Stein told how he signed Madonna in 1982. He had heard her song Everybody and wanted to meet her, even though he was in hospital, but was surprised to take a call saying she would be visiting him in just a few hours time.
Stein said: "I was in my hospital bed. I hadn't shaved. I was wearing a gown with a slit down the back. I as hooked up to machines.
"I called my assistant and said 'can you go back to my house and get pyjamas and a bathrobe'. I called my father and ask if he could cut my hair.
"When she got there, she couldn't have cared if I was lying in a coffin on the bed, as long as my hand was there. She wanted a deal because she believed so much in herself.
"If it was Halloween at midnight and the shortest way to where she wanted to go was to walk through a graveyard at midnight, she'd take that route. But I love her - she's a great lady, very fair, and probably the artist I've had least trouble with. She's amazing and she's still doing it."
Stein told the crowd about how he learned about music from his older sister playing music in their Brooklyn apartment.
He moved on to his time at Billboard magazine, where he worked while still a schoolboy in the 1950s. He talked about the power of Billboard reviews, and the importance of jukeboxes in promoting music.
He said: "A new artist getting a great reviews in Billboard could mean an order from a jukebox operator for 50,000 records. That's a lot of record now."
Also in the audience yesterday was Richard Gottehrer, who co-founded Sire with Stein in 1966 and who was spoke at another Sound City event earlier in the day.
Sire Records became famous for signing acts from New York's punk scene including The Ramones and Talking Heads.
In the late 1970s he also visited Eric's club in Mathew Street, Liverpool, where bands such as the Bunnymen made their name.
McCulloch said: "To me, Eric's was almost my birthplace. It was where I found out who I was, or what I wanted to be."
Other seminars at Sound City yesterday debated subjects from the future of radio to the health of the international touring circuit and new ways to market music online.