Subterranean Modern was Ralph Records' first album involving music from anyone other than The Residents or Snakefinger (with the exception of the very limited work with Schwump). The idea was to widen Ralph's appeal by bringing a greater variety of styles into the label. To this end Ralph had four band submit contributions on the theme of "San Francisco". Each was required to include a version of Tony Bennett's I Left My Heart in San Francisco.

The four bands chosen were The Residents (of course), Chrome, Tuxedomoon, and MX-80 Sound. In the end, only Chrome didn't sign on to Ralph -- they haggled too long so Ralph dropped them. They ended up signing with Beggars' Banquet instead. In another first, Ralph hired Gary Panter to do the cover art rather than have it done by their graphic design branch, Pore-Know Graphics.

The Residents' contribution to the album was a four-part work called The Replacement about a man who's life is being drained away and replaced with that of another man.