It is a grand understatement to say that the face of the recording industry has changed considerably over the past 20 years. The shift away from vinyl albums and singles to the digital domain of compact discs and downloadable sound files, the changes in radio playlists and sales charting mechanisms and the wide-ranging effects of the internet as a delivery vehicle for the music of professional and amateur alike have all had a tremendous impact on artists, labels and consumers.

One of the most significant changes in the industry is simultaneously one of its oldest traditions and one of its newer developments.

The industry's recent spate of corporate mergers and acquisitions has created a handful of megalabels, giving rise to a mushrooming number of small, independent labels that are benefiting from the major labels' need to pare down their rosters along with their newly immense overheads.

In recent months, for example, Asylum, Giant and Atlantic were gobbled up by parent Warner Nashville.

The result has been a surge in the number of established artists winding up on small, untested labels plus an increase in the number of such labels from which artists can choose.

The new kids label-wise in Nashville include Audium, Broken Bow, DualTone, Music City, Relentless, VFR and WE.

Just 20 years ago, releasing an album on an independent label was almost the kiss of death. Without the cachŽ of major label status to carry an artist to the print and broadcast media, independent artists were lucky just to get their packages on the desks of programmers and critics, let alone have their albums played or reviewed.

Putting out a record on a small label, or, even worse, self-releasing an album often carried with it the stigma of lesser quality, a stereotype that was all too often true. Poor sound quality, amateurish graphics, and diminished songwriting and musicianship were generally the hallmarks of the smaller scaled release.

That paradigm has changed with the recent trend toward corporate buyouts of major labels and the record company mergers that have resulted in the terminated contracts of dozens of well-established country music stars - George Jones, Randy Travis, Merle Haggard, etc., etc. - whose only transgression was the inability to move platinum-sized units (one million in sales) up the charts.

A number of sharp entrepreneurs, some of them former label executives displaced in the downsizing caused by major label mergers, sensed the need for a label presence somewhere between the ridiculous extremes of companies too large to subsidize a mid-level career artist and too small to be professionally inclined.

With astonishing rapidity, a number of smaller, more adaptable mainly Nashville-based labels have formed to fill the vacuum created when major labels expanded too fast.

"With all the mergers of labels and corporations, the labels are owned by a handful of conglomerates, and the radio stations are owned by a handful of conglomerates," says Jim Hester, president of VFR Records, whose roster includes Mark McGuinn and Trent Summar.

"That doesn't reward innovation and entrepreneurship, it rewards mass sales. What happens is that the major labels and the radio stations are all looking for big numbers.They heavily re-search stuff, and they only want name artists that they know they can sell a bunch of records on. The concept of artist development goes by the wayside. We can't compete with the majors. Given the same act, they'll beat us every day of the week. The only way we have a chance to compete is by coming up with innovative and fresh music, stuff they may not take a chance on. We take the chance, and that's how we become competitive."

VFR is certainly one of the big indie success stories. Their first relative success came last year with their debut release from Summar and the New Row Mob, which climbed to the top of the Americana charts with support from Country Music Television and radio stations not reporting to outfits running the charts.

VFR's success this year comes at both the esoteric and commercial levels with the release of the niche-marketed "In the Beginning: A Songwriter's Tribute to Garth Brooks," a collection of tunes performed by the songwriters that provided the songs to Brooks in the first place, and the surprise chart hit "Mrs. Steven Rudy" by McGuinn, whose eponymous debut comes out May 8.

There are a number of different levels of involvement in the indie country label community, from true independents to small labels owned by larger music or entertainment conglomerates.

Relentless, for example, is a division of the Madacy Entertainment Group, one of the largest retail music distributors in the world, which is, in turn, owned by the Handleman Co. After doing so much mass marketing of licensed compilations and TV-offered products, Madacy began looking at the possibilities of a label atmosphere last year.

"We felt there was an opportunity for us to get in the frontline business when we realized so many artists were dropping like flies from the labels in Nashville," says Dave Roy, president of Relentless.

"There were a lot of artists, who were very good artists, had very good fan bases, still loved to tour, still were recording, but had no outlet to get their music to the people. We felt that it was a great time for an independent label to come into Nashville."

Artist-run labels have risen dramatically during this time as well. Steve Earle's E-Squared, Charlie Daniels' Blue Hat and Kenny Rogers' Dreamcatcher labels all began ostensibly as homes for the artists themselves and ultimately began operating like regular labels with the signing and promotion of outside talent.

Other indie labels, such as Bloodshot, Checkered Past and New '

West, have made reputations for themselves by blurring the lines between musical styles, mixing varying amounts of country, rock, and folk into a fascinating genre blend that defies categorization and, quite often, airplay.

When it comes to promotion, indies have to play by a different set of rules than the majors. Deep corporate pockets insure that the majors can invest heavily in their developing artists, while an indie's razor thin margin means they will have to be more creative with less resources.

