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Date: Jan 07, 2000
Source: 20/20 Downtown (ABC TV)
Submitted By: Mistyj
A Revealing Look at Two Top-Selling Boy Bands
By Christopher Cuomo
ABCNEWS.com
[Please note that the episode of 20/20 mentioned here aired on Jan 6]
Jan. 6 - My very first story for 20/20 takes us behind the success of the
two top-selling boy bands in pop music history: The Backstreet Boys and N
Sync.
Every time these young men appear on stage or screen, people might
think they have it all. Our report revealed a different story.
What we found was a tale of young men hungry for success, signing away
a huge portion of the bands; earnings. The man who designed these
agreements, it seems to me, thought he was giving nobodies a chance to be
famous. In exchange for the fame, he became incredibly wealthy, apparently
taking a majority of the profits.
While such a move could be dismissed as the ugly reality of show
business you have to give to get what was more difficult to swallow
was how the boys came to believe that he was more of a surrogate father
instead of a shrewd businessman. In fact, they called Pearlman Big Poppa.
It appears that the combination of his atmosphere of familial trust and
their relative lack of resources led the boys to sign contracts that were
both complicated and very favorable to Pearlman
Tonights story takes us from how Pearlman met and made stars of 10
young men to how he lost them.
Chat Transcript
Pearlman takes teenage boys who might otherwise live unremarkable lives and turns them into rich and famous pop music stars. The trouble is, Pearlmans creations have been leaving him recently. The Backstreet Boys and N Sync were launched by Pearlman. The bands now say that Pearlman takes far more than his fair share of their cash.
Are the boys biting the hand that feeds them, or is the mentor taking advantage of his naive bands?
Chris Cuomo joined us in an online chat to talk about Pearlman and his boy bands.
-----
Moderator at 7:50pm ET
Welcome Chris Cuomo. Let's begin.
Vicki from proxy.aol.com at 7:50pm ET
In your opinion, from what you know, what do you think is really going on...was 'NSync in the wrong or was it Lou Pearlman?
Chris Cuomo at 7:53pm ET
As journalists, our motto is "we report, you decide". But just so you don't think I'm ducking the question, it would seem to me after our investigation, that the contracts the boys signed with Mr. Pearlman were unfair even in the record industry. What made matters worse was that it appears that the boys signed the contract under the misguided belief that Mr. Pearlman was going to look out for their best interests and obviously that was not the case.
Glenn from tellink.net at 7:53pm ET
Well, define "his fair share"? And how does their contract read... that is, what percentage did they agree he should take?
Without that information, this is no more than idle gossip, or at worst slander.
Chris Cuomo at 7:58pm ET
It is obviously not our intent as a news agency to slander anyone. That said, the phrasing of "fair share" was done purposefully in light of the complex nature of the contracts. Basically, the contracts as through our own investigation worked as follows: Mr. Pearlman as a manager would be entitled to a commission (industry standards would say of as much as 25% of all money earned) and because of the amount of time and money invested in discovering and developing the boys, perhaps he would have been entitled to a larger than usual commission. Nevertheless, what Mr. Pearlman took seems to be more than even the record business--known for being a very greedy business--would think fair. In terms of numbers, that translated into (again in shorthand) his 25% commission, plus splitting half of all profits after commission with the band, plus including himself as a member of the band "for purposes of cash distributions". That is what we took the boys to mean when they said "more than his fair share".
Vicki from proxy.aol.com at 7:58pm ET
This whole lawsuit with 'NSync vs. Transcon and Lou Pearlman has gotten me confused, have they reached a settlement or is it all still going on?
Chris Cuomo at 7:59pm ET
They have reached a settlement as of last week, the terms of which have not been disclosed.
Bryn Mitchell from proxy.aol.com at 8:00pm ET
My question is concerning the 'NSync lawsuit, Pearlman was clearing making millions off the band yet was not giving them their fair share, so when they retaliated, he sued them for an unreasonable amount and made the fans the ones to suffer. What would Pearlman possibly gain by bankrupting 'NSync or making them stay with a label they did not want to?
Chris Cuomo at 8:02pm ET
Without taking a position as to the merits of the lawsuit, it is our understanding that Mr. Pearlman sued because he believed the boys had breached their contract. And in a business where power is derived from contracts, if they were ignored, Pearlman would be out of business. That said, keep in mind Pearlman and 'NSync settled as Pearlman did with The Backstreet Boys which gives an indication that Mr. Pearlman was not just looking to sue, but to resolve the situation.
