The Rise and Fall of Grateful Dead Records (And How The Mob Ripped It Off)

The Grateful Dead started their own record label in 1973. The mob counterfeited the first album, an insider looted it, and in three years it broke.

Fed up with being what Jerry Garcia called juice for the Kinney Corporation, the band walked away from Warner Bros. and, on the Fourth of July 1972, let Ron Rakow pitch them a ninety-three-page plan called the So What Papers: full ownership, their own pressing and distribution, no major label above them. Rakow raised the startup money by selling foreign rights to Jerry Wexler at Atlantic for three hundred thousand dollars and by talking the Bank of Boston into a credit line. Wake of the Flood, catalog GD-01, sold north of four hundred thousand copies at a dollar twenty-two a record instead of the thirty-three cents Warner had paid. For a minute it worked.

Then it came apart from every direction at once. The album was counterfeited within about a week of shipping, by an operation the FBI traced to organized crime in New Jersey, and by one internal estimate the fakes ate roughly a quarter of the label’s revenue. The 1973 oil crisis drove vinyl costs up across the industry. The Grateful Dead Movie ran past six hundred thousand dollars in postproduction. The band pulled back from the road, so the income stopped, while inside the organization there was no mechanism for saying no to an advance. By early 1975 Andy Leonard put it plainly: there is no Grateful Dead Records, because there is no Grateful Dead right now.