AUSTIN, TEXAS — The stark realities facing the independent music sector threatened to cast a pall over the hard-partying revelry as the South by Southwest music festival began its second full day Thursday.
Executives who gathered for the confab said they were grappling with the same sorts of fallout from the worsening economy and breakdown of traditional business models -- declining album sales, online piracy and rampant layoffs -- that have been afflicting their corporate counterparts for the last decade.
"Everything you've heard [about the troubles of major labels], it's probably worse," said Nan Warshaw, co-owner of Chicago's Bloodshot Records.
Warshaw made her comments during a session titled "Indie Labels Keep the Faith," which became less about communal uplift and more about sharing horror stories and strategies for survival amid the cutthroat industry climate.
"The decline in indie retail has continued in a free-fall," Warshaw told the audience, which also heard from Rounder Records owner Ken Irwin, Barsuk Records' head Josh Rosenfeld and Portia Sabin, who oversees the Portland, Ore.-based independent record label Kill Rock Stars.
Warshaw said that getting albums into the stores that have survived is more difficult than ever, with most chains wanting assurances that a title will sell at least 5,000 units.
"If your record can't do that, there's no point," she said.
Fellow panel member Howard Greynolds, formerly of veteran Chicago label Touch and Go Records, said the disconnect between the labels' needs and those of retailers were becoming greater than ever and that the economics for independent labels had shifted.
While in the past indies could thrive by selling 20,000 to 30,000 copies of an album, "what has happened is that it is now 5,000 [sales] or less, or 50,000 or more," Greynolds said. "The middle is gone."
Increased digital downloading isn't making up for declining CD sales either. Greynolds said the margins from iTunes were too thin to "maintain a staff of 10."
Touch and Go recently cut 21 of its 23 staffers.
Yet there's no shortage of music available. Irwin said the number of official releases tops 8,500 annually, and a record-setting 1,900 bands are in Austin for SXSW.
A number of the remaining panels at the event will touch on other avenues to make money, such as licensing and so-called 360 deals.
Across the hall from the indie panel was a discussion on making money via songwriting and publishing, with authors Jeffrey and Todd Brabec offering copies of their how-to book, "Music, Money and Success," for sale.
Another discussion on placing music in film and television featured Nic Harcourt (former KCRW music director) and Alexandra Patsavas, whose Chop Shop fronted the soundtrack to last year's vampire movie "Twilight" and places music in the CW's teen drama "Gossip Girl."
Greynolds said that a song in a commercial can translate into $1 million in sales. Bloodshot's Warshaw quickly brought the discussion back to reality: "But that's one in a million."