The Brutal 35-Year War Between Sony, Stephen Popovich & Meat Loaf (Excerpt From Fredric Dannen's New Edition of 'Hit Men')

From left: John Belushi, Meat Loaf, Steve Popovich and singer Karla DeVito

(Photo courtesy of Steve Popovich Jr.)

The story was originally published in the May 3 issue of Billboard.

In 1977, Stephen Popovich convinced a reluctant label to distribute the album "Bat Out of Hell." It became one of the ­biggest sellers of all time. Now, a reissue of legendary book 'Hit Men' revisits the dirty business that followed as a battle for royalties turned into a fight to the death.

Stephen Popovich Jr. lives with his wife and two young sons in Murfreesboro, Tenn., a working-class suburb not far from Nashville. Their home is modest -- "It's not a mansion by any means," he says -- and there is nothing at all about Popovich's lifestyle to suggest his late father had been the founder-owner of Cleveland International, a custom label distributed by Sony Music that is best-known for releasing one of the biggest-­selling albums of all time -- Meat Loaf's "Bat Out of Hell." Popovich Jr. inherited a good deal from his father, who died of heart failure in 2011: pride, stubbornness, a penchant for plain speaking and a reputation for honesty.

He did not, however, inherit a fortune. When Sony, in a breathtaking yet somehow classic display of plantation-system accounting, paid Popovich Sr. no royalties, and then had the gall to remove his label's logo from CDs of "Bat Out of Hell," Popovich pere fought back. His story, never before told in a national publication, has particular significance -- it illustrates that even a well-liked industry veteran could fall victim to a major label's brazen yet all-too-familiar claim that a megaplatinum album simply had not earned out. With crucial assistance from ousted Sony Music president Walter Yetnikoff, Popovich achieved a significant, and highly unusual, moral victory: He got a jury to award him damages from Sony -- albeit not enough to cover his legal bills.

Popovich Sr. was a coal miner's son proud of his blue-collar origins, and in appearance and demeanor unlike most music executives. He had a knack for signing overlooked talent, not so much because he had a great ear for music, but because he had respect for opinions other than his own. Popovich's ethnic background was Serbian, Slovenian and Croat, and his taste in music ran to polka bands. He was born and raised in Pennsylvania, but at 17 he moved with his family to Cleveland, after his father died and left behind an insurance policy that barely paid for the funeral. In the early '60s, Popovich learned that the Columbia label was opening a warehouse in town. He cold-called one of his idols, polka star Frank Yankovic, a Columbia artist, and with his help got a warehouse job. He worked hard and learned the business. In 1969, CBS Records president Clive Davis moved Popovich, then 26, to New York, and made him assistant head of national promotion, reporting to promotion chief Ron Alexenburg.

Yetnikoff barely had been installed as the new head of CBS Records in 1975 when Alexenburg and Popovich took him to a theater in Westbury on New York's Long Island to hear The Jackson 5, the Motown ensemble consisting of Jackie, Tito, Jermaine, Marlon and 17-year-old Michael Jackson. The group had had only one hit single in four years, and was generally regarded as past its prime. Alexenburg and Popovich thought otherwise. "The two of them badgered me to sign the Jacksons … and I was resisting," Yetnikoff later recalled in courtroom testimony. "And they both said to me, 'You haven't been in this job long enough to make those negative kinds of decisions.' I said, 'OK, OK.' " The Jacksons, as they were rechristened, signed with CBS in 1976. Six years later, Michael Jackson, by then a solo artist on CBS' Epic label, released "Thriller," which is tied with the Eagles' "Their Greatest Hits 1971-1975" as the best-selling album of all time in the United States -- certified for 29 million shipped, according to the RIAA.

In 1976, Popovich was earning around $100,000 a year, a big salary at the time. Nevertheless, he told Yetnikoff and Alexenburg that he wanted to return to Cleveland and start his own label. "They thought I was nuts," he said years later. With two partners, $150,000 in seed money from CBS and a distribution deal with Epic, Popovich launched Cleveland International in 1977. Seven months after the label opened its doors, he was handed a tape of songs performed by Marvin Lee Aday, better-known as Meat Loaf.

Meat Loaf was an actor/singer with a powerful, almost operatic voice. In 1973 he was performing in "More Than You Deserve," a musical at New York's Public Theater, and befriended the show's composer/lyricist, Jim Steinman. Together, Meat Loaf and Steinman began assembling seven of Steinman's songs for an album that would eventually be released as "Bat Out of Hell." Todd Rundgren, who had worked with everyone from Grand Funk Railroad to the New York Dolls, produced the album and played lead guitar. The record, a decidedly original mix of gothic rock and Wagnerian bombast, was rejected by one label after another. As Meat Loaf recalled, in his 1999 memoir "To Hell and Back," "People at record companies hated it."

One of the cruelest rejections came from Clive Davis, then president/CEO of Arista. Meat Loaf recalled what happened when he and Steinman tried to audition the songs in Davis' office, with Steinman at the piano.

