HITS Daily Double
"Everybody asks me when this boy band thing’s going to end. I know exactly when. When God stops making little girls."
——Lou Pearlman


An exclusive HITS dialogue with Trans Continental’s Lou Pearlman
Whether you call him a svengali or Satan, one thing you have to say about Lou Pearlman—in business, he’s pretty darn savvy. Born in Queens, the son of a dry-cleaner, Pearlman showed his skill as an entrepreneur early on, buying up his neighborhood newspaper routes as a kid before parlaying his love of flight into a helicopter commuter service, then an aviation leasing company with a fleet of planes, jets and blimps. Always a music fan—he is Art Garfunkel’s cousin and was in a variety of bands as a teenager—Lou turned his love into a full-fledged business, forming and then breaking such acts as Backstreet Boys and NSYNC.

These days, Pearlman is as busy as ever, promoting his newly published Bands, Brands & Billions: My Top 10 Rules for Making Any Business Go Platinum (McGraw Hill), in which he gives the kind of practical advice that applies to any undertaking, not just the music industry. He talks about creating NSYNC as "Pepsi" to the Backstreet Boys’ "Coke," and details how to recognize and exploit gaps in the marketplace. After receiving the World Business Award 2002 from Mikhail Gorbachev in Vienna earlier this month (Richard Branson’s was last year’s winner), Pearlman’s Orlando-based Trans Continental Entertainment family will do more than $100 million in 2002. The company now includes a state-of-the-art recording studio, a record company, talent management and marketing divisions, a music publishing arm and a talent roster that includes new acts O-Town, Natural and C-Note as well as veterans like Jose Feliciano, KC and the Sunshine Band and Kenny Rogers. In addition, he still owns the aviation business and two NYPD restaurants (New York Pizza & Deli) in the Orlando area. Recovering from a recent kidney infection, Pearlman is still optimistic about the record business, despite the apparent end of the teenpop boom and the non-stop haranguing of HITS’ own boy band idle, Roy "NSUNK" Trakin.

Are you still bullish on the record business?
I’m bullish on the business, though not necessarily on the act of selling records. But I am bullish on the fact that we’re doing quite well with our artists. Our new group, Natural, is putting the "band" back in boy band. They’re actually breaking big over in Europe. Their album is #2 in Germany.

So you’re going back to your original strategy of breaking groups overseas first.
If it ain’t broke, don’t fix it.

Isn’t teenpop on its way out at this point?
Everybody asks me when this boy band thing’s going to end. I know exactly when. When God stops making little girls. The music style will change, from pop to R&B to hip-hop to pop-rock. What will never change is teenage girls loving good-looking guys.

The one thing you’ve never been able to achieve is giving these acts longevity, like the Beatles ushered teenyboppers through maturity. How can you get the audience to grow with you?
We figure a boy band is going to have about a five-year run. After that, it’s all about, can they sell records? Do they have great music? Do the fans want to grow with them? Look at the Rolling Stones or Pink Floyd. The bottom line is, if they want to continue, they will. If the music’s good, people will grow with you. If it’s not, you’re going to die out. Unfortunately, these boy bands die out because they don’t have good songs. Now, look at NSYNC and Backstreet; the youngest member from each group’s going solo. God bless them and let’s see what happens. Hopefully, they do well and keep going.

You still have a financial interest in both bands.
Of course. We’re still making our money.

Do you second-guess any of the career moves either group has made?
No, I’m asked my opinion. I just saw Chris Kirkpatrick yesterday. The bottom line is, I’m cordial with everybody. The hardest part is breaking the group, which I do. The easiest part is running it.

You keep reiterating in this book, once a project is off and running, you sort of lose interest. You’d rather delegate responsibility and then go off and develop something new.
I’m continually making my money. But it’s not only about the money. The challenge is in breaking new groups. For example, Natural play their own instruments. I love watching them break in Asia, the Philippines, Singapore…

You’re into the next generation of teenpop, like Avril Lavigne, for example.
That’s right. Natural have credibility with the disc jockeys and program directors because they’re a real band. We released Natural’s single, "Put Your Arms Around Me," last year ourselves, and it went gold. We distributed it through Madacy and Handleman. We have a deal on them now with BMG International, who are doing a wonderful job.

When you started Trans Continental, you wanted to keep as much in-house as possible for control. Does that extend now to having your own record label?
You have to be selective. Not every label is going to take you Top 10. Not every label will make your act a priority. That’s why we’ve been working with BMG. We have that experience with Backstreet and NSYNC, which were originally broken by BMG Germany. That’s where they got their first gold records.

It must have amused you to see the success of American Idol after your own Making the Band.
Absolutely. I know Simon Fuller and Simon Cowell. They followed our concept with Making the Band, bringing in the audience. I think Simon Cowell gives it an edge, which spices it up a bit. I think you need that.

