The Making of Heartthrobs Inc.

As his Next Big Thing takes the concert stage, music mogul Louis J. Pearlman ambles through the swirling smoke and throngs of screeching young girls until he finds a spot to watch the show and, more important, the crowd.

On stage, David Perez, a bass singer with a chiseled face and frame, is spinning through a dance routine with the other three members of C-Note, a new harmony group created and crafted under the watchful eye of Pearlman, a 44-year-old millionaire.

“Watch, at the end of the next song, David will unbutton his shirt and they’ll go crazy,” says Pearlman, sounding like a veteran field biologist tracking a favorite species. When Perez’s shirt falls open on cue, the girls wail, jump and bite their lips beneath braces that gleam in the red spotlights. “C-Note is going to be huge,” Pearlman says after the screaming has stopped. “No doubt.”

That may be pure braggadocio, but doubting Pearlman’s pop instincts these days is akin to questioning the frothy power of puppy love. The New York native is the mastermind behind the most powerful teen music machine in the world, Trans Continental Records, which unleashed upon the world both the Backstreet Boys and ‘N Sync.

For the uninitiated, the Backstreet Boys and ‘N Sync are heartthrob squads who have claimed the ears, hearts and allowances of young girls around the globe. Parents may dismiss them as reheated Menudo or another New Kids on the Block, but they are at the heart of a pure pop revival.

These boy bands sold $160 million worth of albums in the U.S. last year, landing three albums among the Top 10 in December. But their selling prowess goes far beyond the record rack. The Backstreeters took in another $29 million from ticket and souvenir sales at their 72 North American concerts, while a glossy, relentlessly peppy biography of ‘N Sync cracked the nation’s bestseller lists. And Pearlman’s Trans Continental gets a piece of all of it.

The groups were also ubiquitous throughout the year in mall aisles, America Online chat rooms and MTV’s viewer request show, a triad of youth market indicators that cannot be ignored. “They are just huge with our viewers,” says Tom Calderon, a top MTV executive. “And the thing that is most amazing is the incredible passion of the fans. They can’t get enough.”

Their success is part of a teen pop revival that began with the Spice Girls and Hanson, acts that brought an almost unbearable lightness of being into an American music scene that had been dominated by angry grunge and violent rap. The reasons for all this teen exuberance include the cyclical nature of pop tastes, more disposable income in the hands of youngsters and, well, hormones.

No one has shown a better understanding of these powerful forces than Pearlman, who in 1991 identified an economic truism. “When girls scream and ask for CDs and posters, are their daddies going to say no? I don’t think so,” Pearlman says with a chuckle. “It works nice for us.”

“Nice” is the watchword at the Orlando, Fla., offices of Trans Continental, which is inevitably described by everyone involved as a family-style workplace far removed from the cutthroat music industry hubs of Los Angeles and New York. “It took me a few weeks to get used to everyone hugging each other in the halls,” says Jay Marose, a Trans Continental executive.

Still, all is not poster-perfect in the land of the boy bands.

The Backstreet Boys franchise is now tainted by lawsuits and money disputes, casting a shadow over the sunny Trans Continental success story. None of that, however, has deterred Pearlman from his dream of assembling a Motown for minors in central Florida.

The entrepreneur is dean of what may be the world’s first boy toy university, which includes classes in vocal strength, media interview skills and persona styling. The students are the company’s junior varsity pop acts, which, like new sodas or cigarettes, are tailored to appeal to market niches.

Among the stable of would-be idols are C-Note (Latino-flavored, bilingual boy band), the Lyte Funky Ones (nonthreatening, cute boy rappers) and Innosense (the female group, so girls can identify as well as swoon).

“It’s a smorgasbord,” Pearlman says proudly. “Something for everybody.”

Everybody, that is, who is young and, most likely, female. The core consumers for Pearlman are girls between the ages of 8 and 18. “Sometimes as young as 6 . . . but by the time they’re 18, they’re worried about their boyfriends and car payments,” he says.