"We sing maybe two songs; that's as far as we get and [Davis is] already shaking his head. 'What are you two doing?' He turns to me and he says, 'You're an actor. Actors don't make records. You're like Ethel Merman …'

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"He turns to Steinman and says, 'Do you know how to write a song?' " Meat Loaf wrote. "And then he starts really laying into Jim, 'Have you ever listened to pop music? Have you ever heard any rock'n'roll music? … You should go downstairs when you leave here … and buy some rock'n'roll records…'

"We get down to the street [and] ... I'm screaming towards the top of his building, 'F--- YOU, CLIVE!' "

Popovich admitted that when he first heard "Bat Out of Hell," he did not much care for it. The album had seven songs -- three more than eight minutes long. Then he played the tape for two women whose opinions he trusted -- his sister-in-law and his ex-wife -- and they both loved it. "It grew on me," said Popovich. "I started to think, 'If it hits the radio and doesn't sound like anything else, it could be a great thing.' "

In October 1977, Cleveland International released "Bat Out of Hell." Epic, the CBS label, distributed the album, but with little enthusiasm. Popovich and his partners began promoting the album aggressively, first getting radio play in Omaha, Neb., Cleveland and New York. By year's end, the album had sold a respectable 140,000 copies by Popovich's account, but the promotion people at Epic were still unmoved. Popovich, in a letter to his former boss Alexenburg, complained, "Some of your guys have given up." Finally, in January 1978, Popovich arranged for Meat Loaf to perform at the CBS Records convention in New Orleans and, Popovich later recalled in courtroom testimony, Meat Loaf "tore the place up." CBS finally got behind the album, he added, "and it exploded in America."

By 1986, "Bat Out of Hell" had shipped 4 million units, according to the RIAA, but Popovich and his business partners had not been paid any royalties. CBS' contract with Cleveland International had included the standard cross-­collateralization clause, the music industry's contractual Catch-22. Under the clause's terms, which remain a staple of contracts today, record companies get to charge their artists for recording, packaging and promotion, and the companies can make the artists pay the costs of unsuccessful early albums out of the profits of successful later ones. The artist may have a hit record and receive no money from it at all, while the label cleans up. When CBS claimed it was entitled to recoup some $6 million in expenses for "Bat Out of Hell" and all the other albums put out by Cleveland International, Popovich's partners walked away, leaving him the sole owner of the label. Meanwhile, "Bat Out of Hell" continued to sell year after year. Sony Music reissued the album in CD format after acquiring CBS in 1987, and sales spiked again. Popovich still never saw a royalty check. (The album's creators evidently fared no better. In a 1993 interview for Q Magazine, Steinman said of himself and Meat Loaf, "We haven't been paid on 'Bat' since 1980.") Popovich did not believe Sony's claim that the album had never earned out, but under the statute of limitations imposed in his contract, the three-year time limit for conducting an audit had expired.

Popovich was in Yetnikoff's office one afternoon in 1990, and, he later recalled, "I said to Walter, 'To the day I die, I'll regret I didn't audit.' And Walter said, 'So audit.' " Yetnikoff liked Popovich, and had never forgotten his role in bringing Michael Jackson to CBS. As CEO of Sony Music Entertainment, Yetnikoff was agreeing to waive the statute of limitations. Yetnikoff was fired from Sony about a month later, and Popovich asked for, and obtained from Yetnikoff, a letter confirming the agreement made in his office that day. "I showed that letter to accountants and lawyers," said Popovich, "and they felt it presented a great case for me."

Popovich hired the Citrin Cooperman accounting firm, and wound up, he said, with an auditor's report calculating that "Sony owed me, my partners and Meat Loaf $19 to $20 million." He filed a $100 million lawsuit against Sony in 1995. Sony used every delaying tactic at its disposal, and by 1998, Popovich was exhausted and broke, but determined to have his day in court. A jury trial was set for Tuesday, Feb. 17, in Cleveland. An attorney for Popovich recalled that on the Friday before the trial, "with our bags literally packed and our papers literally at the elevator," Sony called and offered to settle.

Lawyers on both sides of the case arranged a weekend meeting in Cleveland, and were caught off guard to discover that Popovich, though eager to reach a financial settlement, had another issue of at least equal importance. Sony had removed the Cleveland International logo from CDs of "Bat Out of Hell." Apart from the incalculable value of having your company's imprint on one of the biggest albums in history, there was also the matter of pride -- had it not been for Popovich, the megahit might have remained an unproduced demo tape. "I wanted the legacy to pass on to my children and grandchildren, and they deprived me of that," said Popovich. He demanded a contractual guarantee that his logo would be restored, and Sony's lawyers would not concede. One participant in the meeting recalled that "Steve had actually given up on the settlement, was ready to go to trial … and was walking out of the building, and [a lawyer] was chasing after him to try to bring him back."