In the Shadow of the Dinosaurs

The Death of Indie Labels: Reports Have Been Exaggerated


illustration by John Keen

It's everybody's favorite number these days -- 28,000 -- which is the staggeringly absurd number of albums released last year. Some people play around with it, breaking it down to albums released per day (over 76) or per week (almost 540). Anyway you break it down, it's insanely large.

And it could get even bigger. Have $1,000? Then you, too, can start your own record label and contribute to the madness. With few barriers to entry, it's almost as easy as that; $1,000, a band to record some music, and voila, CD number 28,001. Only there's one small problem: Stores are not expanding to accommodate the 3.2 new releases per hour. While there are more and more titles competing for static or even contracting amounts of retail space, there's also the fact that over the past two years CD sales have finally leveled off after nearly a decade of continual growth.

Not surprisingly, the music industry has been struggling to explain the decrease in demand for product. At this year's South by Southwest, for instance, there was an entire panel devoted to the subject. Favorite theories included the frontrunning idea that most consumers have completed converting their vinyl collections to disc, thus deflating the steady demand for back catalogue, which had long bolstered sales of CDs.

Another popular theory involved the Internet, which, at $20 a month for AOL, was seen as depriving people of 12 potential album buying opportunities per year. Okay.... Oddly enough, though, no record executives were offering up the explanation that their labels might simply be flooding the market with crummy music that isn't worth buying in the first place.

No matter the reason, with rising expenditures and less-than-projected incomes, many major labels have found themselves in a hole and have reacted accordingly -- by "downsizing." There have been house cleanings recently at Atlantic, Warner Bros., and Columbia, with high-profile imprints like American purging their rosters of bands deemed expendable (see "Dancing About Architecture").

It only makes sense, then, to assume that independent labels are having corresponding problems -- especially since they're operating sans the vaults of money most majors depend on to get them through lean times. But as counterintuitive as it may seem, many indies are not on their deathbeds, and if they're struggling just to keep from falling by the wayside, it's just because that's the permanent condition of the indie.

In fact, as many major labels trim their rosters, some indies are actually stepping up their release schedules, an indication that their balance sheets are healthy and demand for their product is increasing. How is that possible in a time of borderline crisis for the Capitols and Columbias? Dinosaurs were big, slow, and dumb. Early mammals were small, cunning, and highly adaptive. Which ones survived?

James McMurtry, who was dropped by Columbia last year and landed with North Carolina-based indie Sugar Hill, explains the biggest difference between majors and indies. "The thing about major labels is that they are going to make you spend money," says McMurtry. "They're usually not going to approve your project unless you get them names that they've heard of... musicians they've heard of and producers they've heard of -- and those guys cost money."

Add to the cost of a name producer the prestigious and expensive studio in which majors are going to set you up (the Hit Factory in New York, for instance, runs around $2,500 per day), and it's easy to see how the bill adds up quickly. And if you're going to spend a shitload of money just making an album, then it doesn't take Kurt Gödel to figure out that you have to sell a shitload of them same albums before you recoup your recording costs and start making money.

"Majors are idiots when it comes to recording budgets," vents Craig Stewart from Austin's Trance Syndicate Records. "It's unbelievable that it gets to six figures. I just can't fathom that. I have no idea how you could spend that much fucking money recording a stupid 40-minute rock & roll record. It's not that hard."

Six figures? Ha! Sometimes the big name producer alone can run you six figures. The reality is, nowadays you can make the big league record for minor league prices; McMurtry, for one, made his debut for Sugar Hill for a "small fraction of the cost" of his albums for Columbia. Trance has yet to hit the $10,000 mark on any of their recordings, and typically does almost everything significantly cheaper. For instance, the Austin-based label spent about $100 on the Mountain Goats EP, and that was to get it sequenced. The technology has gotten to the point that anyone can make a digital quality recording in their living room for next to nothing.

So, by controlling recording costs, even when sales are modest (2,000 units and often less), indie labels can cover their expenses, see a small amount of black ink for themselves, and put some money in the bands' pockets. Just like the hokie pokie, that's what it's all about.

Marketing an album to get even those small sales figures, however, is where the indie labels fight the battle. Indies are at a huge disadvantage in that they simply don't have the financial coffers that a major label has to throw money at an album -- to work it at radio, in the press, and in retail -- in order to generate the hype and the notoriety, which generally translates into sales.

Compare sales figures of major label recording artist BR5-49 to local darlings the Derailers and you get an idea of what a difference money can make. Arista Nashville, with its major label bucks, devoted three people to the BR5-49 project: one doing alternative press, one doing country press and national press, and the other doing tour press. The label also spent time and money working four singles to country radio. Currently the band has sold 222,000 copies of the self-titled release.

