How'd the first year go at the studios of Sanctuary Recording? "OK," founder and owner Tom Silverman says. "But unfortunately, not up to expectations. We're not meeting our projections by a long shot."

Reason? He built the studios, but the business didn't come. In fact, musicians filled the studios only 15% to 20% of the time.

Explanation? Look back to the comments of our expert panel, which in our July 1988 article warned that Silverman's concept, equipment decisions, and own time commitments would make this a risky project.

The experts were right. Silverman is the first to say that his preoccupation with rap label Tommy Boy Music Inc., the New Music Seminar, and the biweekly "Dance Music Report" -- his other three businesses -- has hurt the studio. Revenues at the Seminar were up 15%, and Tommy Boy had its first two major hit albums, sending sales from $3 million last year to an anticipated $10 million this year. "I was putting as much of my efforts as possible in the front-running horse," Silverman says.

The recording studio has been run almost entirely by general manager Howard Kessler. And Kessler, Silverman says, "hasn't been as successful as I feel I could have been in luring clients."

Clients needed to be lured in part because of the equipment; Silverman chose to stock his main studio with an older $90,000 console -- "classic," he calls it -- instead of a higher-profile, state-of-the-art board. That turned out to be a problem.

"People are used to the SSL," Silverman says of the $250,000 to $300,000 machine he passed up. "We took a premeditated risk in going with a warmer, cleaner console. But it seems people are more interested in the bells and whistles." In addition, studios with SSLs became cheaper this year, as low as $65 an hour in contrast to the $85 Silverman is charging and the $120 he wanted to charge. What's more, Sanctuary's sound board, which accommodates 40 inputs, turned out not to be big enough for the R&B and dance-music clients he wants to serve. Few of Tommy Boy's own acts, in fact, use the main studio, because of the console; they account, he says, for "less than a quarter" of bookings. Tommy Boy does use the editing room, though, for all of its editing.

As for the concept -- offering musicians comfort that only the most expensive studios usually provide -- Silverman believes the artists who have used the place enjoyed the ambiance. "Buster Poindexter worked here; so did a lot of other big acts," he says. "Everybody seems to like it and be impressed by the quality they get out of it." But console limitations, he says, have kept others away.

Silverman has personally fed $60,000 to $70,000 into the company to cover its losses this year and plans to put in another $150,000 to $200,000 next year to erase Sanctuary's loans. The company, he says, would have been profitable the first year without the debt.

With last July's New Music Seminar behind him, Silverman has plans to turn things around. He's looking to bring another independent record label or production business in as a partner to provide cash and clients.

Would he do it again? Probably not, he says, because in the time since he started this project, he has had one child, and another is on the way. "You get to a point where you say, 'Why am I killing myself?' I was driven by entrepreneurial spirit for 15 years, and now I feel there are other things besides just starting more businesses.

"But you know what?" he adds. "None of my businesses came easily at first, so it's not something I'm concerned about. I just have to deal with it. If I sold the studio today, I could get out of it about what I put into it, so it wasn't that bad a risk. I still think it makes a lot of sense for an independent label to be involved in a studio." -- Leslie Brokaw

THE COMPANY: Sanctuary Recording Inc., New York City, a midpriced recording and music-production studio ("Good Vibrations," July 1988)

* Concept:
Will musicians care enough about Sanctuary's promise of better service to fill two studios and one editing room?

* Equipment: Can Sanctuary get away with not having the high-profile, expensive equipment touted by other studios?

* Time: Will founder and owner Tom Silverman be able to juggle this venture and his three other growing businesses successfully?

Year one Actual Projected
Revenues $350,000 $1,015,000

Profit (loss) ($70,000) $145,932

Room-utilization rate 15%-20% 51%

Prices (per hour) $45-$100 $30-$120