20 Biggest Record Company Screw-Ups of All Time

Money For Nothing
#15 MCA’s teen-pop calamity
How sure was MCA that slinky Irish teen Carly Hennessy was going to be a gargantuan pop star? So sure that in 1999 they staked the former Denny’s sausage spokesmodel with a $100,000 advance, $5,000 a month in living expenses and an apartment in Marina Del Rey, California, spending roughly $2.2 million in all on her 2001 debut, Ultimate High. How wrong were they? In its first three months in stores, Ultimate High sold a whopping 378 copies, putting the label’s investment somewhere in the order of $5,820 per copy sold. Last seen, Hennessy had resurfaced—still looking for her big break—on season seven of American Idol.  
Unintended consequence “Sausage spokesmodel” proves a less embarrassing resumé entry than expected.

Always Read The Fine … Oh, Never Mind
#14 Stax Records unintentionally gives away the store
Soul fans can credit Memphis’s Stax Records for classic hits by Otis Redding, Sam & Dave and Booker T & the M.G.’s—but the real winner was Atlantic. In 1960, Atlantic partner Jerry Wexler liked one of Stax’s first releases enough to pay label president Jim Stewart $1,000 to lease it, and Atlantic soon contracted to market and distribute all Stax releases. Seven years later, with Stax reeling from Redding’s death, Stewart finally took a close look at the Atlantic contract and discovered he’d been bamboozled: Contrary to industry practice, Atlantic became the owner of any Stax release it handled. Stax had signed away its catalogue and future.
Unintended consequence Bob Dole flips “Soul Man” into “Dole Man” during his ’96 presidential campaign.

The Last Of The Mega-Deals
#13 One label’s big spending single-handedly ends “alt-rock” boom
In 1996, Warner Bros. signed R.E.M. to a five-album contract for a reported $80 million. It was the most costly record deal in history and elicited one of the lowest returns. Warner needed R.E.M. to sell at least 3 million copies of all five records to come out in the black, but sleepy folk-rock albums like 1998’s Up moved a fifth of that. The execs went further into the hole by allowing R.E.M. to keep the masters of all their Warner releases, forfeiting future revenues generated by the band’s popular ’80s and early-’90s discs. No one knows how much the label lost—but the debacle brought to a close an era in which acts known for their “integrity” could score huge paydays.
Unintended consequence Warner executives still hoping “Daysleeper” makes it on to The Hills soundtrack.

Axl Grease
#12 Geffen pumps millions into (the nonexistent) Chinese Democracy
Ten years ago, Guns N’ Roses still looked like a good investment—they’d gone platinum 32 times. So in 1998, Geffen Records could be forgiven for paying Axl Rose a million bucks to complete GNR’s fifth album, promising a million more if he delivered it soon. (Rose had already spent four years working on the LP, losing every original bandmate in the process.) Beset by perfectionism, lack of focus and plain-old nuttiness, Rose never got that bonus million. But his label kept spending: In 2001, monthly expenses totaled $244,000. Four producers and a gazillion guitar overdubs later, the album is no closer to release. And Geffen’s in the red for $13 million.
Unintended consequence A frustrated Rose gets into a well-publicized fistfight
with … Tommy Hilfiger!

Just Be Yourself—Or Else
#11 Geffen sues Neil Young for making “unrepresentative” music
At the dawn of the ’80s, David Geffen signed Neil Young to his new record label, promising that “commercial” considerations would never get in the way of art. Young took this to heart, wandering so far off the reservation with albums like 1983’s synth-driven Trans that Geffen filed a $3 million breach-of-contract suit: effectively charging the folk-rock icon with not making “Neil Young” records. Young filed a $21 million countersuit before settling out of court, but remained somewhat bemused by Geffen’s judgment: “He didn’t seem to comprehend how … uh, diverse my musical career had become,” Young said.
Unintended consequence Young’s Happy House and Tejano albums remain on the shelf.