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    http://www.chireader.com/hitsville/020531.html Indie Label Turns Profit! By Peter Margasak May 31, 2002 Secretly Canadian started out like most indie-rock
    Message 1 of 1 , May 30, 2002
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      http://www.chireader.com/hitsville/020531.html

      Indie Label Turns Profit!
      By Peter Margasak
      May 31, 2002

      Secretly Canadian started out like most indie-rock labels: some
      "record-collecting nerds," in this case a trio of them attending Indiana
      University in 1996, wanted to be involved with music in some greater way
      than simply buying it. The imprint, then as now based in Bloomington,
      Indiana, got off to a running start, releasing two dozen albums and singles
      in two years, but soon the owners hit the wall. They'd fallen in love with
      the act of putting out records -- but they were still losing their shirts.
      "We realized we all wanted it to be a long-term thing," says Jonathan
      Cargill, now 30. "To make it long-term we had to find a way to reduce
      expenses and to make money."

      That's a tough prescription to fill in the independent-music business, but
      in early 1999 Cargill and his partners, brothers Chris and Ben Swanson,
      found a way. At that time Secretly Canadian, like nearly every other small
      label in the country, was using brokers to get its CDs manufactured. All
      major pressing plants insist on minimum annual production figures of
      between 100,000 and 500,000 units -- well beyond most indies' capacities.
      Brokers consolidate orders from a number of smaller businesses to meet
      those minimums -- or better yet to exceed them, bringing the price per unit
      down for everyone. So Cargill and the Swansons -- along with Darius Van
      Arman, who'd just moved to Bloomington from Charlottesville, Virginia, with
      his own label, Jagjaguwar -- decided to form their own CD brokerage, called
      Bellwether Manufacturing, to bring in extra income and lower their own
      pressing costs. Since then, all four have made a modest living making
      records.

      Cargill and Chris Swanson, now 26, met in an IU dorm cafeteria, where both
      of them worked. "There was a big container with all of the clean
      silverware, and we often had the job to sort it all," says Cargill. "It's a
      monotonous job, sitting there with our hair nets and our gloves on, putting
      forks with forks and spoons with spoons. We always had conversations about
      music, and a lot of them were not about bands, but about the labels that
      were putting them out, that all of these bands had come out on a handful of
      labels." Although neither of them knew anything about running a label (or
      even had an artist in mind), they spent the summer planning to start one.
      Secretly Canadian's first signing, June Panic, was suggested by Chris's
      little brother, Ben, now 23, who had arrived in Bloomington that August to
      start his freshman year. Like the Swansons, Panic was from Fargo, North
      Dakota, and Cargill remembers thinking that since the singer had already
      released seven full-length cassettes, he might have some additional insight
      into the biz. In September they pressed 1,000 copies of his album Glory
      Hole only to find they had no way of getting it into stores: none of the
      national distributors that worked with independent labels at the time was
      interested. "That was a big old slap of reality," says Cargill. "Making CDs
      was real easy, but getting them out of your basement was a whole 'nother
      thing."

      Nonetheless they moved on, releasing a seven-inch by Songs: Ohia, who'd
      already released a single on Will Oldham's Palace label. The Oldham
      connection generated demand; suddenly there were willing distributors for
      the single, some of which picked up the June Panic disc as well. Cargill
      and the Swansons had learned an important lesson: when you have a record
      distributors already want, you can get them to take records they don't
      want. Over the next two years Secretly Canadian released about two dozen
      more albums and singles, becoming associated with quirky and introspective
      singer-songwriters like Songs: Ohia's Jason Molina, Panic, and Dave
      Fischoff but never turning a profit. Until Cargill quit his cafeteria job
      in 1998 to work full-time at the label, he estimates he was putting about
      30 percent of his income into it.

      By then, in perpetual search of the lowest price, Secretly Canadian had
      used six different CD brokers. They had also begun to subdistribute indie
      labels they felt an affinity with, including Jagjaguwar; expanding their
      offerings gave them yet more leverage with distributors, who were forced to
      pay outstanding bills in order to get the latest releases. But when one of
      their main distributors, the U.S. arm of Cargo Records, folded in 1998,
      they had to write off approximately $10,000 in merchandise that hadn't been
      paid for. That's when they decided to start Bellwether.

      "Bloomington is a small town, but it's got a really active music scene, and
      we had been sitting here watching our friends getting ripped off making
      their CDs," says Cargill. They started small, pulling together the labels
      they were subdistributing and others they had developed friendships with
      and assessing a low per-piece fee on their orders. Immediately
      manufacturing costs for Secretly Canadian and Jagjaguwar dropped by about
      10 percent. The company now oversees the manufacturing of more than a
      million CDs per year. Secretly Canadian also made manufacturing and
      distribution package deals (akin to what Chicago's Touch and Go does for
      labels like Merge, Estrus, and Kill Rock Stars) with a handful of labels;
      last year venerable Olympia indie K, home to everyone from Beat Happening
      to Chicks on Speed, and Atlanta's Table of the Elements, whose catalog
      includes releases by John Fahey and Tony Conrad, signed on.

      In March 2001 the three businesses rented a 5,000-square-foot space; they
      now share a staff of five. Both Secretly Canadian and Jagjaguwar began to
      turn a modest profit separately from Bellwether -- though Cargill says he
      still pays himself the same meager salary he did in 1998. Both labels have
      accelerated their release schedules and bolstered their rosters with some
      impressive contemporary talent and reissue programs: Secretly Canadian now
      puts out records by Damien Jurado, the Danielson Famile, and Scout Niblett,
      and it's in the midst of an extensive Nikki Sudden reissue campaign.
      Jagjaguwar's lineup includes British experimentalist Richard Youngs,
      Japanese folk rockers Nagisa Ni Te, and critically acclaimed New York art
      rockers Oneida, and has reissued a pair of collaborations between Jad Fair
      and Daniel Johnston.

      But Bellwether has also afforded them the flexibility to take risks on
      lesser-known artists -- like Chicago guitarist Nad Navillus and the
      art-metal band Racebannon. "We're always trying to achieve a balance of
      professionalism with our aesthetics," says Chris Swanson, who dismisses the
      suggestion that the demands of the brokerage business might eventually
      affect Secretly Canadian and Jagjaguwar. "We want things to be comfortable
      and we want to remain in control," adds Cargill. "Our future concern is
      getting the labels to do better."

      Send gripes, leads, and love letters to Peter Margasak at
      postnobills@....
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