The Lost Boys: How a Pop Sensation Came Undone

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The Lost Boys: How a Pop Sensation Came Undone

Date: Aug 17, 2002

Source: The New York Times

Submitted By: jmw

By NEIL STRAUSS

THE Backstreet Boys have sold more than 65 million albums around the world, a number that few pop acts have surpassed. In their prime, in the 90's, they were a pop juggernaut, breathing new life into MTV, the record business, children's radio, teen magazines and teenage purchasing power.

But along the way, they were surpassed by a very similar band with the same management, songwriting and production team: 'N Sync. As 'N Sync's star rose, the Backstreet Boys seemed to disappear. Music industry observers have offered scattered reasons: the Backstreet Boys lost their young audience when they tried to fashion a darker, more adult look; they alienated love-smitten fans when two group members married; they damaged their image when they admitted that the band member A. J. McLean had checked into rehab for alcohol abuse and depression.

But there is more to the story. Or more precisely, the Backstreet Boys' ups and downs are part of a larger story, one about the music industry today. It's about five young men put to work as pop puppets who develop minds and ideas of their own, then find out what can happen to long-term ambitions in a consolidating industry in which quarterly profits are crucial, professional relationships are not what they seem and pop groups are treated like disposable products.

The history of rock and roll is littered with broken bands and dashed hopes. But what distinguishes the Backstreet Boys' story is its scale, one involving deals worth as much as $100 million that the band members now say were a mistake, causing them to lose control of their careers.

"The business is over here," Kevin Richardson, at 29 the oldest group member, said recently, stretching his left hand out. "And the artistry," he continued, stretching out his right hand, "is over here."

The story begins with Lou Pearlman, an aviation entrepreneur based in Florida (and cousin of Art Garfunkel). Inspired by the success of the 80's heartthrobs New Kids on the Block, who happened to charter a plane from him, he decided to recruit and groom his own clean-cut boy bands. After a series of auditions in 1992 and 1993, he recruited Nick Carter (the youngest at 12), Howie Dorough, Mr. McLean and Mr. Richardson, who was 20 and whose cousin, Brian Littrell, soon completed the Backstreet Boys lineup. Mr. Pearlman booked them at grade-school assemblies, shopping malls and Sea World, and assigned management duties to Johnny Wright, who had worked with New Kids on the Block.

A year later, Jive Records, an independent label best known for its hip-hop acts, was coaxed into signing the Backsteet Boys. But the band's first single, "We've Got It Going On," sputtered in America, where its sweet, harmony-laden pop was out of step with the alternative rock of the time. So in 1995 the band's first album, "Backstreet Boys," was released in Europe and Canada, hitting the top 10 in numerous countries. Jive and Mr. Pearlman kept the band busy overseas for the next two years, sometimes putting it on tour for five months straight.

When teenybopper bands like the Spice Girls and Hanson began to succeed in the United States, Jive and Mr. Pearlman decided to bring the boys back. In the fall of 1997, an American version of "Backstreet Boys" was released and, over time, its popularity wore down skeptics at radio stations and MTV. When the album crossed the 10 million mark in sales, it heralded the cultural arrival of Generation Y.

"They were probably single-handedly responsible for the advent of `Total Request Live,' for Radio Disney, for Teen People becoming the force it has become, and, no doubt, for the explosion in teen purchasing power in America," said Barry Weiss, the president of Jive. "They pushed the envelope."

As with nearly all sudden pop sensations, a conflict soon grew between the band members, who wanted time off to relax and find perspective, and the business forces behind them, who wanted to keep the momentum going.

"The Backstreet Boys got so big they got tired," Mr. Pearlman said. "And after a while, it became not about managing them but reasoning with them."

Matters grew worse when a doctor recommended in the spring of 1998 that Mr. Littrell have surgery because of a leaky heart valve. "I remember management at the time saying, `Can't you postpone it so we can finish the tour?' " Mr. Richardson said. "And this just hurt Brian so much because he was like, `Dude, this is my heart.' " (Mr. Pearlman said that he had supported taking time off for the operation immediately.)

