It’s never been easy to run an indie record label, but these days the rapidly changing business climate makes it a special challenge. Tower Records, the biggest brick-and-mortar retailer in the States to specialize in deep-catalog and independent offerings, has gone bankrupt and will soon close its 89 stores. Big-box outlets are thriving–last year Wal-Mart, Best Buy, and Target sold more CDs than anyone else, online or off–but they focus almost exclusively on current hot sellers. If it doesn’t move quickly they won’t stock it, and that leaves most indie releases out in the cold. It’s hardly news that labels have had to adapt to the upsurge in digital downloading–in 2005 the iTunes store was the seventh-largest music retailer in America, becoming the first dedicated download provider to crack the top ten–but for smaller operations, meeting that demand has become a question of survival.

Chicago labels Touch and Go, Thrill Jockey, Drag City, and Bloodshot sell their music through vendors like iTunes and eMusic, a download outlet that works only with indies. Small labels might seem ideally suited to doing business online, where it’s still relatively difficult to browse a retailer’s stock–their customers are more likely to be the sort of educated aficionados who log in knowing what they’re looking for. But the fantasy of the Internet as a level playing field was punctured years ago, done in by the massive advertising and marketing resources of the majors.

Bettina Richards, owner of Thrill Jockey, is trying to claim her piece of the action by building a better mousetrap. Her label already offers a rare online amenity: full-length streams, not snippets, of every song from every release in its catalog. “I believe if people can listen to the albums, they tend to buy them,” she says. “The other key thing is that each record has its own page, and as you listen to it you can read the bio or whatever the artists want to say about the record.” The Thrill Jockey site has been offering downloads of the label’s music for a year, and Richards says some of her recent jazz releases have racked up 40 percent of their sales through digital-only outlets. At the end of November she’ll formally launch a more comprehensive download service, which will join the handful of existing label portals that offer music both from their own catalogs and from those of other imprints–including, founded by Warp Records, and the site run by indie hip-hop tastemakers Definitive Jux.

Richards personally prefers the tactile media of vinyl and CD, and she’s got the record collection to prove it–she says that for her, downloads will “never compete.” But she also knows that basing her business on those preferences won’t necessarily help it survive. “As retail outlets are crunched by the current situation, records that are viewed as marginal will become further marginalized,” she says. “Downloads are a revenue stream that, like it or not, labels my size are becoming dependent upon. It’s a key part of my income.” Thrill Jockey’s digital albums will come not just with art but liner notes, all in JPEG form–an unusual move in the digital market. And its downloads will be encoded at 256 kilobytes per second–even allowing for differences in file format, significantly higher quality than the iTunes standard of 128 kbps.

The labels Richards will be distributing digitally are mostly small, cutting-edge European operations whose releases are unavailable for download on their own sites and tough to find in the States–the Austrian imprint Editions Mego already has some of its catalog on the site, which along with

the Thrill Jockey material has been functioning as a sort of beta test of the download system. Richards hopes the added content will boost her bottom line. “I invested in this Web site for what it can do for me, and it’s a pretty big investment,” she says–about $20,000. “I didn’t really have that capital to invest, so this helps recover some of the cost. And I’m also offering something helpful to other labels.”

Richards started soliciting participants this summer, asking for six-month commitments. Since she planned to charge no fees, just a flat cut of each download sold, the labels were looking at a pretty low-risk decision. So far Rune Grammofon, Touch, Smalltown Supersound, Mosz, and Morr Music have joined Editions Mego in the European contingent, and domestic labels All Natural and Carrot Top have signed up too. Richards is still negotiating with several more, but she’s in no rush. “I want to be careful so that we provide the same service to everyone–and that as we expand we’re not late on accounting or adding catalog to the site,” she says.

Rune Kristofferson, who owns Rune Grammofon, an important Norwegian label, isn’t happy to be forced to deal with downloads. “My main priority is the physical product, and I’m not even sure if I want us to continue being a label if downloading will take over,” he admits. But since the marketplace is changing with or without him, he de-cided to give the partnership with Thrill Jockey a try. “Being my favorite U.S. label, and a label I have followed for quite some time and can identify with, was another good reason. I wouldn’t have jumped on just any possibility.”

Respect for Thrill Jockey also helped Kristofferson’s countryman Joakim Haugland, founder of Smalltown Supersound, put aside his aversion to digital-only releases. “I like the way they work and I like the people there, so choosing Thrill Jockey felt very natural. And I also felt honored being asked, as I know they represent quality,” he says. “I like when I have the physical product and can’t understand that people want their whole life in their computer. But we need to deal with it, and we then need to make it as good as we can so that it reflects the way we work with our physical products. We just need to give quality digital sales as well. And for this I think that Thrill Jockey will be perfect.”

Thrill Jockey has done well on iTunes and eMusic–it’s consistently been one of the latter’s top ten sellers–and will continue to sell music through those services. But Richards wants the option to set her own terms. Though iTunes works like an ordinary distributor, paying a flat fee for every download–usually between $5.50 and $7 for an album–eMusic uses a less predictable revenue-sharing model. Because it offers subscriptions, a user can pay as little as 25 cents per track, and participating labels get a cut that’s prorated according to eMusic’s total revenue for the period–that is, their revenue can vary greatly from month to month even if they sell the same number of downloads. Richards’s approach is simpler: each label will get seven of the ten dollars customers pay for a full album (the site isn’t offering individual tracks), and Thrill Jockey will get the other three. For the distributed labels, that’s just as lucrative as most of the ways to sell an actual CD, and they don’t have to worry about returns.

Ultimately Richards wants the site to become a destination for fans of artists on all the labels she’s distributing. “I’d like to add more informational tools, so labels can access their header page and add tour dates and links,” she says. “ITunes sells a lot of MP3s to sell MP3 players–they’re not in the game of label survival. I am.”

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