Little Labels: Dreaming of musical gold

From the viewing audience (65 million in the U.S. alone) to its stars (Tina Turner, Bruce Springsteen), nearly everything about last week's Grammy Awards ceremony was oversize. The whole business, in fact, is Big Enterprise at work. About 85% of the U.S. record industry is controlled by six mega-diskeries: CBS, Warner, RCA, MCA, Capitol and PolyGram. Even so, 20 of last week's 67 % Grammys were won by the products of such offbeat labels as Arhoolie, Top Hits, Reunion and Delos. These names represent the recording business's vibrant flip side, a growing industry of as many as 2,000 small, independent companies.

As profit-making ventures, tiny record companies are sometimes as shaky as a needle on a warped LP. Yet music buffs and entrepreneurs are lured into the business by the long-shot chance of spinning gold. "All of them are so excited," says Keith Fields, whose Georgia Record Pressing company manufactures disks for dozens of the small firms. "They're all convinced they can make it." The companies have been helped by an industry boom, which pushed sales up about 10% last year, to an estimated $4.2 billion.

The giant record companies have grown so enamored of the successful rock market that they have passed up many smaller pockets of popularity in jazz, folk and urban-teen music. Like boutiques, the tiny firms cater to special tastes and keep overhead low. Major labels sometimes spend as much as $500,000 to record and promote an album, which means they must sell at least 200,000 disks to make a profit. The independents can earn money on record sales of 1,000 or less.

Perhaps the most financially savvy of the independents is Windham Hill, a Palo Alto, Calif., company started nine years ago by Carpenter-Guitarist William Ackerman, then 26. He borrowed $5 from each of 60 friends to record an album of his own called In Search of the Turtle's Navel. From the outset, Ackerman groomed his disks for the baby boom generation, an audience that he felt was growing tired of rock. He recorded melodic albums like Pianist George Winston's Autumn, which cost just $1,720 to produce but has sold more than 500,000 copies. Some critics regard Windham Hill's silky sound as yuppie Muzak, but young professionals cannot get enough of it. Sales reached $20 million last year, up 230% from 1983. Ackerman now chums with Apple Computer Chairman Steven Jobs and gives lectures on his success at Stanford University's Graduate School of Business.

The appeal of much independent music is too narrow to interest many radio stations, so the little companies must find other ways to promote and sell their wares. Tom Rush, a popular folk singer of the 1960s who started his own Night Light label in 1976, boosts his mail-order sales with ads in The New Yorker. Manhattan's Select Records gave its rap single Roxanne, Roxanne (sales: 300,000) a fast start last November by persuading music-store clerks to blast the song on their sound systems, a promotion ploy that bigger companies had overlooked.