But doesn’t that fleeting age window mean the Backstreet Boys are living on borrowed time? Pearlman just laughs. “There is,” he points out, “a teenager born every minute.”

Twice in his life, Louis J. Pearlman looked to the sky to see his future in full flight.

The first time was in 1964, when, at age 10, he peered out his bedroom window and saw a majestic mystery floating above his blue-collar neighborhood in Flushing, N.Y.

“It was the first time I ever saw a blimp,” he says with glee. “It told me to have a good year.”

Two decades later, he broke Goodyear’s exclusive hold on blimp flights in the United States by launching a fleet of competing blimps advertising McDonald’s, Fuji Film and Budweiser.

The second sighting was in 1989 when Pearlman--already a millionaire from his charter fleet of jets, helicopters and his beloved blimps--watched the New Kids on the Block take off in one of his chartered flights.

Pearlman was accustomed to watching Paul McCartney, the Rolling Stones and Michael Jackson clamber aboard the $250,000-per-month charter jets. How could these kids make that kind of money? He sought out his cousin, famed pop singer Art Garfunkel, who told Pearlman that the New Kids had pulled in hundreds of millions with their bubble-gum pop and merchandise.

A year later, a still-intrigued Pearlman heard the New Kids were playing Long Island and he bought a ticket, braved the crowd and stumbled out an hour later like a new believer reeling from a tent revival. “They weren’t fans, they were fanatics.”

In the New Kids, Pearlman saw big money and a chance to be part of the music industry. The twin engines of Pearlman’s life have always been aviation and music, but until that point the latter had only been a frustrating failure, career-wise.

Growing up watching his cousin’s success in Simon & Garfunkel gave young Pearlman the show-biz bug. At 16, he formed a band called, not surprisingly, Flyer, and toiled on his guitar playing. The group got gigs in New York opening for Kool & the Gang and Barry White, but little more, and by 1975 Pearlman resigned himself to making music only as a hobby.

Aviation, meanwhile, became Pearlman’s focus. As a 21-year-old senior at Queens College, Pearlman was working part time with a blimp ground crew at a Teterboro, N.J., airport. The only child of a dry cleaner and the milk lady at P.S. 21, the young man was fascinated by the well-heeled businessmen who landed in jets at the corporate airstrip and then hustled to limos for the drive into Manhattan.

Those commuters were on his mind when the business major drafted an enterprise proposal for class: Use helicopters at the airport to whisk the lawyers and bankers into the city in a fraction of the time. He found some investors and was on his way.

Today, his air fleet has 49 charter planes, from Lear jets to 747s. The aviation business is the backbone of his empire, which he says is worth about $950 million. The varied companies under the Trans Continental banner include a travel agency, pizza and yogurt shops and the Chippendales strippers. Does the stripper franchise and his boy bands suggest that Pearlman is an expert in what makes the female heart flutter?

“It’s all show business,” he says with a shrug. “It’s all about putting on a show.”

When Pearlman set about creating his own boy band, he drafted another business plan. In 1990, he sought out singer Smokey Robinson to share nuances of the Motown heyday. In an hourlong interview in the singer’s dressing room before a New York show, Pearlman listened intently as Robinson talked about the building of a hit factory.

The most memorable lessons, Pearlman says, were the singer’s insights about “massaging” personalities when in-house competition arises, and the need to transform the studios from a workplace into a hangout. Pearlman speaks in reverent tones about the meeting and its impact.

“I never forgot what Smokey told me,” Pearlman says. “This,” he adds, pointing to a framed photo of his meeting with Robinson, “was my education.”

He also continued his homework on the New Kids, the quintet of Boston singers discovered and named by songwriter-producer Maurice Starr. Starr had seen the group as the ideal vehicle to fuse harmless rap with pop music that was delivered with slick dance routines and a nonthreatening sexuality.

