My first obvious encounter with fake crowd noise was on Procol Harum’s “Broken Barricades” album – their follow-up to “A Salty Dog”, and not nearly as good. The song “Power Failure” was a decent slide guitar rocker with an odd, bubbly, 75-second drum solo in the middle. It was a studio album but they spliced in wild applause at the end of the solo and the return of ensemble playing.
There was no attempt to make the song sound live, but the applause worked very well in the mix.
I think John DiFool is whooshing us, mistaken, or confused. Running on Empty was recorded entirely outside the studio, in live performances on stage, as well as backstage, in hotel rooms, and on the tour bus.
I was at that performance in Columbia in 1977. They recorded another track in a nearby hotel. (I wasn’t present for that, although I had worked at that hotel a few years earlier.)
Well, The KLF had The White Room, which had tracks sampling audience cheers to make them sound like they were playing vast stadiums: The KLF being who they were, this was all part of the joke.