Tom Petty sang “I Won’t Back Down” with a raffish drawl. But when he delivered the same message to a record company, it was with the conviction of an artist protecting the integrity of his work -- one who became increasingly cognizant of both his creative and financial leverage and adept at controlling his career.
Petty was first signed to Shelter Records -- a boutique label co-owned by Leon Russell and producer Denny Cordell -- as a member of Mudcrutch. After releasing one single, Shelter opted to drop Mudcrutch but keep Petty. His initial singles with The Heartbreakers, “Breakdown” and “American Girl,” failed to chart, yet he quickly built up a strong following in England, and the band’s popularity as a live act helped his two albums for Shelter go gold.
That first flush of success proved far less lucrative than Petty expected. Particularly irksome was the realization that he had signed away all of his songwriting and publishing rights for $10,000. “I had no idea I’d never make money if I did that,” he told Rolling Stone in 1980. When Shelter’s distributor, ABC Records, was sold to MCA in 1979, Petty sought to break the contract. He said he was motivated by the idea that “I could work my ass off for the rest of my life, and for every dime I saw, the people that set me up would’ve seen 10 times as much.”
MCA and Shelter sued Petty for breach of contract, and Petty and his managers, Tony Dimitriades and Elliot Roberts, ratcheted up the stakes by having the rocker file for bankruptcy protection -- a move that could force a court to re-adjust all of Petty’s business arrangements, including the recording contract. Designed to throw a scare into the industry (if Petty was successful, fellow artists might see bankruptcy as a useful tool for renegotiating and breaking contracts), the tactic succeeded in getting Cordell to settle out of court. “It may have been a sham in some ways, the bankruptcy strategy,” Petty admitted to his biographer, Warren Zanes. “But ... [Cordell’s] lawyers figured we’d out-lawyered them.”
MCA mollified Petty with a new imprint, Backstreet Records, and a deal that reportedly included a $3 million guarantee, and Petty regained his publishing rights. The Heartbreakers’ first Backstreet album, Damn the Torpedoes, went to No. 2 on the Billboard 200 and was certified triple-platinum. But the honeymoon proved short-lived. When MCA sought to make 1981’s Hard Promises its first $9.98 release, Petty staunchly resisted, even suggesting he would retitle it Eight Ninety Eight. MCA “couldn't see that raising the album’s price wouldn't be fair,” he told The New York Times.
By 1987, Petty was itching to move on. “I had written this song, ‘Free Fallin,'” he recalled earlier in 2017, “and taken it to my label, MCA, and they rejected the record.” Not long afterward, when the idea for The Traveling Wilburys was incubating, Petty spent an evening with George Harrison at the home of Warner Bros. Records chairman Mo Ostin. “Dinner ended and George said, ‘Let’s get the guitars out and sing a little bit. Let’s do that 'Free Fallin.'” [Warner Records president] Lenny Waronker said, ‘That’s a hit!’ I said, ‘Well, my record company won’t put it out.’ And Mo said, ‘I’ll fucking put it out.’”
Petty then signed a secret deal with Warner Bros., reportedly with a $20 million guarantee. MCA agreed to scrap the last album in his contract in return for a greatest-hits package featuring two new tracks; one of those songs, “Mary Jane’s Last Dance,” subsequently became a hit. If it chafed to have Petty spirited away by Ostin -- his first album for Warner Bros., Wildflowers, went triple-platinum -- then-MCA Music chairman Al Teller likely found some consolation in seeing Tom Petty and the Heartbreakers Greatest Hits sell a reported 12 million copies.