Wylie formed Wah! (the band's actual monikers are legion, but always included Wah! within), while Cope went on to the Teardrop Explodes. Burns returned to the music scene with Nightmares in Wax, in February 1979, alongside an interminably shifting lineup that even the most devoted fan could barely keep track of, had the band actually had such loyal creatures. They didn't, and Burns himself later claimed the group was deliberately attempting to be the worst in history. Regardless, Nightmares in Wax did slowly gain a following, mainly comprising "real loonies," as the singer himself described them.

One of these hardy souls was Pete Fulwell, head of the local Inevitable Records label. The band's lineup still hadn't solidified, but Inevitable offered them a deal all the same. Burns was joined at the session by his former Mystery Girls' compatriot, drummer Phil Hurst, keyboardist Martin Healy, bassist Walter Ogden, and guitarist Mick Reid. The ensuing EP, Birth of a Nation opened with "Black Leather," a roaring homage to motorcyclists and musically a tribute to Iggy Pop's "Sister Midnight." The song also contained a hint of things to come, when halfway through, the group suddenly broke into K.C. & the Sunshine Band's "That's the Way" -- subsequently revived by Burns for Dead or Alive's first hit single.

The EP was released in February 1980 and sold respectably, but the lineup had already splintered. Bassist Ogden was first to go, replaced by a new member named Ambrose, who subsequently followed his predecessor into Hollycaust, an early incarnation of Frankie Goes to Hollywood. Reid, too, left, and filling in the now considerable gaps were ex-Upsets Sue James, the singularly named Mitch, and music vet Joe Musker, formerly drummer with Merseybeat legends the Fourmost. Nightmares in Wax now continued to exist more as a concept than as a functioning band; still, in May 1980, the group was offered a local radio session. There, without warning and mere minutes before recording began, Burns decided to change the group's name to Dead or Alive. This, he claimed, was because he didn't want to be associated with the arty bands now permeating the Liverpool scene: Echo & the Bunnymen, Orchestral Manoeuvres in the Dark, Dalek I Love You, and so forth. Nightmares in Wax was dead, Dead or Alive was born, and Burn's rise to stardom was now beginning in earnest.