Meanwhile, Mr. Pearlman rolled out his next big boy band: 'N Sync. That summer, the Backstreet Boys decided not to accept an offer from Disney, which wanted to broadcast a concert special. Mr. Richardson said that he and his bandmates were exhausted and wanted to spend time with their families.

"That left the door open for 'N Sync," Mr. Pearlman said. "And 'N Sync walked through the door."

Mr. Richardson said that 'N Sync worked hard and deserved the breakthrough. The Backstreet Boys directed their anger at Mr. Pearlman and his management team, coming to believe that it was a conflict of interest for them to handle such mirror-image acts. "They were directing them to work with all the writers and producers that we worked with," Mr. Richardson said. "And they were using 'N Sync against us, saying, `Oh, if you guys don't do this gig, we'll just book 'N Sync.' "

In response to accusations from Mr. Pearlman and others that the band lost its drive, he said: "We tried to find a balance. We got tired of being taken advantage of. That's the bottom line."

So the band took its contracts to outside lawyers, who discovered that Mr. Pearlman had legally made himself a sixth member of the group, meaning that he was able to keep 17 percent of the money he distributed to the band after taking his 15 percent commission, according to court documents.

The Backstreet Boys filed suit in 1998, claiming that they had only received $300,000 since 1993 while Mr. Pearlman and their managers had reaped $10 million. In an interview, Mr. Pearlman defended his business practices, saying that he had spent $3 million on the Backstreet Boys before the band had earned a dime. He added that it is common practice in the music business for a company to earn its investment back before paying the artist.

As the battle intensified, the band found itself unable to proceed with a planned tour, Mr. Richardson said. "They locked our production equipment and stage and everything up and said, `You guys are supposed to do a tour, but you're not getting your equipment,' " he recalled.

The band reached a settlement that allowed Mr. Pearlman to retain, among other things, one-sixth of the band's profits.

It was around this time in 1999 that the Backstreet Boys, who were being managed by Mr. McLean's mother, held a meeting with executives of a two-year-old management company called the Firm, which represented bands like Korn and Limp Bizkit. Two executives from the Firm, Jeff Kwatinetz and Michael Green, showed up backstage at a concert in Orlando, Fla., and, after being kept waiting for an hour outside the group's dressing room, burst in and made their pitch.

The band members were impressed by these brash young executives who promised them greater control of their careers, a larger share of revenues and innovative promotion and merchandising. With the help of the Firm, the Backstreet Boys sued Mr. Pearlman several more times, until he renegotiated the settlement on terms more favorable to the band. Executives of the Firm said that the Backstreet Boys had bought out Mr. Pearlman's stake in the band, but Mr. Pearlman denied this.

The Backstreet Boys retained the Firm's own lawyer to represent them; later, they transferred legal duties to John Branca, who manages most of the Firm's top clients.

Here, commercially and personally, began a glory period for the Backstreet Boys. In 1999 their CD "Millennium" sold 1.1 million copies in its first week — more than any album before it. "Millennium" became the best-selling release of the year (more than nine million copies), while the accompanying tour raked in $37 million. Merchandise sales brought in millions more.

THE windfall was good for those around the group, too. It thrust Jive Records into the highly lucrative teen-pop market. (Impressed by its teen-pop sales, BMG, which already owned 20 percent of Jive's parent company, recently purchased the remainder for $3 billion, the most ever paid for an independent record company.)

In the meantime, according to executives who worked with the band, the Firm negotiated tens of millions of dollars in advance payments for recordings and performances from Jive and the concert promoter Clear Channel. This helped the management company finance its growth. It soon became a powerhouse in film and music, with a current staff of about 240 people. It acquired the sneaker company Pony, a chain of stuffed-animal stores and the merchandising rights to the cartoon aardvark Arthur. It also started buying other management companies, most notably Michael Ovitz's Artists Management Group earlier this year.

David Baram, the president and chief operating officer of the Firm, denied accusations — from rival managers, and from Aaron Ray, a former partner in the Firm — that the Firm was built off the backs of bands like the Backstreet Boys. "Our success is totally a function of never making short-term decisions for our artists," he said. "We've been fortunate enough to grow our business where we're not dependent on any particular commission check."

