For Delmark Records founder and owner Bob Koester, the past five years have nearly spelled the end of a lifetime’s worth of work. “Essentially, the label almost got fucked right out of business,” he says. “The drop in our sales was precipitous. It kind of felt like, ‘Welcome to the new century.'”

The 73-year-old Koester–who also owns downtown’s Jazz Record Mart and the north side’s Riverside Studio–has always operated the jazz and blues label more like an expensive hobby than a business. He’s never taken a salary as Delmark’s chief, and most years the company has operated with losses in the low-five-figure range. The deficit was usually offset by profits from the record store, but the situation got much worse starting in 2001, when losses jumped into the high five figures. In 2003 and 2004 Delmark was more than six figures in the hole.

Koester cites a number of reasons for the plunge in sales: indie record stores carrying Delmark CDs began closing, major retailers began whittling down their jazz and blues sections, and, he says, more and more people were burning copies of his releases instead of paying for them. Delmark wasn’t Koester’s only headache. A general downturn in CD sales put Jazz Record Mart’s revenues off by as much as a third between 2000 and 2004, and the studio–which opened in 1992 primarily to record Delmark acts–was suffering too, thanks to the growing prevalence of cheap home and mobile recording.

A potential solution came from an unexpected place. In January 2005 Delmark put out Live at the River East Arts Center, a concert recording by Kahil El’Zabar’s Ritual Trio with Billy Bang, on both CD and DVD. The dual-format release was a calculated risk: the label had purchased several cameras and devoted considerable staff resources to the project at a time when its financial health was in dire shape. But since then Delmark has put out simultaneous CD/DVD releases by Tail Dragger, Mississippi Heat, Fred Anderson, the Deep Blue Organ Trio, and Ernest Dawkins’s New Horizons Ensemble, and most of them have gone into second pressings. “We don’t make just CDs anymore–we do CD/DVDs,” Koester says. “Some artists just aren’t very pretty, so we may not film them,” he adds, laughing. “And also, how many DVDs of the same artist can you make? But basically, putting out a CD/DVD combination is our new model.”

DVDs have slightly higher profit margins, and their sales have boosted overall sales numbers. “Initially, I was concerned that a sale of a DVD would replace the sale of a CD,” Koester says. “But that doesn’t seem to be the case. Judging by what we’ve seen in the numbers so far, it’s actually adding to our total sales.”

Filmmaking wasn’t brand-new to Koester. Before he got into the music business, he had ambitions to become a cinematographer, and he planned to head to California to find work as a cameraman after graduating from Saint Louis University. But when the time came he decided to focus on Delmark, which he’d launched out of his dorm room in 1953. The label didn’t do much with film or video for most of its history–its first foray was some handheld footage shot for a bonus DVD included in a 50th-anniversary box set. That experience, combined with the increased sales of music DVDs in general at Jazz Record Mart, inspired Koester to start filming more live performances. In December 2004 he rounded up a handful of label employees as well as his younger brother Tom (who’s done sound and camera work for various films and TV shows) to film El’Zabar’s live set.

Now, in addition to the six videos already available, six more are in various stages of completion. Tom Koester and Delmark staffers do most of the work, though outside talents have also gotten involved: due early next year is a DVD capturing a live set by Rob Mazurek’s Chicago Underground Trio, directed by local experimental filmmaker Raymond Salvatore Harmon and designed to resemble, Harmon says, an “animated Hans Hofmann painting.”

The success of the DVDs, combined with some cost-cutting measures and a rededication to generating business for Riverside Studio, hasn’t put Delmark in the black, but the label’s now more financially stable. Last year’s losses were back in the mid-five figures, Koester says, and he hopes they’ll shrink further by the end of ’06. Helping the cause are the label’s recent archival finds, like All Your Loving I Miss Loving, a CD capturing a performance by guitarist Otis Rush in 1975. The album has enjoyed the biggest first-year sales of any Delmark title; another concert disc drawn from the same period, Junior Wells’s Live at Theresa’s Lounge, comes out next month.

Jazz Record Mart has bounced back as well. “The store is back up to 80 percent of what we were doing in the good old days,” Koester says. “We moved last year, and we got a little disorganized afterward, but we seem to have recovered. Also, we shot up when Crow’s Nest closed and Virgin cut down on its blues and jazz stock. Aside from Tower, we don’t have much competition in the downtown area.”

The Tower Records chain filed for bankruptcy last month, which presents new potential problems for Delmark. If Tower’s shuttered or bought out by a less jazz-friendly chain, says Koester, “sure, Jazz Record Mart can benefit. . . . But I’ll lose more on Delmark than I’ll gain at the store.”

The changing market has forced Koester to be more careful about selecting new talent for the label. Delmark’s jazz roster continues to flourish thanks to well-received discs by keyboardist Jim Baker and the Chicago Luzern Exchange. Blues is another matter, though. “Blues has gradually gone from being a folk music to being an art music,” he says. “Music changes as society changes, as the world changes. And the reality is most of the greats are gone, and no one is taking their place.” That doesn’t mean he’s given up on the genre: he plans to record and film a CD/DVD featuring reclusive 76-year-old west-side bluesman Jesse Fortune for release next year.

Koester says he worries whether the label will survive him. “My wife and my son might decide to sell it,” he says. “But I think there’s a need for jazz and blues labels. Historically, they tend to last until people run out of money, get tired of the business side, or die. We’ve managed to survive most of that so far. I would like to see it continue after I’m gone.”

Art accompanying story in printed newspaper (not available in this archive): photo/Leslie Schwartz.