The nucleus of the band first met at the private boys school Caulfield Grammar School, in suburban Melbourne, in the early seventies. A rock group was formed in 1973, with Nick Cave (vocals), Mick Harvey (guitar), and Phill Calvert (drums), with other students John Cocivera, Brett Purcell and Chris Coyne (on guitar, bass and saxophone respectively). Most were also members of the school choir. The band played under various names at parties and school functions with a mixed repertoire of David Bowie, Lou Reed, Roxy Music, Alice Cooper and the Sensational Alex Harvey Band, among others.  After their final school year in 1975 the band decided to continue as a four-piece group, with friend Tracy Pew picking up the bass. Greatly affected by the punk explosion of 1976 which saw Australian bands The Saints and Radio Birdman making their first recordings and tours, The Boys Next Door, as they were now called, began performing punk and proto-punk cover versions, such as "Blitzkrieg Bop" and "Gloria", and a few original songs. By November 1977 their set was dominated by fast original new wave material, such as "Sex Crimes" and "Masturbation Generation".  The Boys' second guitarist, Rowland S. Howard, joined in 1978, and about this time, the group's sound changed dramatically. The addition of Howard's guitar was certainly a catalyst (his later use of audio feedback being a hallmark of the group) but there were other changes, as well: their sound drew upon punk, rockabilly, free jazz and the rawest blues, but defied concise categorization. Many songs were driven by prominent, repetitive basslines and frenetic, yet minimalist, drumming. Though the band was tightly rehearsed, the instrumentalists often sounded as if they were on the verge of collapse, this quality only emphasising the newfound mania of Cave's singing, and his expressionist lyrics. In producer/engineer Tony Cohen they found a willing accomplice to their experimentation and their refusal to repeat themselves; and in manager Keith Glass they found an enthusiastic financial backer. Glass' label Missing Link Records released all of the early Birthday Party records.

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The nucleus of the band first met at the private boys school Caulfield Grammar School,