Watermelon, on the other hand, the Derailers' Austin-based label, doesn't have the three people to devote one each to a different segment of the media, or the money to release and work four songs to radio. Thus, the Derailers, a very similar sounding band without a well-financed label to give them that degree of support, have, by comparison, sold under 10,000 copies of Jackpot. (Soundscan reports sales of 7,000 copies but Watermelon's president Heinz Geissler figures the service misses up to 30% of his artists' sales.) As Geissler puts it, "The big boys, just out of sheer power of money, still have the ability to create somebody out of nothing." BR5-49 wasn't exactly created out of nothing, but the difference in sales gives a big indication of what throwing money and other resources at a band can mean in terms of sales.


illustration by John Keen

What do indies do to compete? They play the game anyway. They do the things that majors do, but to a lesser degree and with lower expectations. They send out 2,000 promotional copies of a CD to print and radio. They hope to generate media attention. They pray that some radio station somewhere picks up on their release -- even if it's just a Sunday night specialty show or non-commercial college or public radio; don't underestimate the power of public radio as shows like Fresh Air and NPR's All Things Considered (ATC) are exposure windfalls. Sugar Hill claims that after Doc Watson got profiled on ATC, his sales quadrupled from one week to the next. And most importantly, even if they don't offer any financial tour support, indie labels make sure they put their bands out on the road because it's one of the best ways to develop a fan base.

It's when one of these things starts to show results that indies are at a real advantage. A major label may have as many as 30 projects on the table at one time, but since they don't have the people to work 30 projects, they generally pick their priorities and commit to those. They'll even work a bad album that isn't selling, because the president of the company decided he liked it. Indies, on the other hand, only have a couple of new projects going at any given time, and while they'll promote all of them, they can effectively shift resources to things that catch on and begin to sell -- making the money where it looks like the money can be made. They're not locked into things as rigidly as majors.

Moreover, indies typically fill a certain niche; they generally dislike that term, but it's part of their success. Developing a genre identity helps devotees of certain types of music continue to find that type of music. As Rob Mills of Chicago-based indie Bloodshot Records puts it, "It's not like a fan is going to buy one of our CDs and all of the sudden it's going to be a goth-techno thing."

Bloodshot, with artists like the Waco Brothers, Moonshine Willy, and Robbie Fulks on its roster, deals entirely with insurgent country bands. Therefore, when you see an album on Bloodshot by a band you've never heard of, you know what kind of music it's probably going to be -- plus, if you're an alt-country fan, you're interest is probably going to be piqued. Better still, the label has generated interest in one of its bands without having to spend any marketing dollars to do so.

Beyond brand identity, indies generally try anything they can: licensing the music for the European market, patching together overseas distribution, developing solid relationships with the mom-and-pop indie retailers that sell noticeable numbers of their CDs and vinyl, and setting up 800 numbers, mail order, and Internet accounts. After that, they get creative.

To promote lounge revivalist Esquivel, New Jersey-based indie Bar None had to find a way to overcome a couple of unusual obstacles -- like the fact that he's 70 years old and bed-ridden in Mexico. They couldn't very well put him out on tour, so the label took his music and pictures of him, and put that on tour instead, setting up lounge parties where they played the album, showed pictures, and made martinis.

Sugar Hill, for their part, found success by bucking the industry trend with cassette sales in Wal-Marts. Let's indulge in some negative stereotyping for the sake of making a point: Farmers may not own CD players, or they may not like the environment of a Blockbuster Music filled with all those complex city folk, but they still might enjoy listening to bluegrass music. So, as label publicist Rebekah Radisch put it, at a Wal-Mart "while they're picking up motor oil, or other household goods, they can cruise by the record aisles and see, `Wow, they have bluegrass here.'" There are people that want that type of music, so for Sugar Hill it's just a matter of finding ways to get it to them. If all that doesn't work, there's always winning the lottery, which, in this case, means getting one of your bands picked up by a major. Well, it's not exactly winning the lottery, that would be more like an indie record going platinum, which just doesn't happen. This is the independent label equivalent of matching five of six lotto numbers.

If a band is still under contract with the indie when a major comes knocking with its checkbook open, any one of a number of things can happen: The major can just buy out the band's contract, giving the indie "points" against future sales, which essentially translates into royalties; or they can work out a deal with the indie where they release an album jointly. Regardless of the specifics of the deal, the indie is going to get paid, handsomely.

Or not. Bloodshot and Dejadisc only had one-album deals with the Old 97's and Richard Buckner, respectively, and when those acts got signed by Elektra and MCA, respectively, the labels got nothing. Worse still, the splits weren't entirely amicable. Yet even if the labels got stiffed both financially and emotionally, they've still got the back catalogue, so the magic financial coattail ride from future successes can happen anyway. Here's an illustration in the form of a rhetorical question: How much money did Sub Pop make (and is probably still making) off Bleach once DGC introduced the mainstream world to Nevermind?

It's a double-edged sword, though. Being small and nimble, indies can do some things that the majors can't, but as Bar None's Glenn Morrow points out, "There's a fine line between the frustration of not having the big bucks to throw around like the majors do and the ability to do things quickly."

There's almost universal agreement amongst indie label
proprietors that radio play is the most effective way of generating album sales.
Indies don't sell
millions of
albums
because indie songs usually don't get the airplay. Getting on radio involves, what, catching the ear of the program director and having her decide that the album's worth playing, right? Oh, to be that naïve.

