I think most songwriters get their lyrics from personal experiences. I'd imagine there probably was a woman on 8th Avenue. It may have been from one of his times in NYC.
I've always felt the same about the exclusion of 8th Ave on GG1. Actually, I would have preferred it if none of the songs were excluded. I don't know if they ran out of room (which wouldn't be a problem with today's technology), or if Gord just didn't have a good reason to include it. It's a beautiful song.
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