The regular audience's response was similar: loved the music but not the movie. The soundtrack would peek at #4 on the Billboard US album charts and will go platinum and, in 1984, double platinum. The LP will sell 3 million copies in the US alone.
Aside from the overwhelming negative response, there were other factors conspiring against Xanadu (production not-withstanding). For one thing, the film was saddled by the Hollywood press with the 'disco film' label. Xanadu's release date also coincided with the decline of disco as both a musical genre and a cultural phenomenon; at this point in time, the public finally had enough of the over-powering presents of Disco Inc. Even though Xanadu didn't have any of the over-baring Disco traces, all those roller skates and flashy outfits didn't help matters much. In addition, Xanadu had stiff competition for the public's attention and money with the lingering yet strong effect of the much-anticipated Star Wars sequel, The Empire Strikes Back, which opened on May 1980. According to Variety, Xanadu would end up grossing ten million dollars in the US market; the film got a better B. O. response overseas. With the production budget believed to be roughly just over 13 million dollars (plus a few more for advertising and publicity), Universal would end up losing some money on Xanadu.
By early 1981, Xanadu had already won some awards, but not the type you'd want to hang over the fireplace....maybe IN it. In an answer to the Oscars, The Golden Raspberry Foundation soon started to hold ceremonies handing out awards for the WORST films of the previous year (now known as 'The Razzies') and, in that year, they gave Xanadu nominations for worst actor (Beck), screenplay, song (Suspended In Time), director and picture. Only Mr. Greenwald would walk away with a Razzie.
Jeff Lynne didn't have to endure such humiliation that most other Xanadu survivors had. The British Academy of Songwriters, Composers, And Authors awarded Lynne the Novello Award for Best Film Theme Song for Xanadu. This would he his second such award as he won one in 1979 for Best Outstanding Contribution to British Music.
Xanadu would have one more gasp left in this same year. An album was released called Swing (Planet/P-24) and it was a collection of standard big band/swing songs and a few originals thrown in. To quote from it's liner notes: "Modern recording technology enabled us to produce a special sound and character that was literally impossible in the big band days. The total sound of (instruments included) the shimmering effects produced by the synthesizer (sometimes voiced with the sax section)-all played an exciting part in creating the new definition of 'SWING'". Without a doubt, this project had largely (and even more successfully) borrowed the musical formula from Dancin'. According to the LP credits, this was "conceived" by the producer Richard Perry and Joel Silver, the latter being, of course, Xanadu's co-producer.
All these plans were for naught; in 1988, a fire engulfed the entire building except the historical facade and yet, despite complaints, the limbo continued. On May 30, 1989, a second fire took care of the rest. The local fire department made an aggressive effort to save the front but the winds and the intensity of the fire was too much for them to handle. Within the hour, large parts of the remaining front began to crash down to the ground, followed by the rest of the facade.