The song was a major hit in their native UK, where it reached number two.
It was also a Top 10 hit in Ireland and New Zealand, peaking in both nations at number six.
"Everybody Knows" narrowly missed the Top 40 in the U.S., where it reached #43 on the Billboard Hot 100, becoming their final entry of two dozen hits.
Cash Box said it has a "haunting melody and splendid vocal strength.
The song was included on his Last Waltz LP, and is sung with a same-sex perspective.