Why the indie record bosses are So-ho happy

As the chief executives of music industry multinationals reflected this weekend on the gloomy spectacle of HMV shedding parts of its empire just to stay afloat, a small band of record company bosses stood in the sunshine in central London yesterday smiling at each other. Meet the bosses of the UK's most successful independent record labels, who, against all odds, have every reason to celebrate.

Six of the biggest small-label chiefs went back to their roots at Berwick Street Market in Soho to flog vinyl, cassettes and CDs, as they had done before they became music moguls. More than 1,000 people joined them, with, among the punters, the Franz Ferdinand singer Alex Kapranos and BBC Radio 1 DJ Steve Lamacq.

The past decade has seen the music industry turned upside-down. Bands such as Radiohead now sell their albums directly to fans, inviting them to choose how much they want to pay, and record shops not only have to compete with chain stores but supermarket giants such as Tesco and Asda.

The small record labels have been able to adapt quickly: recent industry figures show more than 30 per cent of records are now being released on independent or artist-owned labels.

The future is even brighter for the independent labels, thanks to the download revolution. According to a report published last week by the British Phonographic Industry chairman and former EMI boss Tony Wadsworth, the rise of digital music has led to a significant levelling of the playing field, with independent labels able to compete from pretty much the same position as the majors in how they reach their audience.

Contributing to the report, Martin Mills, chairman of the record company Beggars Group, agreed that the digitisation of music had helped small record companies compete: "The beauty at the moment is that the two big digital players – iTunes and Spotify – are pretty much barrier-free, be you a big player or a small player."

Tom Ravenscroft, BBC 6 Music DJ, almost exclusively plays the music of independent labels. "I think there are a small number of particularly powerful independent labels, slowly developing a second-tier monopoly, below the majors," he said. "If you were to look at radio play-lists and you were to mark down the bands that were on independent record labels, you would find the same label names coming up all the time."

Ben Cardew, news editor of the record industry's trade paper, Music Week, said: "Independent labels have higher digital album sales, particularly in the US. Big independent releases, such as Vampire Weekend and The XX, have seen 50 per cent of their sales sold digitally. It's probably down to the fact that their fans are more digitally savvy, and probably more of that generation."

Even HMV has been forced to bow to economic reality. More than 50 per cent of the music sold by the company is on independent labels, said its spokesman Gennaro Castaldo. "As a major label, you can't rely on selling millions of copies of X Factor singles," he added. "If you're going to be successful, you're going to have far fewer artists but you're going to try to be far more creative with them, and do very bold and imaginative things that connect with fans. Indie labels have always done that."

1. Jeff Barrett – Heavenly Records

Artists: Doves, The Magic Numbers, Saint Etienne

"Identity and good business are key to enduring as an independent record label. Look at the label 4AD, for example. That's known as being a very artistic and interesting label – but still with variety. People buy into a brand they trust and that trust is based upon taste in music."

2. Geoff Travis – Rough Trade Records

Artists: The Strokes, Babyshambles, Belle & Sebastian

"As labels, we're officially competitive with each other, but we also see ourselves as a community, and that's been the spirit in which independent labels have always operated. There's no secrecy or one-upmanship. When we started out [in the mid-Seventies] we all learned together as we went along. So this market is a bit of a return to that spirit."

3. Richard Russell - XL

Artists: The Prodigy, Badly Drawn Boy, Gorillaz, MIA

"I was 16 and selling my own mix-tapes at a market stall in Camden in the late Eighties. I was always amazed by the fact that you could make money selling music – but you can. Music and money are very closely related. More than, say, fine art and money. I've now made mix-tapes on cassette again, to sell for a fiver each. One is a history of pirate radio music, going through all the different genres."

4. Michael McClatchey – Moshi Moshi Records

Artists: Kate Nash, Bloc Party, Hot Chip

"What we look for in an artist for Moshi Moshi is someone who's doing something of merit. So long as they have a conviction in what they're doing and are serious about it and have a vision of their own, that's it. The best indie labels are the ones that have a consistency over time. It's easy to get that one 'flavour of the month' act, but to do that time and time again, that's the mark of a really good label."

5. Will Street – Chess Club Records

Artists: Mumford & Sons, Sun Hands

"I've been running my own label as a one-man show for the past couple of years, so I'm both the tea boy and the CEO. I get so much pleasure out of doing that myself. Labels like XL and Domino are the dream labels people like myself aspire to be. This event is great because you get to see independent labels from those at the beginning stages to the larger labels."

6. Jacqui Rice – Domino Records

Artists: Pavement, Franz Ferdinand, Arctic Monkeys

"We love to sell! We've all spent time behind counters in record stores or the merchandise stall at band shows and miss the immediacy of that direct sale – the moment you turn someone on to something new that you hope will enrich their lives. Some of the time, the simplicity of it feels lost amid all of the marketing and media that play a part in a release. By meeting our customers face to face, it'll hopefully make these records and the passionate people behind them seem more real to people."