Starr’s instincts were dead on: The New Kids became the biggest-selling act in the world. The wheels came off, though, by 1991, when music tastes changed and the members were faced with constant questions about their singing abilities and use of taped vocals.

Pearlman saw the New Kids’ success as a blueprint, and their failure as a lesson. While much of the music industry quickly soured on boy bands after the New Kids, Pearlman suspected girls would always scream if given the chance. He would just make sure his boy band--like the Motown groups--could really sing.

It was in Orlando, a city that seems to glisten with stage sweat and humidity, that Pearlman put his music plan into action. The city is, of course, a mecca for tourists, and requires a steady parade of young people who can sing, dance and smile to work in its amusement parks and film and television studios--a perfect setting for a teen-idol recruitment drive.

Down the highway from SeaWorld is the center of Pearlman’s teeny-bopper universe, the semi-secret offices of Trans Continental Records, an 80,000-square-foot complex tucked into a nondescript industrial park.

For visitors who get a rare invitation to roam the immaculate hallways and offices, two terms are verboten: “boy band” and “factory.”

The former immediately raises the hackles of the company’s stable of young singers (“What is a boy band? Were the Beatles and Rolling Stones a boy band? And we’re not boys anyway,” pleads Dru Rogers from C-Note). The latter offends executives who say they are in the business of shepherding singers to success, not manufacturing idols from scratch.

These subtle distinctions are arguable, but even if Trans Continental is not a boy band factory, it clearly qualifies as a pop star academy.

Jay Marose, a Chicago public relations executive and former youth counselor, leads interview lessons that remind the nascent celebrities not to chew gum, lose eye contact or talk over one another’s answers during interviews.

A team of style consultants also helps the singers develop their clothing choices and even their personas. In the grand tradition of heartthrob groups, many of the acts have a “serious one,” a “bad boy,” a “big brother,” etc. Stage veterans teach fundamentals such as how to hold a microphone, work a crowd and properly catch teddy bears thrown from the audience.

The overall atmosphere is charged with heady dreams of success and the sounds of young people singing and laughing. It’s as if the kids from “Fame” opened a corporate office.

Pearlman is a fastidious man, and as he walks through the building he pauses to straighten the scores of framed posters that adorn the walls. Most of the posters show the company’s two flagship groups and, indeed, totems of the Backstreet and ‘N Sync success stories are littered throughout the complex.

“There are so many gold and platinum CDs around, we use them as coasters,” Marose says.

For the would-be stars in training, it’s impossible to escape or forget the monumental success of the flagship groups.

“We look at Backstreet and ‘N Sync, and we’re in awe of what’s going on with them,” says Raul Molina, one of the C-Note members. “I think about it all the time. I wonder, ‘Can that be us?’ ”

After some gigs at restaurants and malls, the Backstreet Boys performed in public for the first time in May 1993 at SeaWorld in Orlando, and they were an immediate flop. Their first single, “We’ve Got It Goin’ On,” did not live up to its claim, and, with alternative rock and hip-hop dominating the airwaves, the boy band was ignored.

“It was hard. Lou shopped the group to 10 different labels and nobody was interested,” said Alan Siegel, a longtime Pearlman associate who now manages C-Note. “Everybody said the so-called boy band thing is over. Nobody knew these guys or wanted to.”

The guys were Nick Carter, Howie Dorough, Brian “B-Rok” Littrell, A.J. McLean and Kevin Richardson. The five, who ranged in age from 12 to 20, were selected after Pearlman and his small staff auditioned about 60 young performers from all corners of Florida.

The disappointing initial response did not dissuade Pearlman, who had by then recruited Johnny Wright, the former tour manager for the New Kids, to be the Backstreet manager (Pearlman became, and remains, the group’s business manager). Pearlman, Wright and the Boys’ new label, Jive, came up with a plan: Take the fledgling boy band to Europe to hone its craft and play to a market where teen pop acts had never gone out of style.

“We were right,” Wright said. “They exploded.”

