Falling sales, tired old Britpop, formulaic girl groups: the music business is in crisis. Could independent labels come to the rescue? asks Rachel Newsome
You may well have been entirely innocent to this, but over the past twelve months how you've spent what's in your pockets has become the main indicator of an ominous cultural shift - you have stopped buying records.

More to the point, you have stopped buying into Cool Britannia. Where once we were prepared to queue all night for Oasis tickets with only a thermos for comfort, watching our favourite footy teams play out their passions in a stadium is now more likely to get our pulses racing.

Never mind living out our glorious fantasies of rock 'n' roll hedonism at the 48 hour gigfests, we are beginning to turn elsewhere for our escapism. And not all the sophisticated marketing, plugging and hype of the music industry seems to be able to make us change our minds.

Now the industry is reassessing how to put a buzz back into the business. How to raise its status was one of the key questions at last week's international music industry convention, "In The City" (ITC). Packaged as an "urban Glastonbury", it is co-ordinated by Tony Wilson, the former Factory Records boss responsible for signing New Order, and his partner Yvette Livsey. Four days of seminars, debates, showcases, gigs, club events and networking in overdrive, it has been an annual showcase for the best in new music and a forum for stimulating debate on the future of the industry since 1992, with one of the highlights being the Unsigned Band competition (this year extended to cover black, dance and acoustic music) which in 1992 introduced the world to Oasis and more dubiously, in 1995, to the sound of Kula Shaker.

But no amount of glossy PR make-up can detract from the fact that in the past 18 months, the music industry has become like a fat matron relying on the increasingly cliched glory days of Britpop past by pimping bands like Travis and Embrace, while play-it-safe labels increasingly depend on bubblegum formula acts like Cleopatra, Five and the bleatings of the 15-year-old Billie. Originality has taken a poor back seat to profits.

John Robb, journalist, singer with the band Gold Blade and chair of ITC's debate on Cool Britannia is not impressed. "There's a real cultural mediocrity at the moment. Bands like Travis are very dull. Oasis were exciting because they made pop music with an edge, but I just don't see that happening at the moment."

What has happened is that, not only has the hype surrounding the music industry been deflated, but (shock, horror) the egos too - temporarily at least. It seems the music industry is asking questions it would not have countenanced posing two years ago, as it gears itself up to undergo one of its biggest structural changes in the past decade.

This is long overdue. First week album sales have crashed over recent months, most noticeably with Catatonia's International Velvet only selling 32,000 and still reaching number one, and Garbage's Version:2 whose first week sales figures scrambled to 31,500. Not to mention the cancellation of two major music festivals due to a lack of ticket sales, the take- over bid of EMI and the liquidation of major label A&M.

Faced with this tough reality, the music industry is downsizing into a more compact, cost-effective version of its former obese self. Big Mac sized marketing campaigns are out (or, at least, not quite the priority they were) and "we-care-because-you-do" artist development coming back in as the music industry wakes up to the fact that bands cannot live on hype alone. So it's "bye-bye" to Spice Girls Pepsi deals and "hello" to serious creative investment.

This is how former A&M MD Osman Eralp, about to launch his own indie label, explains it: "Deals will be smaller so that more money can be spent on music and development," he says. "There's a new, very sophisticated generation who are coming up with some very exciting, innovative things. The only people panicking are the older industry figures who are worried that they are no longer relevant."

This is not only because if we see another Spice Girl Chupa Chup we are liable to stick it where the sun don't shine, but also due to the effect of Internet technology. Forget Our Price and Virgin, the days of traipsing round record shops trying to locate the new UNKLE album will soon be over because DVD means that you will be able to download it straight off the Internet without ever having to hum what you're looking for to an intimidating assistant. And then there's the videos, live gigs, biographies and pre- sale samples you'll be able to access, too.

While the corporate majors are still wobbling their bottom lips at this threat to their existence (who needs labels when bands can programme new music direct to the Net?), it's the once overlooked independent labels who are smiling quietly to themselves.

