February 21, 2009 / 2:27 AM / in 10 years

Economic downturn claims Chicago indie label

NEW YORK (Billboard) - Chicago indie label Touch and Go’s decision to close its distribution business and stop signing new acts shocked the independent music community and has raised concerns about how small labels will fare in the tough economy.

Indie labels often operate with less debt and lower overhead than the majors, but their business is often very cyclical, leaving them vulnerable when they hit a trough. For example, Seattle indie Sub Pop has been declared dead by the press four times in its 20-year history, but is coming off a strong year with the success of Fleet Foxes and Flight of the Conchords.

In a statement, Touch and Go cited “the current state of the economy” as the reason for its retrenchment. None of the label’s recent releases have sold well. Calexico’s album “Carried to Dust” has sold 26,000 copies since its September release, sharply off the pace of the band’s 2006 album, “Garden Ruin,” which has sold 46,000 units, according to Nielsen SoundScan. The self-titled debut album by indie-pop band Uglysuit has sold less than 2,000 copies since its release in August, according to SoundScan.

While Touch and Go didn’t produce chart-toppers, many of its acts have been highly influential. Launched in 1981 as an extension of a fanzine of the same name, Touch and Go released albums by Slint, Shellac, Silkworm, June of 44, the Jesus Lizard and the Butthole Surfers.

The label also put out the first two Yeah Yeah Yeahs EPs; their self-titled EP sold 71,000 copies, and the “Machine” EP sold 24,000. In 2004, Touch and Go released TV on the Radio’s first album, “Desperate Youth, Bloodthirsty Babes,” which sold 116,000 copies. Both TV on the Radio and Yeah Yeah Yeahs have since signed to major label Interscope.

All Touch and Go albums slated to come out through the spring will be released, after which the label will continue as a catalog-only imprint, according to a source at the label. The closing of the distribution business will affect imprints including Kill Rock Stars, Drag City, Jade Tree, Suicide Squeeze and Estrus.

The moves, which included 20 layoffs, came as a surprise to industry observers. Kill Rock Stars president Portia Sabin said she was aware of recent staff cuts at the label but hadn’t thought it was a sign of bigger problems.

(Editing by Sheri Linden at Reuters)

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