While the Backstreet success story was beginning, Pearlman was enduring some difficult times on the home front. His publicly traded blimp company, Airship International Ltd., floundered badly in 1995, after two high-profile crashes, increased competition and a dwindling client list sent the stock from a peak of $6 a share down to 3 cents.

That bitter failure prompted him to turn increasingly to his music enterprises and, like the blimp models that dot the walls of his sprawling Orlando home, his empire’s airships started to become more symbolic than profitable.

By the time Trans Continental and Jive launched the Boys in the domestic market in 1997, they had sold more than 8 million albums and were inciting near-riots among foreign fans, all harbingers of their reception when they would return home.

In the midst of their growing success, though, a funny thing happened. The group, which had enjoyed doting attention from its show-biz “parents” Pearlman and Wright, noticed that they suddenly had a younger sibling.

Despite his research into Motown, Pearlman insists that Trans Continental was conceived at its launching as a one-act company. That changed only as the costs of establishing the Backstreet Boys mounted, he says. The studios, the training, the touring--all of it made the company too big for one group. “You can’t make money on an airline with just one airplane,” he says.

That led to the birth, in 1994, of ‘N Sync. Pearlman scouted more singers and came up with their group name by taking the last letters of their first names--JustiN Timberlake, ChriS Kirkpatrick, JoeY Fatone, LansteN Bass and J.C. Chasez. (Actually, Lansten’s real name is Lance, and Trans Continental added the letters to make the band’s name work.)

Pearlman called Wright in Europe, where he was on tour with the Backstreet Boys, and summoned him back to the States to hear the new act and become its manager. According to Wright, the Backstreet members had no problem at first with his dual duties, but that changed as ‘N Sync followed its predecessors to Germany and catapulted to fame, quickly landing three songs in the country’s Top 10. The Backstreet Boys fired Wright as their manager late last year.

“We brought in another brother and they saw it as an abandonment,” says Wright, who remains manager for ‘N Sync. “And that ended up putting me in a position I did not want to be in where the groups are now competing head to head in a race to the top.”

The Backstreet Boys were unavailable to be interviewed for this story, according to their new managers, the Firm, a Los Angeles-based company that also represents hard-rockers Korn and comedian Martin Lawrence.

The management issue is a backdrop for a money dispute that last year involved a flurry of lawsuits and a small army of attorneys. The lawsuits included one filed by the Backstreet Boys against Pearlman and his company over the division of $200 million in revenues generated by the act to that point. That suit was settled in October on the same day Pearlman and the Boys were given the keys to the city of Orlando for their local fund-raising efforts.

Judith Segelin, a Fern Park, Fla., attorney for the Backstreet Boys, says her clients were seeking a greater share of money and control, and she adds that they “were happy” with the settlement, the terms of which remain secret.

To Pearlman, the matter was blown out of proportion by the press, and he characterizes the dispute as a “paperwork suit” without any animosity or real meat.

But Jane Carter, mother of Backstreet’s Nick, says the original contract Pearlman signed with Backstreet is “not as good as it should have been” for her 18-year-old son’s group, and she suggests that Pearlman has not been completely forthcoming about the amount of money generated by the assorted ventures cashing in on the act’s worldwide success.

“He should be fair to these boys and their families,” she said. “Making the wealth is one thing, sharing the wealth is another. . . . Don’t just be a greedy person because you had this idea.”

Pearlman owns the group’s name (along with the ‘N Sync name and the rest of the company’s acts), and the middle-aged entrepreneur is technically the sixth Backstreet Boy--which means he gets one-sixth of the act’s pay after Trans Continental and the group’s label, Jive, take their money off the top.

(And, in another legal subplot, Trans Continental is now locked in legal wranglings with Jive and its parent, Zomba Recording Corp. of New York, over, no surprise, money issues and the Backstreet cash machine.)