David Mandors, manager of unsigned band Minibar is grinning at the future too. "Selling records over the Internet means that the indies can compete in the market because they don't have to buy rack space in shops. So suddenly you've got a lot of independent record companies - and that's good because they work with artists very closely," he points out. "The Internet makes marketing easier and cheaper because you can penetrate the audience more deeply. In fact, it will be the public and not the majors who will control who makes it big, because they'll be doing the deciding about what interests them."

If the major labels are the corporate, campaign-friendly Clintons of the music world, then independents are the radical Swampys (though, hopefully with more style). Passionate, obsessive and dedicated to the "archaic" idea that music is an art form rather than a pound sign, their legacy is one of revolutionising the pop landscape from the grassroots up.

It's this almost militant enthusiasm that's embraced by Manchester independent hip hop label, Grand Central, whose live ITC showcase dissolved into a heaving sea of whistling and whooping bodies.

Starting life as a record shop, it operates on a basis of matching local talent to international stars like the Jungle Brothers and Charlene from Texas. "I cannot express the level of hard work we put into the label," label boss Rae enthuses backstage after his gig. "We're extremely driven towards taking things as far as possible to communicate the power of music."

So while the major labels' "scaredy-catting" has meant waking up to the homogenous coos from the likes of Cleopatra, The Corrs, Steppes and B*Witched there's also a growing resurgence of independents ready to inject the sex back into the soundtracks to our lives.

But then, change has always been engendered from the margins rather than the mainstream. Would we ever have had The Sex Pistols without punk's allergic reaction to the establishment in the late Seventies? Or The Prodigy's primal scream without the underground rave culture of the late Eighties?

Now, playing at this year's ITC and part of the new indie wave taking over the clubs and bars is the thoroughbred of pop, Six by Seven; the elegant guitar arabesques of Chemikal Underground's The Delgadoes; and N To X, whose weird and wonderful sounds will help shape the future of music. Meanwhile, the pulse of dance labels like technoists Soma, avant- garde junglists Partisan, disco evangelists Paper Recordings and Bjork's pet techno imprint Fat Cat are providing an antidote to the Top Shop radio sound of Sash!

It seems what goes around comes around as a new generation begins to bite at the industry's heels. Enigmatic French duo Daft Punk made it big on Soma before Virgin stepped in, while UNKLE collaborator Badly Drawn Boy has been catapulted to success by arcane Manchester label Twisted Nerve and now rubs shoulders with The Prodigy at major label XL.

Jill Sinclair of the newly independent ZTT describes the movement this way: "There are lots of people focusing on good music. The industry will become more reliant on key people who make the music, and the independent record labels will become like A&Rs for the majors."

Elsewhere the relationship between majors and "minors" is even more pertinent, with Fat Boy Slim's Skint label signing a pounds 4 million distribution deal with Sony, and Junior Boys Own (Underworld's label) getting into bed with Virgin.

Pragmatism is taking over in an industry where the corporates cash in on indie cred and independents cash in on, well, majors' cash. Still, the real future of the music industry are the unknown bedroom DJs and school-kid bands whom the independents have yet to discover. Would-be Spice Girls and Boyzones need not apply.


Damian Harris, label boss, Skint

"After seven years of running an independent label, we decided to do an international distribution deal with Sony so that we would have the cash to continue supporting our clients. Sony to us is like a bank. We did the deal because they still allowed us creative licence while they are hoping to sell a lot of records around the world"

Mary Ann Hobbs, Radio One Breezeblock Show

"I've been in the music industry for 17 years and as far as I'm concerned, British music hasn't been healthier. My main concern is the cult of the celebrity where people with no real talent who are in a position to push new music have actualy got one eye on hosting a gameshow"

Mark Jones, label boss, Wall Of Sound

"What crisis? As far as Wall Of Sound goes, we've had one of our most successful years yet with The Propellerheads and Les Rhythmes Digitales. I think it's only been a problem for the majors because they're so out of touch. Money is always tricky if you're independent, but it just means you've got to use your imagination more"