How did you feel when Clive Calder negotiated his $3 billion payout with BMG?
I like Clive Calder. He was there at the beginning. When I put $3 million into Backstreet, he came in and helped me out on the record side. His biggest act at the time was R. Kelly. It was great to see all that happening. With Backstreet, NSYNC and Innosense…Britney [Spears] would have been the youngest member of the band, but she decided to go solo. Because he had the machine, and invested all that money over the years to develop that machine, with the help of Mutt Lange, Barry Weiss and the whole team over there, they certainly deserve what they got.

Do you have any ideas as to how to cure the music industry’s current doldrums?
My belief is the record industry will change. You can’t just sell a CD. You have to sell an album via a book with a nice presentation of the artist. That nicely bound book is what you’re buying. And then you get the album as a freebie.

So the disc itself is a loss-leader to sell other merchandise which accrues around the brand name.
You have to brand your artists. The record industry has to wake up and smell the coffee. That’s the only way you’re going to sell to the young market. The older fans aren’t into downloading or CD-burning; they’re into buying what they like. But for the young masses that can download every single or album they want, you have to offer something more.

Are these overall deals, like the one EMI just did with Robbie Williams, where they’re partners in touring, merchandising, etc., the future of the record industry?
That’s the way it has to go. The days of the record companies selling millions of albums and people lining up to buy them are over. Not when there are downloads available in advance. You have to give them added value, like in the form of a book that includes all the background and detail. Or an enhanced CD, or special access to a website. We have our own website for aspiring talent, Tctalent.com. Models, actors, musicians have a chance to make themselves known. One day, the record companies will turn around and say, "We should make a deal with Lou Pearlman. He’s bringing us the talent." They’re too busy worrying about their jobs to be concerned with where the talent is coming from. I don’t just spot and develop talent, I create it. And the record companies haven’t realized that.

Isn’t there something a little weird in building an assembly line with human beings?
We’ve sold 170 million albums to date. That’s a nice tinkle to the cash register. What we do is cultivate the talent. We don’t inject into their heads or throats the ability to sing and dance. God does that. What we do is take that talent and cultivate it.

What you’ve shown is success in this business isn’t just about talent, but a lot of perspiration, discipline, routine and hard work, too.
Absolutely. Making the Band was a behind-the-scenes look at what you have to go through. That’s something you don’t see on American Idol. We were the first with the reality-based TV shows. We were first with the boot-camp, assembly-line method…whatever you want to call it. We’re here to stay. We’ve proven ourselves. The market’s not going to die. As long as we keep coming back with good music. O-Town’s new single is getting a lot of airplay. We just keep doing what we do best.

Did you actually get laid out of this whole thing?
[Laughs] I better have.

You never had children of your own?
I never did, but I almost got married twice. My girlfriend now is a nurse.

You said she took care of you after your kidney operation.
Right, exactly.

Are you upset with the way you’ve been portrayed in the press?
It’s like I said in the book, if I can make you $10-20 million by putting up $3 million that you won’t have to pay back if we don’t make it, and I make $50 million, what’s the problem with that?

People don’t understand you’re putting up your own money. Record companies are putting up shareholders’ money.
I put my money where my mouth is. If I didn’t, I would be the one suffering. I don’t mind renegotiating, like in sports. There’s a legal way to do that, and we settled everything amicably. I can see any of our artists and they all give me big hugs. And why not? I made them all millionaires. The problem is, in this day and age, people come out of the woodwork, trying to attack whatever success you have. Lawyers try to get in there to get their piece of the action. That’s our society.

What’s your take on the record industry’s future?
The problem with the record industry, plain and simple, is that there are no more new formats for people to re-purchase the back catalogues. They didn’t understand how deep this downloading or CD-burning would affect it. You can’t buy a computer without a CD-burning capacity. Any kind of copyguards are useless. These record companies should be talking to us… We’re the marketing guys. We’re out there in the trenches. They should be asking themselves, what’s the next step? Which is where my extra-added value comes in. You can’t download a book with glossy pages. In the case of Bertelsmann, they have Random House and Doubleday. They have the capability to publish a book and manufacture a record.

Are you happy with BMG?
Yes. But we also do business with Universal, ArtistDirect and other labels as well. We find BMG most responsive to our needs. They’ve gone out there and taken chances, while others haven’t.

What if BMG asked you to come in and run their operations?
I’m not interested in that. Record companies today will be a thing of the past. They’re dinosaurs. They have to come up with an extra edge. It has to do more than just sell records. And that’s what we do. We’re providing that edge. We’re making things happen. That’s what we’re offering to the consumer.

Is it fair to have that kind of control over your acts, managing them and acting as the production company?
We’re not allowed to do both. We’re managing Natural, Jose Feliciano, Nelson, KC and the Sunshine Band, LFO’s Rich Cronin, all of whom we don’t have production deals with.

Are you still in the aviation business?
Sure we are. We have 49 747s, 727s and corporate Gulfstream jets that we still operate today. We’re also in the food business. We have NYPD, New York Pizza & Deli, two of which are here in Orlando. That’s where we held the party at which we presented NSYNC with their first German gold record.