An indie label rocks on

The End CEO Andreas Katsambas

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(FORTUNE Small Business) -- When we last met the end records ("Squeezing Money From Music," March 2007), the music label had just taken a double whammy.

After Tower Records folded in fall 2006, The End lost a major distributor and couldn't count on indie-averse mainstream retailers, such as Best Buy (BBY, Fortune 500), to fill the void. Then moving from Salt Lake City to Brooklyn cost The End a hefty $30,000.

Revenues for 2007 were a stagnant $3.5 million, and CD sales dipped 20% - a drop CEO Andreas Katsambas attributes mostly to Tower Records' demise. Getting creative, Katsambas branched out, selling limited-edition items such as book-CD combos and T-shirts.

"You can download free music, but you can't download T-shirts!" he says.

Taking the experts' advice, The End upped its website traffic 30% after adding features such as artist tour updates and news posted by fans. Despite the site's gains, Katsambas isn't pushing for more digital sales, which in 2007 made up just 2% of The End's profits.

To help The End trim costs, Katsambas sliced its advertising and marketing budget by 20% per release - a cut it could tolerate thanks mostly to the media coverage sparked by Lordi, the Finnish monster rockers who put out an album with The End last March.

"It was instantly our top seller of the year and opened media doors," says Katsambas, citing magazine and television mentions.

Following Lordi's success, The End is cultivating established artists with strong fan bases, such as Mindless Self Indulgence, a New York City band with an April album release. As big-name bands join the label, The End's mail-order business, which traditionally yielded two-thirds of its sales, is likely to shrink to just half of the $4 million in 2008 projected revenue.

Still, Katsambas says that he won't sell out or forget his roots: "We'll always work with smaller artists."