Ask Pearlman about the fairness of his dealings with the Backstreet Boys and he’ll respond with a history lesson. He says he plowed $3 million into the Backstreet Boys before they made any money, and he recalls days when he bought the boys their meals and haircuts, paid their vocal coaches, wrote their first song and (according to one of Trans Continental’s officials) also made mortgage payments for one of the singers’ families when times were tough.

Sources close to the Backstreet Boys characterize the true nature of the dispute as this: a group of young men who have “people talking in their ear,” lots of money and a growing tendency to chafe under the hand of their father figure.

The latter is easy to envision. Pearlman’s fans and critics point to the same attributes when they describe him. A notorious micro-manager, he routinely makes changes in everything from the acts’ music videos and song titles to the way they are promoted. “It’s amazing, he always sees a way to make it better,” Marose says.

But to the record labels that deal with Trans Continental, that work style can be a sore spot. A source at one label said Trans Continental usurps some of the traditional roles of the label, such as publicity. “They don’t know as much as they think they know about the music business,” says a label source who asked for anonymity. “And they don’t always do what’s best.”

For their part, the members of ‘N Sync try to steer clear of the Backstreet-Pearlman dispute.

J.C. Chasez, a veteran of the Mickey Mouse Club and unofficial leader of the band for ‘N Sync, sighed deeply when asked about the intertwined fates of his group and the Backstreet Boys.

“Honestly, they’re busy doing their thing and we’re busy doing ours,” he said in a telephone interview from a tour stop in Utah. About the firing of Wright, he says simply, “It could have been over us; it could have been over money. I’d rather not know,” Chasez said. “It’s none of my business.”

In Miami on the day C-Note will perform for a local fund-raiser, Pearlman climbs aboard a lavish tour bus parked outside the hangar-like auditorium. Two 14-year-old members of another Trans Continental act, Take 5, are playing a video game and roughhousing, and Pearlman gently shushes them so he can make an important point.

Easing his frame into a large couch, he insists his relationship with the Backstreet Boys remains positive, and none of the assorted subplots will interfere with making music or money. “Everything is fine,” he says.

A heartbeat later, though, he concedes that things are not like they were in the old days when he and the Backstreet members used to munch on pizza together and share daydreams about stardom.

“I wish it could always be a family without lawyers,” he says. “It’s a shame it has to happen, but it’s inevitable. Success breeds people getting in your ear. Lawyers, financial advisors, parents, all these people. The boys are growing up . . . but the Backstreet Boys are all multimillionaires now, and they can never forget that. You can’t forget where you’ve been.”

Pearlman, who aspires to be the Berry Gordy of teen pop, is plainly hurt by the prospect of being viewed by some as more like Col. Tom Parker, the notorious exploiter of the greatest of all teen idols, Elvis Presley. He would much rather talk about C-Note.

“I love these guys,” Pearlman says, noting how the members call him “Big Dawg” and playfully jab at him like kids picking on a favorite uncle. Pearlman has no children of his own--he says he twice “came close” to getting married, but is “still looking”--but no regrets, either. “I have a lot of kids already,” he says, referring to his roster of young talent. “More than I can handle.”

Just hours earlier the group made its national debut on MTV, getting a meaty five minutes of singing, dancing and cute-guy antics in a segment of a special called “The Revenge of the Boy Bands.”

At the C-Note show later, Pearlman takes his post among the screaming fans at the fairground facility. On stage, the singers are not having a good time. A murky sound system and a too-small stage has the quartet frustrated.

Some of the girls in the crowd appear to be losing interest, and more than a few are looking away from the stage to huddle and giggle and point at the few uncomfortable boys in the crowd. All that changes, though, when the group launches into its final number, “Wait ‘Til I Get Home,” their soon-to-be single on the Epic label.

The catchy chorus and polished harmonies are pure confection, and the girls love it. The singers are sweating and working the crowd with renewed vigor. The screaming level goes up a few notches and, right in the middle of the madness, Louis J. Pearlman smiles.