South Bay's Gourd Music faces indie label's challenges

It was the kind of out-of-the-box thinking needed to keep an independent record label alive, particularly one that wants to create good original music in a highly competitive sea of mass-marketed teeny-bopper bands, free downloads and chain record stores that charge as much $4,000 to display one album.

Hellman, 52, was at a trade show in 1996 talking to a buyer from the Wireless catalog about its best-selling products -- a pair of men's silk boxer shorts with a tool belt on them and "Jingle Cats," the album featuring, yes, cats, manipulated through the power of the recording studio, belting out the Christmas classics.

That's when the bolt hit.

"All of a sudden I was like Swifty Lazar, pitching a Marlon Brando biography to Random House that hadn't been written," Hellman recalls. "I said, 'That's funny, we've been working on a Christmas album played on power tools."'

Syndicated columnist Dave Barry mentioned it in his gift-buying guide, and the album took off faster than a cat backing onto a table saw. It sold 100 copies a day around the holiday season; Amazon.com ran out of it.

"It was incredible," Hellman recalls. "We were ahead of Alanis Morissette on the Amazon list. It gave us such an influx of money. It kept us going for a while."

The trouble for a boutique label is the same as for a major one. You need hits to fund the more ambitious releases. But mergers of big labels and record store chains have been putting the squeeze on small labels.

"Small labels are going out of business all the time," says Nick Despotopoulos, industry analyst and former publisher of the music magazine, Tracking Angle. "They are getting killed by free downloads on one hand and by return policies and product placement fees at record stores on the other."

Hellman realized the problem early on: "For me to try to compete with the majors is suicide."

So, from the start in 1986, he started selling albums to places the record companies were ignoring: art museum shops, specialty catalogs, gift shops, health food stores, historical societies, and shops that sold books, musical instruments, and Victorian and Civil War memorabilia.

The gift shops were his mecca. For one thing, they didn't return albums, the way record stores do. And, they paid soon after they were billed.

Unlike his novelty Christmas hit, the rest of the label was filled with music he loved, by musicians he respected, mostly from the Santa Cruz area.

Hellman had an early serendipitous hit after spotting a book called "Shaker Spiritual Gifts" at a used bookstore. He became interested in Shaker music, found the author, and compiled an album called "Simple Gifts," with classical musicians performing traditional melodies. It sold 90,000 copies after being publicized on National Public Radio and picked up by a dozen Shaker museums.

As his business grew, he went from keeping his stock under his bed to building a record company office in a remodeled garage behind his house. He rented warehouse space for thousands of discs.

"My vision was to put out music like Aaron Copland's 'Appalachian Spring.' I wanted it to sound American and acoustic and classical," Hellman says.

He started a Web site (www.gourd.com) and sold records there for $12 apiece or 10 for $100.

He lost his shirt every time he tried to do what rock and pop labels do.

Don't think chain stores put records in prominent displays because someone thinks you will like them. They charge labels heavily for those spaces.

For example, he would pay $4,000 to get one album played on a record chain's listening station. But if the chain didn't sell at least 2,000 copies, he would end up losing money from the returns.

Lately, things have gotten tighter. His sales have dropped about 40 percent over the past two years as record labels flood the market with 30,000 new releases a year.

"You have to realize that when I started, the major labels were completely unaware of these places I was selling. Now they know about them, and when they want to reach them, they buy a small label and get its distribution into the small shops," he says.

Still, he's sold 750,000 albums, counting returns, in the past decade, a big accomplishment for a small label. Unlike some labels, he has no debt.

The bottom line? He produces music that he loves. "I'm really really proud of this music. That's my anchor. I'm still profitable, and I'm able to pay my artists. A lot of other labels can't say that either."<