There are few equivalents in the business world to the independent record company. Most are labors of love rather than profit. To music lovers first, business people second, indie-label owners perform a valuable service in releasing music by artists that the big, corporate imprints can't, won't or don't know about yet.
Whatever the motivation, indie labels (so called because they are "independent" of the Big Five record distributors, Warner Bros./Elektra/Atlantic, EMI Music, Universal, Bertelsmann and Sony) are more than farm leagues for big companies to pluck bands from. They are havens for musicians who care more about art in a business that is increasingly concerned with pleasing stockholders.
Operating on smaller budgets and selling fewer records than the big boys allows for more creativity and flexibility. Artists may not even have contracts at indies, as handshake deals are commonplace. But instead of the 10 to 15 percent royalty rate, common at major labels, indies and artists usually split the money closer to 50-50. For a band that can sell 100,000 records, there is three times as much profit on a small label as on, say, Warner Bros., Interscope or Capitol.
And indie labels exist on a scale in which 10,000 sales turn a good profit. Majors, with their field staffs, radio consultants and other overhead, make it impossible for most bands to break even unless they sell 500,000 copies. Of course, because indies aren't focused on the bottom line, they can also be volatile, short of cash, ad hoc and out of business, sometimes even before the pressing plant gets paid.
Two durable American indie labels, Merge and Matador, are each celebrating 10 years of operation this year, and they're doing it by releasing compilation records (Oh, Merge and Music Is Nice, respectively). In the early '90s, the kinds of bands that Merge and Matador had on their rosters fit right in with the popularity of alternative rock. One of the unexpected bonuses of platinum records from Nirvana, et al., was that these companies sold more records. Matador did jump into bed with the majors, signing a distribution deal with Atlantic Records (part of the WEA family) in 1993 and then selling 49 percent of the label to Capitol (EMD) in 1996 for, reportedly, between $8 million and $12 million. Neither deal produced hits. Matador bought itself back from Capitol at the end of last May.
Beyond caring more for artistry than dollars, indie labels have personality. Matador, based in New York City, has a snarky, slightly hip attitude, evidenced in its 10-year anniversary campaign, "Matador Is Nice." This cheekiness extends to the staff, headed by co-owners Chris Lombardi and Gerard Cosloy, leading some Atlantic staffers to refer to the label as "Matitude." For inquiring minds, yes, Matador is bigger than Merge. Matador released 300-plus records in the past decade, and it has a larger staff. Artists who have recorded for the label include Liz Phair, Yo La Tengo, Pavement, and Guided by Voices.
Lombardi and Cosloy worked together at another indie label, Dutch East India Trading Company/Homestead, in the '80s, and Lombardi started Matador without his partner, who eventually came aboard in 1990. Cosloy probably best exemplifies the attitude of the company. His responses to email questions came like under-the-breath comments from the back of the room, illustrating the label's demeanor much better than serious answers could have.
NT: What are some of the mistakes you've made?
Cosloy: We should've handed out that sexual harassment policy letter much earlier. Sponsoring the amputee softball team was a questionable decision. And of course, some of our more litigious former employees will not let us forget "Go to Work Blindfolded Day" (which kicked ass over Casual Friday, I thought).
NT: How do you and Lombardi work together?
Cosloy: In a very careful, considerate manner, not unlike Madison/Unger, Nixon/Agnew, Cagney/Lacey, etc.
Funny, but not very helpful. Cosloy's partner is more serious in discussing the label, lending some credence to the Odd Couple joke. Chris Lombardi started the label soon after leaving Dutch East India. Being plugged into the New York music scene and having connections in the retail world put him in the right position to start a company.
He signed a few bands right away, and things took off more quickly than he expected, though it would be four years before Atlantic would step in with big money. Cosloy was brought on to help with the workload a few months after the label started in earnest. Today, Cosloy is in England overseeing Matador Europe (opened in 1996), and the company has 36 people on payroll.
"There wasn't any grand scheme to create a full-fledged record label," says Lombardi. "It was an experiment. 'Let's see what happens.' It just grew from there, basically. Friends ended up working for us for very little money. When we had some money to pay them, we paid them. We paid ourselves whenever we had a little bit. The idea that we could keep the lights on, continue to put out records and have money for pizza, we were doing good. If we could pay our rent, that was even better. And we were able to do that. We kept growing."
This growth allowed the Matador company to sign such disparate acts as noise merchants Unsane, Japanese dance-pop duo Pizzicato Five, Scottish rockers Teenage Fanclub, and a stable of indie rockers such as Helium, and Come. Part of the label's success comes from its ability to sell a variety of styles of music to a small group of consumers. Matador had the status of a label like Sub Pop, without concentrating on just one sound.
"When we first started, we didn't think of ourselves as being an indie rock label," Lombardi says. "It was really what we liked. There was pride in the design of the label as [having] a really diverse roster, that we didn't represent grunge music or something exclusively."
But Lombardi knew the label was for real when the big money suitors started calling. "When we started getting offers from major labels to do distribution deals, we realized there were people who were really interested in what we were doing on a financial and a commercial level. That made us realize that we had something we could continue to build and grow. Someone was willing to capitalize it for us. It wasn't just literally taking the mail-order money for the day to trade that in for more postage. That was probably the first notice that we had something that was real and we could continue doing it."
Just as the company didn't think of itself as representative of one style of music, it shunned the insular world of indie rock, embracing the money and opportunity that major labels offered. There's a big difference between selling out and branching out. To their credit, Cosloy and Lombardi kept on releasing records from bands that had little hope of selling as many records as marquee acts on Atlantic (home to Hootie and the Blowfish) or Capitol (Everclear, Beastie Boys).
