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(Fortune Small Business) -- If anyone is rooted in pop music tradition, it's Ben Taylor. In a recording studio just north of Times Square in New York City, the son of James Taylor and Carly Simon is taking a break from wrapping up his forthcoming album, The Legend of Kung Folk - Part 1 (The Killing Bite).

Taylor's singing has traces of his father's phrasing and his mother's polish, and his lyrics, which dwell on broken relationships, sound familiar too. But the album, his third, reflects the broad palette of pop on which Taylor, a hip-hop fan, was raised. "Dangerous Girl" has a stark, skulking ambiance, crunchy electronic beats lurk beneath "Wilderness" and "She's Gone," and tracks like "You're the One for Me" are more rooted in easy-listening R&B than in "Fire and Rain."

Taylor's studio is the same one in which his parents cut many of their classic albums, and tonight he is stretched out on the worn brown couch where, as a kid, he'd sit and watch cartoons while James and Carly worked in the next room.

But now Taylor is a recording artist with his own label, even as his mother happens to be working on an album in the studio behind him. Whereas his parents' careers were promoted by major record labels, Taylor has decided, like many other modern musicians, to take his career into his own hands. This summer Kung Folk will be the third full album from his label, Iris Records.

"My dad always says, 'The music business is not the same as it was when I got into it,' " Taylor remarks. "My father may have been the first person who ever put it in my head that CDs were promotional devices to get people to his concerts. They're not a consistent, dependable revenue stream. That got me thinking, 'If that's the case for you, what's it going to be like for me?' "

When Taylor and drummer Larry Ciancia launched Iris in 2003, major-label veterans patted them on the head condescendingly. But what a difference a collapsing music business can make. Thanks to the digital revolution, Taylor pockets as much as $11 from his $15 CDs, while most major-label acts are lucky if they earn $1 or $2.

"The question should never be, 'How many CDs can you sell?'" says Taylor. "It's, 'How much can we as artists make on every song?'"

Iris, which has since signed five new acts, pays for a few recording sessions and offers artists the chance to own their music. Taylor's take as co-owner is put back into Iris, based in Ciancia's home-town of Evergreen, Colo.

Moving to another room, Taylor cues up a track - "Bad Girl," more reminiscent of pop act John Mayer than of Taylor's parents. Simon drops in and shimmies to her son's song.

"Iris is a small business now," she says, "but not for long."