Here’s one record label that isn’t hit-driven

Every Monday, Rounder Records general manager Paul Foley starts the company’s marketing meeting with a rundown of the latest bad news hitting the music business.. It’s a pretty bleak picture.

But then he turns his staff’s attention to the state of his own company, and the mood brightens considerably.

In 2002, the overall U.S. music business saw a decline in album sales of 10.7% from the previous year. But the Boston-based independent had a sales gain of an astonishing 50% over 2001. And in 2001, when the overall business dropped 5%, Rounder’s sales were up 25%.

This happened without any teen-pop acts, with no hip-hop stars. In fact, Rounder didn’t have a single pop radio hit or any visibility for its artists on MTV or VH1 last year. Instead, the company had its success with a mix of singer-songwriters, folk and bluegrass, roots-rock, blues, Tejano, reggae, children’s music and archival collections. Three of them earned Grammy nominations this year: Jimmy Sturr in the polka category and Cathy Fink & Marcy Marxer and Beethoven’s Wig for best children’s musical album.

The label’s biggest star is bluegrass-rooted singer Alison Krauss, who gained extra profile from her prominent role on the 2000 “O Brother, Where Art Thou?” soundtrack. Rounder also saw strong sales from country-folk singer Rhonda Vincent and English singer Linda Thompson and released albums by such other established musicians as the Cowboy Junkies, Juliana Hatfield, Texan country-rocker Joe Ely and Canadian singer-songwriter Bruce Cockburn. “There was a trend to roots music that blossomed under ‘O Brother,’ and our artists benefited from that,” Foley says. “That’s been a big boon.”

And 2003 is already off to a great start for Rounder, with country-influenced Canadian singer Kathleen Edwards’ “Failer,” released by the company’s singer-songwriter-oriented Zoe Records subsidiary. The company has also launched Marsalis Music, a new joint venture with saxophonist Branford Marsalis.

The recent success is nothing new for Rounder. Of its 32 years in business, only three have not been profitable. There’s no real secret, Foley says, citing the success of similarly targeted companies such as Blue Note, Verve and Nonesuch.

“The consumers have shown that if you bring good music, especially that appeals to adults, and make them aware of it, they will buy it,” says the executive, who came to the company in 1998. “We’re not hit-single driven, not driven by quarterly earnings or month-end results,” he says. “Clearly, we’re in it for the long haul and are committed to continuing what we’ve been doing.”

By not chasing pop hits, the company avoids the huge expenses and risks of pop radio promotion, in which campaign costs can approach $500,000 for one song. And Rounder also isn’t caught in bidding wars for untested artists, as the major labels often are. Instead, the company relies on considerable touring by its artists and on the long-term audience loyalty that can be built with a mature fan base.

“If we don’t have a huge hit at radio, we’re not giving up and then moving on to the next thing,” Foley says. “We’re still working records from a year ago, a year and a half ago.... Rhonda Vincent has a new album out in April and we were still marketing her last one through Christmas. Retailers realize with Rounder that if it doesn’t happen in the first few weeks, we’re not dropping it and leaving them stuck with the CDs.”

Even with accelerating sales for acclaimed newcomer Kathleen Edwards, Foley says the key is to not get over-eager and spend foolishly.

“The experience here prevents us from making those errors. Do we think Kathleen can be a gold artist? For sure, and maybe beyond.... But with the understanding that we take it step by step. We’re managing expectations, but taking advantage of the opportunities when they’re there. We know our customer base.”