Bruce Durbin at 8:03pm ET
This sounds a bit like the recent TLC situation. Also, we look back on the Motown era and think: Wow, these artists really got screwed.
Chris Cuomo at 8:05pm ET
It is an old story in the record business that talent is often treated unfairly by management. That said, it is also an old record business story that when a band hits it big, they want to renegotiate. So no matter if 'NSync or The Backstreet Boys or Lou Pearlman is to blame, it is still an old story. What makes this different, perhaps, is that Lou Pearlman had a more sophisticated business setup (i.e., more ways to make money off the band) than is typical of the record business.
Vicki from proxy.aol.com at 8:05pm ET
Was the reason the BSB left the same as the reason 'NSync left...if not what is the diffrence...besides Lou Pearlman making LOTS of money off them both? Thanks!
Chris Cuomo at 8:06pm ET
It is our understanding, and we explain in the story, that the bands did have similar sets of issues/problems with Lou Pearlman's contracts. Keep in mind, just because Lou Pearlman is making money doesn't make him a bad person. He is in the record "business".
Vicki from proxy.aol.com at 8:06pm ET
On 20\20 tonight will there be comments from either Mr. Pearlman and 'NSync?
Chris Cuomo at 8:08pm ET
We were very fortunate to sit down with Mr. Pearlman and have him address the recent controversy surrounding The Backstreet Boys and 'NSync. On the bands' side, we have detailed answers given by respective counsel. What you will hear will be surprising.
Big Fan *NYSNC at 8:09pm ET
What has 'NSync decided to do with their record company? Will they change companies? Are they being sued? When will they start touring again? When will their new CD come out, and which record company will it be under?
Chris Cuomo at 8:10pm ET
Those are all good questions. The answers to many of them have not been given as of yet. That said, it is our understanding that as part of their settlement with Lou Pearlman, 'NSync will be able to remain with their new label (but that has not been confirmed).
Guvie from proxy.aol.com at 8:10pm ET
Welcome to 20/20!
Why are so called 'boys groups' so popular lately?
Chris Cuomo at 8:12pm ET
Thank you. That is a question I have been asking myself for the last two months. Boy bands are not a new thing. The Backstreet Boys and 'NSync are the latest and greatest in a tradition of music making that goes back to the Monkees. The only thing I can come up with is that young women find few things as delicious as handsome young men who can sing and dance.
Roswe11@yahoo.com from poco1.bc.home.com at 8:12pm ET
Does BMG still hold any rights or give any type of royalties with 'NSync or are they completely severed from BMG?
Chris Cuomo at 8:13pm ET
That issue should have been resolved in the settlement, the terms of which have not been disclosed.
Anderson from jxn.netdoor.com at 8:13pm ET
Besides 'NSync and BSB, Pearlman is continuously developing other groups, both male and female. Innosense, his soon to be hottest female group, is performing with 'NSync as their opening act. How does this relationship hinder or help Pearlman?
Chris Cuomo at 8:15pm ET
Great question. You will have my job soon enough. I have heard that the recent troubles have attributed to Mr. Pearlman having difficulty signing his newest band, which is the subject of an ABC (Entertainment not News) Miniseries. One would hope that the other bands would make sure that they have had competent counsel, look at their contracts (if they have not already) to make sure that they are comfortable with what they contain.
Lisa Vinci from snet.net at 8:16pm ET
Are you planning to talk to 'NSync also? It seems unfair that you would only interview Lou Pearlman. He obviously sees himself as in the right. He will make it seem like he was right, and 'NSync was wrong. You should get a view from both sides.
Chris Cuomo at 8:18pm ET
Take it easy! Take it easy! Just because I sat down with Lou Pearlman does not mean we did not pursue the same opportunity with 'NSync as well as The Backstreet Boys. Because of the nature of the issues involved, they opted to have us speak to their lawyers--who were more than willing to present the boys' side of things with great emotion and enthusiasm. Don't worry, the boys have their say in this piece as you will find out when you watch it.
Guvie from proxy.aol.com at 8:18pm ET
Chris,
Are there not any agencies to prevent these kind of entertainment mishaps from happening, especially to young and naive performers and their families?
Chris Cuomo at 8:21pm ET
That is a very good observation, one that I considered when doing the piece. The bottom line is: business is business. And while there are safeguards for minors who enter into contracts (i.e., court ratification) it is up to the boys and their families to make sure they have lawyers. Everyone hates lawyers until they have a problem, then they go running for one. I do not mean to seem harsh, but these boys had families who should have made sure their contracts were reviewed by someone other than Pearlman's team. Hopefully, this story will make other young artists more aware of the potential for trouble. The irony is that artists hire managers like Lou Pearlman to avoid these types of contract problems. A manager is supposed to look out for their artists, not exploit them.
