mentioned that--or much else--between tunes.

Indeed, Widespread Panic gives away as little as possible, the better to keep its listeners guessing. "We've got to be consistent in our nothingness," jokes Bell. To make sure that there's a unique set list for every concert, the band devised a color-coded system that guarantees the same song doesn't get played more than once every three concerts. When their catchy "Coconut" tune got too many requests, they stopped playing it altogether for a while. "None of us really wanted a career based on one song," says Nance. And to keep things lively on stage, the band brings up guests like Cecil "P-Nut" Daniels, who blew through a digital saxophone called a Midi Horn. Percussionist Ortiz proudly points out that while "most people look for short songs with a hook ... we've never followed anyone's direction." In fact, when the photographer for this story asked Bell to cross his arms, he resisted. "It feels fake," he told me. "Take a picture of us the way we are."

The band's dislike of "practiced off-the-cuffness" may be what forced it into its definition-defying niche. As Bell tells it, he was scarred by an experience he had as a teenager. Excited to see his favorite act in concert, he returned for a second night and was disillusioned to discover that all the natural-sounding, light-hearted banter was scripted (Bell won't name the offender). "My heart just sank," he says. "It really made me think about the value of lack of predictability." Co-manager Sam Lanier, 54, adds that it helps that Panic "evolved, with a very independent touring base and not having to be dictated to by a record company, radio, or anyone else."

Sitting in a Hotel Suite, with a copy of a recent Rolling Stone magazine on the coffee table in front of him--it happens to mention Widespread Panic as one of the best live bands ever--Bell turns cranky when I ask him whether, after nearly two decades of regular touring, he's pocketed any serious scratch. "It's nobody's business as to what my personal holdings are," he says.

The band isn't interested in following the conventional path to big bucks. It won't play at most radio-sponsored shows, Bell says, because Widespread Panic "can't express itself in an hour." He gives a similar reason for turning down a feeler about opening for the Rolling Stones. "Our fans would be disappointed." The band has played twice on The Late Show With David Letterman (and once on The Tonight Show last August) because "it felt right." Serving those fans remains a priority even in New York City, where tickets cost just $45 (the average Garden price is $65 to $75), so true believers can soak up both nights. Without them, as I now know, there's no show.

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.