It all started in 1992. Lou Pearlman, an aviation entrepreneur based in Florida (and cousin of Art Garfunkel), influenced by the 1980's group New Kids On The Block, decided to form his own boyband. He held auditions in 1992 and 1993. The first member recruited was Nick (the youngest member, he was 12 at the time). Howie Dorough, Alexander James McLean (AJ), and Kevin Richardson (the oldest, he was 20 at the time). Kevin phoned his cousin Brian and told him about the try outs and so Brian Littrell completed the group.
Soon after the Backstreet Boys were signed to Jive Records. When the Backstreet's Boys first single, "We've Got It Going On," was released to radios in the USA it sputtered on the countdown. They realized that they were out of step with the kind of music that was popular in the USA. They decided to release their first cd overseas. In 1995 they released their first cd, since the cd is red, me and a few other backstreet fans call it the "Red Version." They were kept buzy over seas until pop groups, such as the Spice Girls, got popular in the US. In the year 1997 the Backstreet Boys were back. They released an Americanized version of the Backstreet Boys' debut, or as I called it, the "Blue Version."
A conflict soon grew within the members of the group and thier record compony and management. The Backstreet Boys wanted time off but their management compony wanted to keep the momentum going. Matters got worse when Brian had to go through sergery because of a leaky heart valve. The Backstreet Boys were asking to stop the tour for the sergery. Management didn't want to on the other hand. Lou Pearlman stated in an article at Backstreet.net News: "The Lost Boys: How Pop Sensations Come Undone" that he was behind stopping the tour and proceeding with the opperation.
That summer Backstreet Boys decliened an offer to do a Disney Concert. Lou Pearlman then braught in the Backstreet Boys' soon-to-be biggest rival on the music sceen, *NSYNC. That was the first major appearence of *NSYNC. However this caused problems with the Backstreet Boys and their management. The Backstreet Boys thought it was a conflict of interest for them to handle such mirror-image acts. *NSYNC worked with the same writters and producers and Backstreet Boys did. And when it came to performances, if Backstreet Boys didn't want do it then *NSYNC would.
The boys were tired of being taken advantage of so they 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 AJ 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 two 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.
That 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.
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 *NSYNC, 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. Kevin Richardson wasn't pleased with the album, however the rest of the boys were and voted to release it. 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.
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 *NSYNC seemed to be, especially in making public appearances. Furthermore, Brian 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. Kevin Richardson thought it was a big mistake.
To make money 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, like Clear Channel promised to give them to support their tour with. When AJ went into rehab and 9/11 happened there was another renegotiation. Again complicating the situation was *NSYNC, 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 *NSYNC'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.
The Backstreet Boys didn't support the album, however, their management did and siad that it was going to be released anyways. Since they said they were going to release it anyways the Backstreet Boys were forced to promote the album, or else is would have done very poorly.
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.
Kevin 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.
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. With A.J. McLean and Brian 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 Nick Carter as well as in Justin Timberlake of *NSYNC, 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, they did this to start the reinvintion of the Backstreet Boys as a whole.
Nick Carter is set to release his solo debut cd on Oct 29th, 2002. At this time 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 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.