May 23, 2008

By By Ed Christman, N.Y.

With Radiohead's "In Rainbows" behind it and My Morning Jacket's "Evil Urges" ahead, ATO Records has quickly become a "must watch" indie label.

It was already a highly sought-after label when it decided to end its joint-venture label deal with RCA last year after a seven-year run. At that point, ATO could have went anywhere and received a big advance.

After all, the label had a great track record since its first release, David Gray's "White Ladder," cracked the multiplatinum milestone, with 2.5 million units sold in the United States, according to Nielsen SoundScan. Since then, the label has broken Spanish duo Rodrigo & Gabriela (a quarter-million in scans), and Patti Griffin, Ben Kweller and Gomez each have ATO albums that have scanned 100,000-plus units.

Since its inception, ATO has issued 54 albums, EPs and videos, scanning some 7.4 million units, or an average of nearly 137,000 units per release in the States.

But rather than signing a new deal with a major label, co-founders Coran Capshaw of Red Light Management, Michael McDonald of Mick Management, Dave Matthews and Chris Tetzeli dipped into their deep pockets to buy back RCA's share in the complete catalog, which sources say set them back in the neighborhood of $5 million.

To be sure, ATO's success comes as others are scrambling to keep their heads above water.

"The way the industry is moving could be beneficial to a wholly owned, well-funded label," McDonald says. "We felt we had enough faith in ourselves that we decided to take a chance in today's climate."

Besides, leaving RCA has allowed the label to be more entrepreneurial, think outside the box about the digital space and move like a speedboat, says ATO president Will Botwin, who aspires to establish ATO as a "flagship indie label."

Click here to read about ATO's early tests, and which artists are finding the label a safe haven.

Subscribe to Billboard magazine today!