The rise and fall of the Lookout Records empire.

Page 4 of 8

Yet Appelgren has faced plenty of criticism for struggling at all. Sure, labels hit financial snags all the time, but Lookout's early success only made its subsequent failures more perplexing. "The thing is, they had three releases on that label that sold, rain or shine -- the two Green Day albums and the Op Ivy," Ginoli says. "And a lot of labels don't have that. So I'm very disappointed that they did not manage their business better in order to keep going. ... I don't think they were out trying to screw people -- I just think they're lousy businesspeople."

Townley has heard that one a few times too many. "If you're incompetent for that long, it becomes malicious," he says. "Because you don't actually care enough to change, you don't care enough to learn how to be a good employer, you don't care enough to put in a workable royalty system. Hey, this Green Day thing is not a new problem, and there's a huge list of bands who left. 'Hey, that's a problem.' No shit! It's been a problem."

But the ongoing royalty snafu is a symptom of Lookout's financial problems, not the disease. If Appelgren didn't pocket the ludicrous royalty sums Green Day was supposed to be earning, then where the hell did it go? How can a relatively small indie label burn through millions?

The answers, respectively, are "promotion" and "very, very easily."

Whatever Sticks

Jon Ginoli recalls with bemused nostalgia his band's attempt to invade MTV. Pansy Division's 1996 video for "I Really Wanted You" got played exactly once -- on the late-night alt-rock show 120 Minutes. Radiohead hosted. It never aired again. It cost $5,000 to make. "And that was considered a triumph," Ginoli notes.

Band and label alike wanted to position Pansy Division's fourth Lookout album, 1996's Wish I'd Taken Pictures, as the Breakout Record. Alt-rock was huge, out-of-nowhere success stories were still possible via a seemingly flexible radio and MTV market, and Ginoli and his mates had recently benefited from their highest-profile gig ever, opening for Green Day just as Dookie broke.

The economics seemed to make sense. Pansy Division's first record brought in $5,000 before expenses, its second made $10,000, and its third $15,000, all on shoestring recording and marketing budgets. "We never spent money on promotion," Livermore recalls of Lookout's early mentality, "apart from sending out about a hundred records to fanzines and college radio stations, and a couple hundred bucks for ads in Maximum Rocknroll and Flipside fanzines, essentially announcing that the records existed. And that was it." To wit, Op Ivy broke up prior to Energy's 1990 release and thus never even toured to support it, but the seminal album sold like hotcakes anyway. (Under Appelgren's watch, Lookout would mail up to 1,500 promo copies of a new release to press, radio, and other industry flacks.)

With Pansy Division's star rising, unaided, in a similar arc, the next step seemed obvious. Appelgren sums up the post-Dookie Lookout mentality: "We created so much success not doing any of these things -- not doing these marketing and promotional efforts -- what would happen if we did start to do these things?" So Pansy Division shot a video that cost more than the recording budgets for its first three records combined, and Appelgren took out a costly ad in Spin. As an added oddity, the band hooked up with a Canadian minor-league hockey card manufacturer, which produced a limited-edition set of Pansy Division cards, the traditional stick of gum replaced with a condom. Total estimated promotional budget: $10,000. Total sales of Wish I'd Taken Pictures: roughly $15,000. The band's prior album, Pile Up, garnered equivalent sales at a fraction of the cost. "I don't regret doing it," Ginoli recalls of the power move, "but the lesson learned was 'Don't do it.'"

This misadventure, multiplied by X number of fledgling bands and X number of contending albums, explains Lookout's financial plight: Too many of its promotional experiments -- paid for by the Green Day cash cow -- didn't fare well enough to break even. Indeed, it was Dookie's success that set the stage for Lookout's great philosophical debate. While Screeching Weasel ultimately drove Livermore to cash in his chips, the problem of how to spend all that Green Day scratch already had him heading for the door. "Once all the money started rolling in in 1994 and '95, there was a lot of pressure -- both from the bands and from people within the label, especially Chris and Molly -- to spend way more on promo, videos, the whole deal," he says. "I always thought most of it was a waste of money, but I had to compromise to keep the bands and other people at the label happy."


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