Fortune flows from grungy beginnings

Some highlights of a Friday-morning walking tour of Sub Pop’s spacious third-floor office in downtown Seattle: A “wood record” award for the Shins, commemorating sales of 100,000 copies of “Chutes Too Narrow.” A soda machine in the lunch room stocked with Rainier beer. A framed chunk of plaster from Sub Pop’s first office where Kurt Cobain wrote his name and address on the wall so the record label would always know where to send his checks.

Sub Pop was founded 23 years ago by Bruce Pavitt and Jonathan Poneman with the goal of documenting the blossoming Seattle rock scene. “It was either make the label succeed or work at Kinko’s,” Poneman remembers. With bands such as Mudhoney, Soundgarden and Nirvana, the label’s fortunes mirrored the early-’90s grunge boom -- and decline.

But today, the label is home to some of the most critically acclaimed 21st century artists around, including the folk-rock Fleet Foxes (its “Helplessness Blues” hit No. 4 on the Billboard album charts last year), indie-pop’s the Shins and the electronic duo the Postal Service.

While most of the record industry is doing a slow-motion collapse, Sub Pop’s success-on-a-shoestring business model is thriving. Once dubbed a “grunge” label, it’s now home to a diverse roster of bands and artists recording on micro-budgets and touring in micro-buses. In fact, Sub Pop will release one of 2012’s most anticipated debuts, by the experimental South African hip-hop artist Spoek Mathambo.

“We were lucky that we were going bankrupt two years before everybody else in the music business,” says Tony Kiewel, the label’s head of artists and repertoire. “We fixed everything two years ahead of everybody else. If we spend only $5,000 recording an album, we can afford to keep doing records with artists that we truly love.”

Although Sub Pop has been around longer than most indie labels -- it predates its East Coast rival, Matador, by just months -- there’s plenty of other thriving indies all over the country such as Merge, Epitaph and Secretly Canadian. With major labels increasingly in the teen-pop business, they’ve become the primary venue of rock ‘n’ roll. In the first half of 2011, according to Billboard, the market share of indies was collectively 31.2%, greater than any single major.

Mark Arm is lead singer of Mudhoney, which left Sub Pop for Warner Bros. in 1992 but returned in ’99. “We only left because it seemed like Sub Pop was going to go under,” Arm says. “The label is very different than it was in 1990. Everything has gotten tightened up.” When Mudhoney isn’t touring, Arm runs the label’s “warehouse” (a large mailing room in the middle of the label’s offices).

Although early Sub Pop records were built around a steady diet of distorted guitars, recent releases span from tuneful folk-rock (The Head and the Heart) to ambient chill (Washed Out) and comedy (David Cross). Comedy was a controversial move within Sub Pop, Kiewel says: “It was viewed as one less band we could be signing. There’s a strong instinct here that what we do is as much a philanthropic enterprise as a business. But I was starving to be political, and I felt like we were in a weird moment -- we’re still in that moment -- where music isn’t allowed to be political without being cheesy bad punk.”

Circa 2000, Sub Pop would often sign bands with $100,000 recording budgets, but they had to scale down if they wanted to stay in business. So they financed the 2003 Postal Service record “Give Up” for the cost of a hard drive and some Guitar Center gift certificates. “And now that record is at 1,050,000 copies and still selling 600 a week,” Kiewel says. “Companywide, our biggest records from that era -- the Postal Service, David Cross, the Shins, Iron and Wine, Hot Hot Heat -- all cost $10,000 or less. We were being rewarded for being fiscally responsible! Low-risk, high-yield -- why would we ever change that?”

Most Sub Pop albums now are budgeted to become profitable by the time they sell 10,000 copies -- some even 5,000.

“For some bands, self-releasing is a smarter bet,” Kiewel says. “I don’t think I could make a pitch to They Might Be Giants as to why we could do it better than them. And some bands should be on a major. If a new, young band with a bit of blog hype is looking for somebody who can put them in the studio with a big producer guy like Dave Fridmann or Tchad Blake and spend $100,000 -- that’s not what we do, and I don’t feel bad about that.”

The Hand and the Heart self-released its debut album last year and sold about 10,000 copies before signing to Sub Pop. “We wanted more than we could do on our own,” says singer Josiah Johnson, “but we didn’t want to flop by major-label standards and get dropped.” He values the label’s ability to market them efficiently -- they appeared on “Conan” a few days after the album was released on Sub Pop -- without shoving them down people’s gullets.

On the other hand, with a flagship act like the Fleet Foxes, who sold almost 400,000 copies of their debut, Sub Pop pursued every promotional angle possible for their second album, “Helplessness Blues”: free MP3 downloads, college-radio giveaways, online advertising, even a Starbucks tie-in. When the band’s contract expired, there were rumors they’d jump to a major label. Lead singer Robin Pecknold tried to squash that chatter in a blog posting: “Fleet Foxes will never, ever, under no circumstances, from now until the world chokes on gas fumes, sign to a major label.”

Sub Pop now has about 30 employees, most of whom have multiple jobs. General manager Megan Jasper says, “We look for someone with a really sharp mind, who can handle a filthy-mouthed staff.”

On Friday afternoon around 3 p.m., about half the staff is in the lunchroom, celebrating the weekly happy hour, “Wine Friday.” The staff drinks vodka and lemonade, merrily discussing Genghis Khan, tattoos and practical jokes. The presence of a reporter means that most of them are wearing button-down shirts today instead of the usual uniform of promo T-shirts. A notable exception is Poneman, who’s sporting a battered orange “Trainspotting” T-shirt from 1996.

Watching his employees enjoying themselves, he hovers at the fringe of the party, a presence both awkward and genial. “I’ve always wanted Sub Pop to be a collaborative endeavor,” Poneman says. “I try to downplay the record label executive as star -- I don’t want to be autocratic. I’m very conscious of wanting everybody to participate and every voice to be heard.” His eyes flick around the lunchroom. “Plus that way I don’t have to work that hard.”

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