Here's the R.E.M. article from the Wall Street Journal, sometime last week. Sorry that I don't have a precise date or proper byline. Reprinted without permission. ------------------------------------------------------- rem by reilly When +Time Warner+ Inc.'s Warner Bros. Records re-signed the rock band R.E.M. to a record-breaking five-album contract for more than $80 million in August, some Warner executives actually cried with relief that the label could still hold on to top talent after two years of management turmoil. Now, however, they may have reason to cry the blues. ''New Adventures in Hi-Fi,'' the band's last album under its old con- tract, is tumbling down the national album sales charts only a month after its release. Despite heavy promotion, ''New Adven- tures'' never reached No. 1 and its actual sales have dropped each successive week. In the latest reporting period, the week ended Oct. 6, the album had dropped to 17, according to SoundScan Inc., of Hartsdale, N.Y., which provides industry charts on retail record sales. R.E.M.'s sales are being watched with trepidation in the music industry. The group's contract is the new high-water mark, and other music superstars prepar- ing to renegotiate their own contracts are expected to ask for equally rich deals. With a number of new record labels and new management teams competing for scarce hits, some may be willing to pay more to bag a hot group. But at a time when retailers are cutting prices and music sales are declining in many categories, music companies can't afford to pay a lot for albums that don't pan out. Because of the size of the R.E.M. contract and the perks awarded the band- including advances of at least $10 million for each of the five albums-industry exec- utives say Warner Bros. will have diffi- culty making money on the deal. Execu- tives also worry that slack sales for R.E.M. portend more disappointing sales for the industry, which is already hurting from music retailers' store closings and bank- ruptcies. R.E.M.'s album was supposed to be one of several big records this fall that would encourage traffic at music stores. But some highly anticipated new albums are selling far worse than expected, and others-such as the latest album from Irish rock band U2-have been delayed until spring. Warner Bros. executives remain stoic, saying they aren't disappointed with early sales and that albums from the Athens, Ga.-based band traditionally sell well over long periods of time. In fact, they are still celebrating the deal. Warner Bros. execu- tives, including Russ Thyret cqNo, label chair- man, and Steven Baker, label president, spent part of last week in Athens at the invitation of R.E.M. to officially sign the contract on the band manager's front porch. A pizza party and trip to a local nightspot were planned. The record has received largely favor- able reviews from critics, and some agree with music-industry consultant Jeff Pol- lack, who says, ''There are some huge singles on this album. It's much too early to judge how the album will do.'' Still, Warner Bros. has its work cut out for it. Company executives say the band's choice of a droning, dirge-like first single, ''E-Bow The Letter,'' contributed to the album's slow start, and a new, radio- friendly single chosen by the label and the band was added to radio playlists last week, which should boost album sales. A special, and for now secret, ''national radio event''-expected to be an hour-long interview with band members-is planned for November, and new music videos are being shot for future single releases. ''With R.E.M. it is not where you start but where you finish in terms of sales,'' says Jeffrey Gold, executive vice president and general manager of Warner Bros. Records. Adds Bertis Downs, R.E.M.'s longtime lawyer and manager: ''The band is naturally disappointed it isn't higher [on the charts] at this moment, but we take the long view. It wouldn't be smart to panic, and we don't need to.'' The R.E.M. album's performance is the first real marketing challenge for Warner Music's relatively new leadership, co- chairmen Bob Daly and Terry Semel. Both also run Time Warner's film busi- ness; they took control of the music side late last year, following a series of tumul- tuous executive firings at Warner Music and the departure of Warner Bros. execu- tives Mo Ostin and Lenny Waronker. Warner Bros.' Mr. Gold admits the record label was ''thrown through a loop'' when the band insisted on ''E-Bow The Letter'' as the first single. The song is 5 1/2 minutes long, which hurt its chances for broad radio airplay, and it peaked at 49 on Billboard magazine's Hot 100 Singles list, compiled from retail sales and radio playlists and airplay. The choice ''was highly unconventional. But the band felt it showed the depth of the record,'' Mr. Gold says. ''We had other first choices.'' Warner Bros. is hoping for better luck with ''Bittersweet Me,'' which is being promoted on Top-40 radio stations. A video of the song is being shown frequently on MTV. R.E.M. isn't touring to support ''New Adventures.'' But ''Road Movie,'' a 90- minute documentary filmed during the last three nights of the band's 1995 ''Monster'' tour, premiered last week over a new satellite-linked interactive network of 31 college theaters. The documentary, which includes songs written during the ''Mon- ster'' tour that appear on ''New Adven- tures,'' was also released to the home video market. In addition to heavy coverage in print media in the last month, including the current cover cqNo of Rolling Stone, Warner Bros. literally promoted the record on the street, screening ''Road Movie'' on the sides of buildings in places that are meccas for young people, including Manhattan's East Village. According to SoundScan, ''New Ad- ventures'' has sold just under a half million copies since its release. But for the week ended Oct. 6, the album sold 56,000 copies, down from 74,000 units the week before and 107,000 copies the week ended Sept. 22. Warner can take some consolation from the fact that the album is No. 1 in Europe, according to charts compiled by the Am- sterdam-based Music & Media magazine. The group's last three albums each sold close to three million or more copies in the U.S., according to SoundScan, while world- wide, each album has sold more than eight million, Warner Bros. Records says. ''The album has been No. 1 in 15 countries including Germany, the second biggest music market in the world,'' says Warner Bros.' Mr. Gold. ''We are confi- dent it won't languish.''