Steve Eisenpreis from new-york-08-09rs.ny.dial-access.att.net at 8:22pm ET
Welcome to ABCNEWS! When reading about Pearlman and his proteges, I think back to Brian Epstein and the Beatles, and how they loved him despite the occasional disagreement. They always thought of Brian more as a father than just a manager. I believe "dictator" would be a better word to describe Pearlman. Wouldn't you agree?
Chris Cuomo at 8:22pm ET
I think that's a funny analogy. Whether it is accurate or not, I'm not sure, but your point is a good one.
Vicki from proxy.aol.com at 8:23pm ET
Did the fact that 2 of guys were under the age of 18 when the contract was signed effect anything?
Chris Cuomo at 8:24pm ET
When a person is a minor, their contracts must be ratified by a court. Allegedly, Mr. Pearlman went through the necessary procedures to have the contracts of any minors ratified. However, that does not mean those same contracts were reviewed by lawyers trying to make sure the boys were getting the best deal possible.
Russ from boehmtvl.com at 8:24pm ET
Forgive me if I have come in late. I hope it isn't redundant to ask, Who is "creating" the music that these bands perform? Do the groups themselves have any creative input in the process?
Chris Cuomo at 8:26pm ET
Yes, they do. However, it is our understanding that these boys, more than most "organic" bands, have had their music composed for them. One of the criticisms of Pearlman's boy bands, is that they do not deserve the same rights as other artists because Pearlman "made" them (i.e., had songs written, dance steps taught, voices trained).
Anderson from jxn.netdoor.com at 8:28pm ET
Since controversy has always stimulated interest, whether positively or negatively, it seems to be to Pearlman's advantage to be as positive as possible in the public's eye, although in private he may be gritting his teeth. Saying this, how exactly is Pearlman's persona coming across to the media?
Chris Cuomo at 8:29pm ET
I would suggest that Pearlman, more than anything else, wants the boys to be successful, because if they don't sell records, he doesn't make money. His expressing affection or respect for the boys is, if not genuine, certainly in his best interest. In my personal opinion, I believe Lou Pearlman to be a savvy businessman, not simply a bad man.
Russ from boehmtvl.com at 8:30pm ET
You use the term exploit. Who would have been liable for a lack of success of this group? Would the members themselves have lost anything other then time?
Chris Cuomo at 8:31pm ET
Great point. It is not my opinion that anyone has been exploited. The point you make goes to the heart of the tension between artists and management because if the group fails, the Lou Pearlmans take the hit. If the group makes it, the Pearlmans wind up only getting a piece. For this reason, managers throughout history have argued that whatever an artist gets before they become stars is fair.
Stevoe from Sprynet.com from ica-art.com at 8:32pm ET
Is it not true that the participants willingly entered into the arrangements? Most of them would likely not stand a chance of success on their own.
Chris Cuomo at 8:34pm ET
That is one opinion. However, it is not black and white whether or not these boys entered into the contracts on their own, or if they were conned into believing that they did not need to have them reviewed because they were signing a great deal. Again, a criticism of Pearlman's boy bands, is that before they were with him, they were nobodys and their success was dependent on him.
Vicki from proxy.aol.com at 8:35pm ET
Johnny Wright, 'NSync's current manager was in affiliation with Lou Pearlman, 'NSync now is on Jive but Johnny Wright is still with them can you explain that?
Chris Cuomo at 8:37pm ET
I do not have all the answers. I am a reporter, not an 'NSync historian. However, not only is Johnny Wright still with the band, but his estranged wife (who used to co-manage The Backstreet Boys with Johnny) is now suing Lou Pearlman. Our reporting revealed that Johnny does not embrace Pearlman's position.
Moderator at 8:38pm ET
Are some bands/groups reluctant to sue for fear they will be tied up in the courts for years?
Chris Cuomo at 8:41pm ET
I think in the record business, more than other businesses, everybody likes to stay friends. Lawsuits are more the exceptions, not the rule. That said, perhaps the only thing closer to the heart of an artist than their music is their money and they will sue to maximize what they make.
Guvie from proxy.aol.com at 8:41pm ET
Chris,
Much luck to you as a new correspondent for 20/20!!!
Lisa Vinci from snet.net at 8:42pm ET
After interviewing Mr. Pearlman, what is your personal opinion of him?
