Tom Petty Once Declared Bankruptcy to Get Back at His Label

In the early days of his music career, Tom Petty moved from Florida to California and signed with a record label. As the band was young and excited about the deal, they didn’t pay as much attention to the terms as they likely should have. When the band started to find success, the terms of their contract left them with little to show for it. Petty went head to head with the label to get better terms for their contract.

Tom Petty wears a green shirt and strums a guitar.
Tom Petty |  Rick Diamond/Getty Images

Tom Petty signed an unfavorable record deal with his initial label

Petty and the Heartbreakers initially signed a contract with Shelter Records. After two albums, MCA bought their contract without consulting the band.

“This stunned us a little bit, and frightened us, that we were just gonna be handed around to people we didn’t know, and didn’t have any relationship to,” he said in the book Conversations With Tom Petty by Paul Zollo. “Plus we really had a bad record deal. We were on the same deal that Mudcrutch had. It was really a terrible deal. And we felt that we’d had a little bit of good luck with the first two records, and we deserved a better deal. They didn’t see it that way, of course, so I had to dig my heels in and refuse to work if they wouldn’t make me a better deal.”

He did not appreciate that the label owned all his publishing.

“They also owned all my publishing, which I didn’t think was fair either because when the deal was made, I didn’t even know what publishing was,” he said. “So a fast one had been pulled on me, and I wanted it made right.”

Tom Petty declared bankruptcy as a way to get back at his label

Petty immediately made his concerns clear to MCA. Per CNBC, he informed the label that he didn’t like being “bought and sold like a piece of meat.” The label wouldn’t surrender the contract, however, so Petty took further action. 

He spent over $500,000 in the studio, financing the album on his own. After this, he refused to release the album. By declaring bankruptcy, he was able to force MCA to terminate his contract. When they did, the band signed back onto the label on more favorable terms for them.

He once also took on his label by refusing to raise the price of an album

This was not the only time Petty challenged his record label. When they wanted to raise the price of his 1981 album Hard Promises from $8.98 to $9.98, Petty refused. This was $1.00 more than the standard album price, and Petty didn’t want to make his music inaccessible to fans.

He threatened to change the name of the album to Eight Ninety-Eight, reflecting the price he wanted. He also threatened to withhold the album entirely. Eventually, MCA backed down, and the album sold for $8.98.

“The music has to be affordable,” he told Billboard in 2005. “It’s the common man that keeps it going, and if you price it out of his realm, it becomes a thing of the elite.”

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