One thing at which the Firm excels is battling record labels on behalf of its acts. The executives who worked with the band say the Backstreet Boys had a heavily one-sided deal with Jive, which owned most of the band's merchandising, film and other rights. In addition, on Jive's books the Backstreet Boys still owed the label money, which meant that despite being the most successful band of their time, they weren't getting a penny in royalties from their record label, according to the band's past and current managers.

In a contract renegotiation, the Firm managed to loosen some of the label's restrictions on the band and secure a $65 million advance, a figure that many in the Backstreet Boys camp confirmed. (Though the band only received 30 percent of the money up front; the rest comes with album deliveries and sales bonuses.) Executives who worked with the band said that the Firm had made use of the Backstreet Boys' irritation at Jive's latest coup: the signing of 'N Sync, which had also sued Mr. Pearlman and found new representation.

The band's subsequent album, "Black and Blue," signaled the end of its glory days. "That record — and I'm not complaining or blaming anyone because it sold a lot of copies — for me personally, I wasn't happy with it," Mr. Richardson said. "I felt like we should have experimented more. But there was all this pressure and fear from our label and our management company."

Executives of the Firm said that the rest of the band had been happy with the album and voted to release it, especially since any further changes would have meant missing its Christmas-season release date. To promote the album, the Firm worked closely with Wal-Mart, MTV and Burger King, which paid several million dollars to sponsor the band. (According to executives close to the band, Jive Records, which was not included in the Burger King deal, made a separate deal for 'N Sync and Britney Spears with McDonald's, whose campaign beat Burger King's by about a week.)

In the end, "Black and Blue" actually beat the first-week sales of "Millennium," selling 1.6 million. (It went on to sell a total of 5.3 million.) But what should have been a triumph was hardly seen that way by the industry. That was because 'N Sync's new album, "No Strings Attached," had sold 2.4 million copies in its first week. The 'N Sync album followed a ubiquitous No. 1 single, "Bye Bye Bye"; the Backstreet Boys had not released such a successful single early.

"We made a lot of right decisions when we put the Millennium tour together," Mr. Richardson said, "but because of that success, people in our organization got comfortable and weren't being so cautious anymore."

Other factors were undermining the band. Executives working with the Backstreet Boys said band members had stopped getting along after the release of "Black and Blue." Executives with the Firm were also frustrated with the band for not working as hard as 'N Sync seemed to be, especially in making public appearances. Furthermore, Mr. Littrell's wife, Leighanne Wallace, who was critical of the Firm, began exerting a major influence over his decisions, according to executives close to the band, incurring resentment both within and outside the group.

The relationship with the Firm grew worse when the band began to work on its tour to support "Black and Blue." Clear Channel offered to buy the entire tour outright for $100 million, a figure the group's managers jumped at.

As it turned out, Mr. Richardson said, "it was a big mistake."

"When people were throwing that big number on the table, it was tempting, but we asked questions, we asked about ticket sales, we asked about the control aspect, and we were told not to worry," he said, referring to his management company. "And it hurt us."

To make money, he said, Clear Channel had to set extremely high ticket prices, shutting out many Backstreet Boys fans. A spokesman for Clear Channel said that the steep ticket prices had actually been pushed by the Firm, and that Clear Channel had fought for lower prices, telling the management company that the ticket costs were "obscenely high" and "detrimental to the band's career." (Mr. Baram of the Firm said that the final decision had rested with Clear Channel, and that ticket prices had been set that were comparable with tours by similar acts.)

Tickets did not go on sale until January 2001, months later than originally planned. The economy dipped and pop music sales began to sag, along with the entire boy-band phenomenon the Backstreet Boys had spearheaded. Ticket sales were less than expected, and the venues were scaled back from stadiums to arenas. Mr. Baram said that The Firm had made this decision, sacrificing millions of dollars in commissions, because playing to half-filled stadiums would have been greatly damaging to the band's image and career.

"When the tour went down to arenas, it was renegotiated so that it wasn't $100 million," Mr. Richardson said. "When 9/11 happened, and when A. J. went into rehab and we took two months off, that's another renegotiation. So that $100 million, that's not $100 million."

Again complicating the situation was 'N Sync, which put its tour tickets on sale a week before the Backstreet Boys did, a move the band interpreted as intentional on the part of 'N Sync's business associates.

