Continued Story with Texas Instruments

Thanks to the publicity he was getting, Johnston attracted the attention of producer Kim Fowley, who was interested to hear what he would sound like in a studio environment. Fowley had organized for The Texas Instruments to act as Johnston's backing band and paid for the sessions but was largely uninvolved, only entering the studio on one occasion.[10][9] Joe Johnson produced ten of the album's tracks at Europa Studios, with four additional tracks recorded elsewhere by either Johnston himself or Pam Peltz. The album also features two other guest performers, Bill Anderson, who co-wrote two of its tracks, and Rick Morgan, who appears only on 'It's Over.'[11]

Johnston was pleased with the initial recordings but was shocked by the creative control Fowley had demanded afterward. According to Johnston, Fowley wanted more of Johnston's earlier material to be re-recorded, this time with additional saxophones.[9]

When Fowley heard the finished album, he was disappointed and said that the songs sounded 'unfinished.' He also wanted Johnston to sign a contract that would have given Fowley full ownership over the masters, songwriting credit, and 50% publishing rights. Johnston refused the deal, and Jeff Tartakov, his manager at the time, obtained ownership of the album on Johnston's behalf, leading to Johnston's self-released version.[10]

Sonically, the album showcases a more rock-oriented sound than that found in Johnston's earlier music,[12] and is particularly stylized in the indie rock or pop-rock styles. [1] Additionally, clear influences on the album include pop from the 1920s - 1930s,[1] as well as the music of Lennon/McCartney.

Also included on the album are re-recorded versions of two tracks featured on two of Johnston's self-produced 1983 tapes, 'Running Water' from 'Hi How Are You' and 'Casper' from 'Yip/Jump Music'; however, neither of the re-recordings took place at Europa Studios.[11]

Continued Story marks the end of an incredibly productive era for Johnston; between 1981 and 1985, Daniel had recorded nine albums but would not make his next until three years later.

The album's artwork depicts a "Fly Eye",' a Johnston invention representing supernatural watchfulness. Johnston's other drawings of the Fly Eyes depict them as either comforting or sinister, watching over the world's every move, with Johnston referring to them as "Good/Evil". In the song "Fly Eye", Johnston attempts to calm one, in order to transform it into a less ominous constant companion.[13]