Well, what do you expect from an artist who's reading Penthouse, surrounded by liquor bottles and cigarettes, on the cover of his album? Perfection? Accessibility? Sanity? Well, you ain't gonna get that from Nilsson, a man who left sanity behind shortly after he entered the mainstream with Nilsson Schmilsson. Instead, you get a record from an artist who's just at the fringe of popular culture, not really caring if he has a hit, but not really wanting to be so weird that he's just a cult. Realizing all of this, the artist also knows that he doesn't need to try so hard -- he can be as lazy as he looks on the cover. So, that means That's the Way It Is is essentially a covers record, with songs ranging from material penned by longtime favorite Randy Newman ("Sail Away") to longtime fan George Harrison ("That Is All") to oldies ("Just One Look/Baby I'm Yours") to obscurities ("She Sits Down on Me" and "Zombie Jamboree"). Only two original songs then: the faux-reggae "Moonshine Bandit" and "Daylight Has Caught Me," co-written with Dr. John. Everything's given a rather lush, but not particularly sleek treatment, placing it closer to soft rock than to the unabashed cult rock that Nilsson was producing at this point. So, this winds up being an album that's not as gleefully weird and funny as its predecessors and yet is stranger because of that. Because, for chrissake, who wants this album? It doesn't have enough perversity or indulgence for those who treasure his weirdness, but it's way too idiosyncratic and odd for anyone who might like the L.A.-style vibe. Not a bad record, really, but certainly not a very good one, even by latter-day Nilsson standards.
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AllMusic Review by Stephen Thomas Erlewine