The Lost Boys: How a Pop Sensation Came Undone
Kathie Freeman
August 18, 2002
The Lost Boys: How a Pop Sensation Came Undone
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."