On May 23, 1979, Tom Petty showed the world (and his record label) that he would rather file for bankruptcy than be held captive by exploitative contracts that made him feel like a “piece of meat.” The bold financial move was the first of several confrontations Petty would have with his record labels, cementing his status as a staunch advocate for artist rights within the competitive music industry.
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In the end, Petty’s hard work led to a breakthrough, triple-platinum record that would become one of the most beloved albums of his expansive discography.
Tom Petty Filed For Bankruptcy In Response To Label Buyout
The passion creatives feel toward their art and the shiny allure of an official record contract can lead to many artists signing away their rights to exploitative business deals that will leave the musician indebted to the label well beyond the recording and promotional processes for a specific album are through. Such was the case for Tom Petty, who released his first album with the Heartbreakers on Shelter Records, a subsidiary of ABC Records, in 1976. Three years later, MCA Records bought out Shelter Records. Because Petty’s contract with Shelter Records was still active, MCA claimed ownership of the agreement. Petty refused.
The Heartbreakers frontman argued that MCA Records’ acquisition of Shelter Records made his contract with the latter label null and void. He famously refused to be “bought and sold like a piece of meat,” demanding that MCA Records renegotiate the terms of his contract. Petty paid out of pocket for his third album to free himself from any legal obligations to MCA Records. The $500,000 bill led Petty to file for bankruptcy on May 23, 1977, showing the rest of the world (and especially MCA Records) that he was willing to put his money where his mouth was. After that, the ball was in MCA Records’ court.
The record label responded by creating Backstreet Records specifically to re-sign Petty to a $3 million contract under the parent organization’s umbrella. Happy with his new business deal, Petty released his third album, Damn the Torpedoes, through Backstreet. If there was any lingering doubt in Petty’s mind over whether that was the wisest decision, the album’s subsequent chart performance likely soothed those worries.
His Post-Bankruptcy Album Was A Massive Success
Tom Petty might have been cutting his teeth for years by the time he demanded a renegotiation of his contract with MCA Records, but in terms of chart performance, Tom Petty and the Heartbreakers were still in their infancy as a band. Although his first couple of albums had notable cuts like “Breakdown” and “I Need to Know,” the band didn’t achieve Top 10 chart success until Damn the Torpedoes. Featuring cuts like “Here Comes My Girl,” “Refugee,” and “Don’t Do Me Like That,” Damn the Torpedoes quickly ascended to No. 2 on the Billboard 200. With a triple-platinum certification in the States and a double-platinum certification in Canada, the album turned the band into bona fide stars.
Two years later, Petty once again went head to head with MCA Records ahead of the release of his fourth album, Hard Promises. The label wanted to sell the album for $9.98 (over $31 by today’s standards). Petty refused to move forward unless MCA Records agreed to drop the price to the standard $8.98. Fresh off the heels of its first conflict with Petty, MCA Records knew better than to try to call the musician’s bluff.
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