A good producer stays out of the way of a tight, accomplished band - objective song selection and sequencing should be the only important tasks left. A band's first album usually consists of the top 10 songs taken from a setlist that has been hammered and honed for many years in live clubs. If recorded correctly (see next question), this brings an undeniable energy to the proceedings. At the very least, the wank-ola suicide of "we wrote all the songs in the studio" is avoided completely - as it should be, unless you are Pink Floyd or Radiohead!
Arranging? Why mess with song structures that have grown organically in front of an actual audience? Performance coaching? If you can't nail these songs after x number of years, you won't nail anything. Et cetera...
Of course, this presupposes you are a member of a tight, well-rehearsed band - we're giving you the benefit of the doubt ;-).
I can list countless artists where the "first album is the best" axiom holds true: the Police, the Pretenders, Gang of Four, the Stone Roses, Live (don't even talk to me about anything past the first album), Dar Williams, even Guns 'n' Roses.
The exceptions to this axiom are almost always because the producer or the production didn't stay out of the way. My favorite pet peeve in this department is the Smiths' first album. John Porter, an otherwise upstanding guy who had the right credentials (Roxy Music) to produce Britain's most promising young band in 1983, drenched everything in annoying reverbs. The guitar overdubs show a hint of the Johnny Marr guitar army done so much better in later Smiths releases, but all the piss and vinegar is taken from the guitar tones. Compare the first album to the Peel sessions from around the same time, and you'll understand just what I mean. The Peel sessions jump off the record with a tight, gritty (and perennially underrated, even by Morrissey himself) rhythm section and much drier, in-your-face guitars. Which leads me directly to the next point, the reason why those sessions sounded so good...
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