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Indie labels wary in wake of Touch and Go’s downsizing | Turn It Up – A guided tour through the worlds of pop, rock and rap

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Last Monday, 21 employees of the Touch and Go record label came to work in their three-story Ravenswood office to find the company some of them had known for decades was coming to an end.

Corey Rusk, who founded Touch and Go 28 years ago and had become one of the most significant figures in , told the staff that economic conditions were forcing him to drastically shrink the label, end its production and distribution services for 23 independent , and pull back – at least temporarily — on releasing new music. The employees were “dumbfounded,” one staffer said. “Nobody said a word.” Jobs would be cut, though specifics of how many and when were still being worked out.

As recently as 2006, Rusk said Touch and Go was enjoying the most profitable years in its history. But “the current state of the economy has reached the point where we can no longer afford” to continue operating a multi-faceted label, he said. Though the label will release a new album by the band Crystal Antlers in a few weeks, it will focus in the near term on catalogue sales.

The announcement was symptomatic of a broader picture of economic decline in the music industry, and focused attention on the fragile state of independent labels. They operate with considerably smaller budgets than majors such as Universal Music Group even as they are a breeding ground for some of the most significant artists of recent decades, including Nirvana, Green Day and former Touch and Go bands TV on the Radio and the Yeah Yeah Yeahs.

As word filtered across the independent music community nationwide, the dramatic downsizing of Touch and Go was met with expressions of shock, sadness, and anxiety. As Mac McCaughan of North Carolina’s Merge Records said, “It makes you think, if Touch and Go can’t do it, who can? If they can’t pull through this economy, what does the mean for the rest of us?”

Chicago has long been home to dozens of independent labels, none more respected than Touch and Go, which has released more than 400 albums since the early ‘80s. “Corey created the blueprint for labels like mine, created the system many of us use,” said Bettina Richards, who founded the Chicago-based Thrill Jockey Records 17 years ago.

Touch and Go and punk-era contemporaries such as Dischord Records in Washington, D.C., set up a community atmosphere for underground artists to create music in the early ‘, and share equally in the profits of their work. This stood in vivid contrast to most major-label deals, in which artists received only 10 percent of profit from record sales, and then only after recovering expenses for recording, manufacturing, marketing and publicity. Fewer than 10 percent of major-label artists are paid royalties from record sales. In contrast, artists at well-established independents such as Touch and Go usually see royalty checks more quickly and frequently than their major-label counterparts, though the amounts are far more modest.

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