He released his last album through Yip Eye, Space Ducks: Soundtrack, in 2012. Around this time, he formed his own label, Eternal Yip Eye Music. In 2005, Jeff Feuerzieg directed the award-winning documentary about his life called The Devil and Daniel Johnston.
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In 2004, he released the two-disc compilation The Late Great Daniel Johnston: Discovered Covered with renditions of his work by TV on the Radio, Jad Fair, Bright Eyes, Tom Waits, Death Cab for Cutie, Beck, Sparklehorse, and more. Though Atlantic dropped Johnston from the label in 1996-two years after his Paul Leary-produced album Fun-he continued to record and collaborate with high profile musicians.
Elektra Records and Atlantic Records were among the bidders, but Johnston ultimately signed with Atlantic because he believed Elektra signees Metallica to be Satanic. During that time, a label bidding war began after Kurt Cobain brought attention to his music by sporting the artwork of his 1983 album Hi, How Are You on a T-shirt.
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