In the end, out of what was supposed to be a deal worth $100 million, band members received $6 million to $7 million each, less than half of what they were expecting, according to executives involved in the deal.

From the band's perspective, the money wasn't the problem. The bigger problem was that such large deals, while lucrative for the band and the business people around it, were harmful to its members' long-term careers and the needs of its fans. And the worst was still to come. As 2001 came to a close, Jive Records had not released a blockbuster teen album. So it decided to rush a Christmas release of a Backstreet Boys greatest-hits CD.

The band members say they resisted, feeling that it was too early in their careers for such an album and that it would ruin their longheld plan to mark the group's 10th anniversary in 2003 with a greatest-hits release.

"Our management company was supportive and we weren't," Mr. Richardson said of the album. "And the record company was going to put it out anyway. So it's either promote, or fight with your label, don't promote it and risk it doing very badly. But ultimately, who is it that's going to get hurt? It's not going to hurt our label. It's going to hurt us."

Despite threats from the band, Jive Records put out the album after long debate. Mr. Weiss of Jive defended the label's decision, saying that the greatest-hits record sold nearly six million copies worldwide, yielded an international top 10 hit ("Drowning") and served to keep the group's profile up.

Mr. Weiss did not respond directly to many of the band's grievances. "If you look at the annals of the entire record industry," he said, "any expert would defy anybody to say that Jive didn't do the best job in the history of this kind of music."

However, Mr. Richardson and his current management said the band planned to commission an audit of its financial relationship with Jive. The band, he said, was still "unrecouped" — industry parlance for when a record company says that a band hasn't earned back the money the company has spent on it. With multi-million dollar advances against future sales (a move that Firm executives said made sense, considering how difficult it is, even for a band this big, to get royalties from a record label), there may be good reason the band wouldn't be receiving royalties yet.

"I'd rather not get into it," Mr. Weiss said about the royalty situation. "The Backstreet Boys do not have anything to worry about financially. These guys are set for life based on the money they've received from this label."

Last March, the Backstreet Boys had a group meeting because they felt that they weren't getting the personal attention they needed and had been used to before the Firm expanded. "They've built a huge, very powerful company, and they're good people," Mr. Richardson said. "But this past year, some bad decisions were made and some bad advice given."

With Mr. McLean and Mr. Littrell strongly advocating leaving the Firm, the band walked into the offices of the Firm to deliver an ultimatum. Much to the band members' surprise, the Firm did not put up much resistance to their leaving. The bigger shock came when the other group members found out that Nick Carter, arguably the most popular of them, had chosen to remain. The Firm told the group that it would manage his solo career, and the band stormed out.

Afterward, in an unexpected move, the group signed on to be managed simultaneously by two industry veterans, Howard Kaufman and Irving Azoff.

In the meantime, Jive is taking a great interest in Mr. Carter as well as in Justin Timberlake of 'N Sync, an apparent shifting of focus from groups, which are more costly and difficult to manage, to solo acts. With no blockbuster pop releases this year, the label, according to industry observers, has little choice but to bank on releasing a Nick Carter solo album by the end of the year. Mr. Weiss of Jive said that he considered the solo album, due to be released in October, ahead of the next Backstreet Boys album, "part and parcel of the reinvention of the Backstreet Boys as a whole."

Many industry observers, however, feel that these moves are detrimental — if not lethal — to the bands. "Nick wants to go solo, so does Justin," Mr. Pearlman said. "And if I was more a part of their careers, I'd ask: `Does this help the group? How does this help the other guys?' "

Currently, Mr. Carter is choosing among 35 songs he has recorded for his album. The rest of the band is recording demos without him, using a number of producers, including Babyface, Jermaine Dupri and Glen Ballard. The more rock-oriented material made with Mr. Ballard, who produced Alanis Morissette's albums, shows an evolving, maturing direction.

Mr. Azoff said that he had signed on to help the band members with their commitment to a long-term career. Whether that will happen remains to be seen, but Mr. Azoff is unconcerned with the current debate over tensions between the band and Mr. Carter. "Whether Nick is in the band or not, it doesn't frighten me," Mr. Azoff said. "The Eagles changed members three times, and it didn't hurt their career."

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