Albums get played on mainstream commercial radio because they're worked to mainstream commercial radio (or because they're already being played by another influential station somewhere else). Major labels have entire departments that kiss radio people's butts in an attempt to get their albums played on these stations. Outside of the majors, indies can hire independent radio promoters whose sole function in this world is also to get songs onto the airwaves.

It's a lot of phone calling, a lot of badgering, maybe some lunches and dinners -- or even some more questionable perks -- in the quest to build a relationship that will achieve the desired end. And, believe it or not, these promoters don't do this out of the goodness of their hearts or because they really believe in a band. They do it for the paycheck. And it ain't cheap work.

Hiring an independent radio promoter can run around $500 a week, and to be truly effective you need that person to work an album/single for about six weeks. Now, how on earth is a label that survives by keeping recording costs at around, say, $2,000 going to come up with another $3,000 for radio promotion?

Dejadisc's Steve Wilkison, who not too long ago had an on-air tiff with one local program director about not getting airplay at that commercial alternative (oxymoron?) station, laments that, "It's almost guaranteed that if you hire one of the independent radio promoters to work your record, it's going to get more attention and it's going to get farther up the charts than if you do it yourself because that's just how it works."

In fact, more cynical minds at other labels figure that unless you use independent promoters your band won't get serious consideration at all, which is tantamount to saying that the music isn't being evaluated on its quality, but rather on how much the label is willing to spend on it. And since indie labels often don't have the kind of money necessary, independent radio promotion is that much more of a gamble.

Sometimes it's not even a gamble, but a waste of time. According to Watermelon's Geissler, "Don Walser could never get played on KASE 101. And you would think, `They don't come more country than Don.' He's a hometown hero. KASE 101 is in Austin. We tried forever and it just didn't work.... Unless you are on a major label, there's just no way to get in there."

It's not just at radio that getting outspent really handicaps independent labels; they're also up against the leviathan right where most records are sold -- retail.

Those listening stations that started popping up in record stores within the last few years? Ah, that's the big lie. They're not there because some benevolent retailers thought, "Hey, let's find a way for people to sample more music to help them decide if they want to buy it." No, they're there because some enterprising retailers thought, "You know, we could make more money if we put CD players in here and charged record companies to put their records in them."

It's called a program. Listening stations, sale pricing, and positioning (placing CDs in highly visible displays) are all programs and they all cost money. If an indie wants to put one of its albums into a listening station at a Tower Records, it has to pony up some dough to Tower Records -- roughly $40 per store for a month. That sounds reasonable on a per-store basis, but that's not really allowed. Labels generally have to buy into the entire chain, and that brings the actual cost to around $4,000.

The virtues of listening stations have been brought into question recently. When they first appeared, most indie folks were fans, thinking things like, "I always knew that if I could just get people to listen to this music, they'd like it. Here's that chance." Now, however, those same people look at it like, "Nobody takes the time to listen to all 60 albums on a listening station. They might listen to an artist they've already heard of before they walked into the store. What's the point, then, of paying a record chain good money to give people a chance to listen to something that they won't actually even listen to?"

Nevertheless, $4,000 is nothing to a major label. They'll drop that on top of buying the half-page ad in Rolling Stone, putting up the billboard on the corner of 4th Street and D, and springing for the golf junket for the program directors of all the target stations in the major markets. If anything, $4,000 is the cheapest of the lot. They'll spend it and not think twice about it. Rather than just selectively picking their spots, major labels can spend until they feel they've gotten the message out to everybody.

Where can indies beat the majors, then? If it happens at all, it's usually in the press, where quite often bands on small labels get lauded by critics who are busy shredding the major labels' bland million-sellers. In print, Pavement gets fellated and Hootie gets flogged, right? Oh, irony you're a cruel bitch -- everybody knows that press, good or bad, doesn't sell albums.

Geissler cites Alejandro Escovedo as an unfortunate example of this principle. "We had a three-and-a-half or four-star review of Gravity, Alejandro's first album, in Rolling Stone, and naïve as we were, we thought, `Wow man, the phones won't stop ringing for the next six months.' And we got maybe 30 calls and 20 letters, and they printed our address and phone number with the review." Put together all of Escovedo's glowing press and you've got a nice thick volume of literature on a guy that recently lost his deal with Rykodisc.

Similarly, when Richard Buckner was still on Dejadisc, he got a full page spread in Spin. Wilkison guesses that didn't account for "more than 100 or 200 sales on the record."

Rob Miller sums it up nicely: "If you don't have the major label money to buy into the chains and do all of the promotion on that end, then a lot of the time releases, no matter how critically acclaimed they are, just get lost in the shuffle. There are just too many life-size cardboard cut-outs of No Doubt filling the stores. We don't have any life-size cardboard cut-outs of anyone."

The major labels may be dinosaurs, but they are rich dinosaurs, so they ain't going nowhere. The indies will just have to stay small, cunning, and highly adaptive -- it's how they survive in a music world where just about everything costs money they don't have. Besides, have you seen the Waco Brothers? A life-size cardboard cut-out of them would be no good. They're not that cute.

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