From 1993 to 1996, while Atlantic was distributing the label, for instance, Matador issued records by the British band Moonshake. A band that combined frantic rhythms, dub breaks and hip-hop, Moonshake was, at best, a cult favorite.
Ostensibly, Atlantic was interested in getting hits out of critical faves Liz Phair and Pavement. Phair, whose debut, Exile in Guyville, was a song-for-song response from a female point of view to the Rolling Stones' Exile on Main Street, was widely hailed by critics and was Matador's first gold record (for sales of between 500,000 to one million). Her follow-up the next year, Whip-Smart, was the biggest success of the label. It also went gold, having debuted on the charts at No. 27. But these accomplishments weren't enough to keep Atlantic and Matador together.
After the split in 1996, Capitol won the bidding war that erupted. It purchased 49 percent of Matador with the option to buy the remainder after three years. The marriage came and went, and in May of this year, neither party thought it best to continue together. Blame the declining sales of alternative rock.
"Certainly, in the climate of the music industry today, we didn't want to go forward with Capitol, and Capitol didn't want to go forward with us," Lombardi says. "It worked out nicely. We've gone full circle. The two distribution deals allowed us to capitalize the company, build our systems, increase our staff, bolster our roster with multigenre artists and really grow. Now we're back to being fully independent and on our own. We've created the infrastructure to be able to support ourselves."
In retrospect, the deals made some sense, but a label like Matador specializes in selling records in the thousands, not millions. Lombardi agrees: "I think the plan was to have huge, massive commercial success. That didn't happen because we don't make mainstream music here at Matador. That didn't really fit into the plan we had with Capitol, which, in reality, was to deliver platinum records and gold records."
There aren't any gold records on the walls of the Chapel Hill, North Carolina, headquarters of Merge, and that's pretty much fine with them. The college town location of the imprint perhaps helps explain its laid-back approach. Merge has dubbed its 10-year celebration "M2K," even though people who work there understand that 10K means 10,000. "Ah, whatever," is the attitude. Merge is co-owned by Laura Ballance and Mac McCaughan of flagship band Superchunk, and has a staff of six, including Ballance and McCaughan. Other notable bands to have graced the Merge roster include Polvo, Seaweed, Neutral Milk Hotel, and Verbena.
Ballance admits that Merge's success comes not from careful planning but from luck, instinct and learning on the fly. Superchunk's punk-rock aesthetic colors the temperament and style of the company. The label began in the minds of Ballance and McCaughan with a feeling straight out of punk rock's do-it-yourself ethos. The two were in a band, and Chapel Hill was (and still is) a hotbed of like-minded musicians, folks who release their own records and those of their friends.
From Ballance's bedroom, the pair issued a record about every other month for a couple of years. Superchunk's first two albums came out on Matador. They started with seven-inchers, and, in 1992, Merge's first full-length album was a collection of Superchunk's singles, Tossing Seeds.
Soon Ballance and McCaughan had to move out of the bedroom and into an office in a house, sharing walls with a real-estate company and a rare-book trader. They hired their first staff and linked up a production and distribution deal with Chicago's Touch and Go label. This would help them get records into stores. "When it got to the point where we had two people working for us, I was like, 'Whoa, this is getting serious.' I didn't know this was going to happen," says Ballance. "We've never been much for goals."
The sound of artists on Merge began diverging from pop-punk as the label grew. Lambchop's orchestral country, the Squirrel Nut Zippers' hot jazz and Labradford's space rock all found a place at Merge's table. Today, the staff of six handles the work of 20-plus bands. For a pair in a band that once wrote a song about working at a 24-hour Kinko's ("Slack Motherfucker"), being bosses and signing paychecks is awkward.
"It really sucks. I don't like it," says Ballance. "It's weird because it was never our intention to have to manage other people and have to hire people and fire people, give them raises or not give them raises. You don't think about that [when you start out]. It's not that many people, but it's more than I ever wanted to be the boss of."
The demands of the label have grown while Superchunk has become a perennial indie rock favorite. Ballance admits that co-running the label and being in a successful band are both full-time jobs. "They are; it's hard. I feel like I have to neglect both of them in order to do the other. When I'm at home, I go to the Merge office every day, eight hours a day," she says. "The last thing I want to do is go home and work some more, play bass, practice playing or write songs. So basically, I have to do one or the other when the need arises. It's like crisis management. It sucks. I would prefer to do something really well."
But being in Superchunk and touring helps the label find and keep bands. Because it is artist-run, it's artist-friendly. Currently the label doesn't even use contracts. Instead, it carefully chooses bands, some of whom 'Chunk finds while on the road.
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"That's where being in the band kind of comes in handy," says Ballance. "It's a matter of working with bands that have a similar mindset, where the goal is to put out records that you like and be able to do them the way you want, not necessarily spending a lot of money on them, with a realistic goal in mind."
Realism plays a strong role in how Merge does business. Ten years in, it still didn't have a business plan, still didn't do anything very differently, according to Ballance, except spend more on advertising. And like Matador, Merge is changing with its owners.
When asked what Merge will do in the next decade, Ballance starts her answer, stops and laughs. "I was going to say, 'Stay on top of what people are actually interested in buying,'" she says. "But the way Mac and I work is, we'll just keep putting out records that are what we're into listening to. Probably what that means is that it will be appealing to people in our age group."
That's something that both Matador and Merge have done from the beginning. By using their ears, and not detailed marketing plans, Lombardi, Cosloy, McCaughan and Ballance have stayed true to the reasons they started, even if the music has changed.