Chris Cuomo at 8:43pm ET
My personal opinion of him is that, because he comes from Queens, New York, he can't be all bad (I'm from Queens). More than anything else, I think Lou Pearlman's relative inexperience doing deals in the record business may have led him to be more aggressive than he should have with the boys. As cliche as it sounds, time will tell whether Lou Pearlman will do the right thing. He told me, if a court told him his contracts were not fair, he would change them.
Moderator at 8:45pm ET
In doing this report Chris, was there anything you learned that surprised you?
Chris Cuomo at 8:46pm ET
Everything I learned surprised me. I was not aware how much Pearlman's team had done in developing the boys. I was not aware about this interesting story behind where the boys come from and I was not aware of how the contracts had worked. The answers to all of these surprises are in the story.
Moderator at 8:47pm ET
Will there be a follow up to this story?
Chris Cuomo at 8:47pm ET
Whenever ABC News does a story, there is an intention to follow the issue to its conclusion. So if there is more that happens that is worthy of mention, we will report on it.
Lisa Vinci at 8:48pm ET
Maybe you can answer this question for me. I'm still a little confused as to exactly what Pearlman's relationship with 'NSync was. Every time I read an article, it refers to him as their ex-manager. However, isn't Johnny Wright their manager? I know that when 'NSync came to him as a group (already formed), he helped them get signed to a record deal and promoted them. What does this make him?
Chris Cuomo at 8:49pm ET
Good question. Johnny Wright and Lou Pearlman co-managed the boys. Pearlman's involvement went far beyond managing, he was the primary investor in developing the boys (i.e., paying for housing, tutors, coaches, etc.) as well as heading up several companies that catered to the needs of the boys.
Tascha from cvx15-bradley.dialup.earthlink.net at 8:49pm ET
Are you any relationship to Governor Mario and if so, did he open the door for you in obtaining this job?
Chris Cuomo at 8:51pm ET
If there is one thing that the media does not like, it's a reporter with a known bias. That said, being my father's son was not the biggest help in becoming a reporter. However, being his son gave me a level of respect, as a result of how people view him, that I believe has helped me and will always help me in whatever I do.
Russ from boehmtvl.com at 8:51pm ET
In your investigation did you find any precedent for this type of action involving any previous "Corporate Groups" to speak of? If so who?
Chris Cuomo at 8:52pm ET
While that was not the purpose of our investigation, it seems that Mr. Pearlman's contracts and way of generating revenue from a band sets a new standard in the record business.
Guvie from proxy.aol.com at 8:53pm ET
Chris,
Are there any standards or set fees that agents or managers can charge a client?
Chris Cuomo at 8:54pm ET
There are standards in the industry for fees and commissions. Agents typically get 10%, managers can get between 10% and 25% (depending on how much they do), lawyers typically get 5%, but everything is subject to negotiation. The entertainment business is business in one of its rawest forms.
Joe Hendricks Lufkin, TX. from txucom.net at 8:55pm ET
Recording artists have always been victimized by slick, business savvy managers, producers and corporate executives. Even Elvis Presley was reportedly ripped off by his long time manager Colonel Parker.
It is a sad commentary on the music industry, but it is and always will be a reality.
Chris Cuomo at 8:56pm ET
I agree, and we said that earlier. Which is why, perhaps, this situation between Pearlman and the boys, is not as black and white as many fans would believe.
Jon Buss from smartt.com at 8:58pm ET
Who is to judge what is "a fair share"? If there is a violation of contracts, then it is a legal matter. Will 20/20 reveal what these young and largely inexperienced kids were thinking at the time of signing a contract with Mr. Pearlman?
Chris Cuomo at 9:01pm ET
This issue is covered somewhat in the story, but it was a little more in depth than we were able to go. That said, it is the primary contention from the boys lawyers that the boys were duped by Lou Pearlman, and therefore signed contracts that they otherwise would not have. The easy answer, that these boys signed the contracts, therefore they have to live with them, would not apply if it could be proven that they signed them while under undue influence of Lou Pearlman.
Moderator at 9:01pm ET
Any final thoughts Chris?
Chris Cuomo at 9:04pm ET
Although a lot has been written about this controversy, I believe that our story is one of the more complete soup-to-nuts looks at the interesting and perhaps tragic story of Lou Pearlman and his musical sons. Of course I want to thank the people who were good enough to come to this chat, and I want them to email me after the story at: chris.cuomo@abc.com
to discuss this story and to help me as we move on to other stories.
Moderator at 9:05pm ET
Thank you Chris Cuomo for joining us. And watch Chris' piece on boy bands airing tonight on 20/20 Downtown 10 p.m. ET
.
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