On a friend’s recommendation, I watched Peter Bogdanovich’s wonderful documentary on the early years of Tom Petty & the Heartbreakers (called ‘Runnin’ Down the Dream’) which just aired on the Sundance cable channel. [I’m a huge Petty fan, as it happens – a good deal of his stuff ranks up there with the truly great masterpieces of rock and roll, imho]. It turns out that Petty played a not-insignificant role in a rather important legal development in the mid 80s.
Petty, like a LOT of musicians, had been so happy to get any recording contract at all, when the band was just getting started, that he didn’t think much about what it was that he was doing. He had signed a “publishing” contract — as Petty describes it in the film, he really didn’t know, when he signed the contract, exactly what “publishing” meant, assuming that it had something to do with the distribution of sheet music; little did he know that the “publishing” contract he signed had basically transferred his future royalty payments for all public performance of his songs (include their “performance” on the radio, where the really big bucks are) forever.
It’s an old story, of course, and we’ve all heard it a million times. But Petty fought back in an interesting, and somewhat novel (at the time) way: he declared bankruptcy. A bankrupt is allowed to void all “executory” contracts — contracts to be performed in the future — so as to allow the “fresh start” that bankruptcy is supposed to provide. Petty had to get the court to declare that his publishing contract was an executory contract. It’s a nice little legal issue. If he had “transferred his copyright” to the publishers, then it’s clearly not an “executory contract” that the court can declare void; if you sell you house in 2007 and declare bankruptcy in 2008, you don’t get your house back. But if the contract is treated as an “assignment of his ongoing royalties” to the publisher, that’s a different story — that’s a contract to be performed in the future, and he can get out of that one.
Petty (and a number of other artists at around the same time) were successful in persuading the courts to void these publishing deals (allowing them, of course, to renegotiate them on far better terms).
What I find particularly interesting about the episode is the way Petty talks about it in the film – which he does, at length, and quite eloquently. To Petty, the significant thing about the fight was that he had signed the publishing contract “under duress” — forced to swallow outrageous and onerous terms by a greedy corporate monster — and he clearly feels vindicated by his victory in court. He may be right that he had been forced to swallow outrageous and onerous terms by a greedy corporate monster. But that’s not why he won — it had nothing to do, in fact, with why he won. He won because the contracts were executory and therefore voidable — duress and the rest of it had nothing to do with that. Except, of course, that it was the “duress,” and the perceived unfairness of it all, that helped strengthen his cojones to fight it in the first place.