The members of HY, Japan's hottest rock band, like to do things their way. They play their instruments, write their own songs, choose their own clothes, do their own hair. But even more unusual is what the five recent high school grads from Okinawa refuse to do. They don't canvas TV variety shows to promote their songs. They don't shill for mobile-phone or soft-drink companies. Most unusual of all, they've turned down offers to leave their small, independent label for big-time contracts that would all but guarantee them a higher profile and boost their CD sales. Not long ago, such contrarianism would have consigned them to perpetual obscurity in Japan's micromanaged musical marketplace. But HY number among a growing clique of musicians who are making a killing by defying convention. HY's mellow, earnest brand of rock has hit the spot with listeners burned out on chirpy idols and carpet-marketed boy bands, and their second album, Street Story, recently spent a month at the top of Japan's Oricon music charts and has sold more than half a million units. Hanging out backstage before a recent show in Osaka, the band members seemed bemused by their popularity. "It's unreal, we don't feel like rock stars," says lead singer Hideyuki Shinzato. "We're not cool like SMAP. We can't even dance," says drummer Shun Naka without a trace of regret, referring to the ageless male quintet that has come to epitomize the mainstream.

Japan's age of indies has dawned. The charts are crammed with artists, from punk rockers 175R to jazz singer Chie Ayado, who spurn big labels and insist on placing music before marketing. At the seven-story Tower Records in Tokyo's Shibuya district, the Japanese indies section—a fixture in most of the country's large record stores—is nearly as vast as the adjacent sea of J-pop . While big-label CD sales have slumped almost 20% over the past five years, independent record sales and market share are rising steadily. "Indies are the only healthy part of the Japanese music industry, artistically and financially," says Steve McClure, who covers Asian music for Billboard magazine.

A stroll through Tower's indie racks or the countless smaller music shops nearby reveals a diversity of music that contrasts tellingly with the mainstream's formulaic sameness. Industry experts estimate that Japan has more than 1,000 small record labels. The Benten label specializes in girl bands and boasts a catalog of more than 60 releases, dating back to 1993. Readymade Entertainment pumps out eclectic, loungy fare from Tokyo's hippest club DJs. Childisc Records, founded by Kyoto-based electronic whiz Nobukazu Takemura, strives for an aesthetic of digital sonic simplicity. And Pizza of Death Records lays claim to a clutch of Japan's loudest punk bands.

The current barrage of indie rock started last summer, when Okinawan punk trio Mongol 800 sold more than 2 million copies of their album Message despite almost no media exposure. Instead of TV tie-ins and corporate endorsements, the band's reputation spread by word of mouth. "There was a time when you could attract listeners by spending a lot of money on promotion," says Naoki Sekine, an international marketing director at Sony Music. "These days, people don't depend on the mass media as much for their information." Accustomed to foisting machine-tooled acts on credulous consumers, the music industry, which now faces the task of actually discovering talent and gauging popular tastes, has been caught off guard. Keitaro Kamo, a scout for Toshiba EMI, was unimpressed when he saw the then unknown Mongol 800 play in Okinawa three years ago. "I thought their songs were good but too fast for Japanese listeners. I figured they'd be lucky to sell 20,000 [copies of their album]," he says. Like others in his line of work, he's now busy chasing indie bands that have already made it big. "I tell them we signed the Beatles, the Rolling Stones. But unfortunately they don't listen," he laments.

HY count themselves among the bands that don't listen. "I'm worried about what might happen to our lives and our music if we get too popular," says drummer Naka. He has reason to be concerned: HY's label has hired a Tokyo-based company to help slick up the band's image, and the members are finding themselves managed more and more like a standard pop product. "If anyone tries to package us, we'll run away," says Naka, flashing a nervous look to the band's manager. These days, running away may be the smartest—and most lucrative—decision a Japanese band can make.