CAMBRIDGE -- When Tufts University graduate Ken Irwin started Rounder Records in 1970, he saw it as a home for old-timey artists who played anything from obscure bluegrass instrumentals to coal-mining laments.
Such styles fit his noncommercial, underground mind-set. He and fellow owners Marian Leighton and Bill Irwin had been '60s hippies who had no interest in the business world, with Leighton even calling Rounder an ''anti-business" company.
''None of us ever wanted to be managers. We were just hobbyists," Irwin says today. ''We never dreamed of how this would develop over the years."
The Cambridge-based Rounder is now an indie powerhouse -- and a label that continues to change. Efforts to expand into the lucrative pop-rock world caused internal dissension that took a while to alleviate. But the label's income is up 17 percent this year; Rounder is now the third-largest indie in the nation, behind TVT Records and Koch Records.
Rounder still embraces many rootsy acts -- bluegrass stars Alison Krauss & Union Station, whose new album just sold 70,000 copies in its first week, remain their biggest seller. ''Rounder lets me record the music I want to make," says Krauss. ''They've been very loyal to me, and I've been loyal to them."
But in the adapt-or-perish, downsizing climate of today's record industry, Rounder has been forced to change to stay alive. The same owners remain, but they're now boosted by a bevy of competitive, former major-label employees who have guided numerous rock titles to Rounder's catalog.
You want the latest Rush and Godsmack DVDs? They're on Rounder. And ditto for the coming Duran Duran DVD, which is a long way from coal-mining music.
''Rounder has evolved tremendously," says Mike Dreese, CEO of the Newbury Comics retail chain. ''Years ago, you would never think of Rush or Godsmack doing anything with Rounder." In fact, the Rush DVD, ''Rush in Rio," is the top DVD seller at 200,000 copies.
John Virant, a Harvard Law School graduate who is now Rounder's president/CEO, had personal and practical reasons for bringing Rush into the fold.
He vigorously pursued the band because he had been a childhood fan. And economically, rock DVDs are taking off. ''You used to be able to expect a DVD to sell 10 percent of what a CD would do, but in the case of Rush, it's a lot more than that," he says, adding that the Godsmack DVD is closing in on 30,000 sales.
Rounder has also plunged into the rock world with its Zoe label, named for Virant's daughter. It has featured albums by Juliana Hatfield, Lisa Loeb, Grant Lee Phillips, the Cowboy Junkies, the Bodeans, and, soon, Tracy Bonham and Martha Wainwright (Rufus's sister). Rounder also put out songs from the ''Buffy the Vampire Slayer" cast that sold 150,000 copies. And it just broke a Norah Jones-like jazz act named Madeleine Peyroux, who has climbed to No. 3 on Billboard's jazz chart and whose album is expected to sell 100,000 copies by Christmas. She had dropped out of sight after making an album for Atlantic Records eight years ago.
Co-owner Irwin says a ''different generation" has come into Rounder. He cites the former major-label employees who were trained in big business and know how to seize various market opportunities -- from signing rock acts to starting a publishing firm called Rounder Books -- that will boost the company's gross this year to a total nearing $50 million.
''We're not the small, bluegrass-folk label from Cambridge anymore," says general manager Paul Foley, who once worked for PolyGram Records. ''But the opportunities with DVDs and other new profits still enable us to put out sea chanteys and the Alan Lomax [roots music] series." The label also continues to release reggae under its Heartbeat subsidiary, blues under its Bullseye Blues imprint, and folk on its Philo label.
''It's a balance," says Irwin. ''Some months a roots record might bring in the most money, and another time it will be 'Buffy the Vampire Slayer.' You just don't know."
What is known is that there have been growing pains at the label. Change has come rapidly -- and some of Rounder's old-hippie guard among its 90 employees has not made the cut. ''Rounder has gotten very corporate. It's more profit motive-oriented now," says Lori Ray, who worked in Rounder's mail-order department before being let go last year. She contends that management has attempted to break the company's union, which helped gain employees better benefits in the last 20 years. The union still exists.
''There's been some turmoil," admits Brad Paul, a Rounder vice president who has been there 21 years. ''There was a lot of turnover three to four years ago, when it seemed like every time I turned around, another face was leaving. Some left on their own, some didn't. But now we have a solid staff with everybody on the same page."
''It's natural that some people are going to be resistant to change, but everything has been calm here for quite some time," says general manager Foley. ''We also renewed the union contract for two more years. We now have longtime employees mixed with employees who came here in the last six to 10 years to help Rounder better compete in a shifting marketplace."
One of the big changes came a few years ago when Rounder dropped its own distribution branch (thus trimming staff) and signed with major label Universal Music to handle that duty for many of its popular records and DVD releases. The short-term effect was to alienate some workers and smash Rounder's old ''anti-business" stereotype, but the end result has been to make Rounder a powerful hybrid.
''We're still able to work at an independent label, but we get all the benefits of major-label distribution," says Rounder sales manager Sheri Sands, who formerly worked at Sony Music.
And the prestige works the other way, too.
''Rounder for us is a great partner," says Jim Urie, president of Universal Music and Video Distribution. ''They are such a totally credible music company, and that rubs off on all of us. . . . And their records are always interesting and usually well reviewed and well received. Even music snobs like them."
Rounder's new strength just lured rocker Bonham to sign with Zoe. The Grammy-nominated Bonham, who enjoyed a rock radio hit a few years back with ''Mother Mother," is a typical case of a past major-label artist who got crunched in that world (she was dropped by Island Records as she was halfway through her third album) but has found fresh life with Rounder.
''They pursued me, and that made a difference," Bonham says. ''They're an indie label, which is important to me, but they can still get my records in the stores because of their distribution deal. Plus, I'm feeling creative again. I was burned out by being with a major because there were so many fear-based decisions. I couldn't do anything creative there anymore, so I don't want to go through that again."
''Rounder is a safe landing place," says Dreese of Newbury Comics. ''It's hard to find love if you only sell 100,000 copies of an album today. But Rounder's success -- and why it's in a sweet spot today -- is really based on the competitive failure of the major labels."
Artists like Bonham and the Cowboy Junkies may ''no longer be welcome at a major label, but they're perfect for us," says Rounder president Virant. It's well known that a big label needs to sell at least 200,000 to 500,000 copies of an album to make money, but Rounder can sell 20,000 to 200,000 and do well because of lower costs, adds Virant, who jokes, ''We don't have marble toilet seats here yet."
No, that's certainly true. A tour of the Rounder offices and its warehouse in North Cambridge is a long way from a tour of
Still, for some employees who are refugees from the major labels, it's a godsend to be at Rounder.
''I could have gone to Wall Street if it was just about the money," says Paul Langton, a Rounder vice president who worked at Island Records for 10 years.
Adds Troy Hansbrough, a vice president of A&R who signed Peyroux, ''At a major label you might have only one in 10 people who lives, eats, and breathes music all day. But all of us do here."