"Independents have always been locked out of radio in the past and simply couldn't afford to play with the big boys," says Roy. "Our approach has been that there are a lot of opportunities, as long as the artist understands that this totally isn't going to be a radio game. We have the ability to get their records to retail, to market, and to use all the alternative methods that we feel make sense. Because of our distribution and sales strengths, we feel that we can go out and sell 25,000-150,000 copies of an album for an artist, they'll make money, we'll make money, and everyone's happy, even though they're not in the Top 20 of the country music charts."

VFR's Hester concurs. "We call it connecting the dots," says Hester. "We have to connect the dots better. Theoretically, we should be better at crossing the t's and dotting the i's than the majors. When we get something, it matters. When we get a newspaper article, we need to maximize the potential of everything we get."

Chris Neese, vice president of A&R for Broken Bow Records, works a similar angle for his artists. "One of our key marketing objectives is to market from a grassroots level," says Neese. "We definitely don't want to ignore the national blitz, but along with going from the top down, we have to build from the bottom up. When we get action in any one market, we saturate that market with press, making sure that retail is onboard. We have street teams that go into these markets, and they'll make sure our product is in the stores, they'll make sure that there are bin cards, they'll call the radio stations and request the songs, they'll go to the colleges and hand out T-shirts and samplers. It's a real grassroots ap-proach."

Audium Records, home of Loretta Lynn, Ricky Van Shelton and the Kentucky HeadHunters, has found success promoting its releases by compiling a specific network of radio stations that are sympathetic to the label's direction. Audium President Nick Conner says that it may not be the newest idea in the mix, but you can't argue with success.

"We've put together what we call the Audium List of Radio Stations," says Conner, a former Warner Brothers exec. "We're dealing almost exclusively with non-reporting radio stations, and we've told these people that they are as important to us as the major reporting stations are to the big labels. That's been one of our main lines of offense, so to speak."

One of the biggest challenges across the board for independent labels is distribution of its product to brick-and-mortar stores around the country. Many of the corporately-held indies have ties to distribution chains - Relentless utilizes the established Madacy network, and VFR's distribution is handled through RED, which is partially owned by Sony - but the biggest roadblocks are reserved for the true independents that have to subcontract distribution.

But, as Hester notes, finding distribution can be the least of an indie's problems. "The biggest challenge for an independent is how to expose their music to the masses," he says.

The most important piece of the indie puzzle is the artist. Every artist who signs a contract knows that losing that contract is a distinct possibility, and every artist will react differently to being dropped. Some may want to jump back into the fray right after being dumped, and some may want to retreat and regroup, wary of anyone bearing a similarly voidable paper.

Jim Lauderdale deliberated on his next move before signing with Dan Herrington and Scott Robinson's DualTone Records, which will release Lauderdale's new album, "The Other Sessions," in June.

"I've been fortunate to have been with several majors, and DualTone seemed like the best home for my work at this time," says Lauderdale. "The album has not been released yet, but I feel encouraged by the set up this album is getting. I have a lot of music I want to get out, and this also seems like the best route. I could see staying in the indie world, but I have the freedom to do projects with majors if they arise."

Lauderdale is typical of the kind of artist that DualTone is seeking for its roster, according to Herrington, a former Arista Austin executive. In addition to Lauderdale, DualTone has signed Radney Foster (whose live album comes out in June with a pair of new studio tracks), Jeff Black and Chris Knight. The label debuted in April with an AC/DC bluegrass tribute album by Hayseed Dixie.

"We look for the cream of the crop, but not necessarily something that's a slam dunk radio hit that sounds like everything else on the country chart right now," says Herrington. "That's not the game we're going to play. Music Row is great at what they do, and that's what they do. We're going to be the other side of that."

This declaration of independents is certainly not lost on the majors.

Although the majors set this chain of events into motion themselves, in an effort to stem the tide of artist defections and to retain some of the small label charm, Polygram and Sony have set up small, indie-like labels within their larger companies.

Labels like Lost Highway (Lucinda Williams, Ryan Adams, Kim Richey, Robert Earl Keen) and Lucky Dog (the Robison brothers, Jack Ingram) have sprung up within the label system, benefiting from a smaller headachy as well as the incredible distribution machine available through the parent labels.

Time will tell whether or not this strategy will prove effective. With the upheaval caused by the major label realignment and the number of smaller, more versatile labels cropping up to fill the void left by the majors' departure, the only real certainty is that the label structure within the music industry will never be the same. The lines between the amateur and the professional, the very big artist and the very small, and the corporate and the independent, once very clearly defined, have all gotten very fuzzy and indistinct.

Regardless of the path that any of the labels may be taking on this strange new trip, VFR's Jim Hester likely speaks for the majority.

"We're not limiting ourselves to any genre," he says. "Our thinking is that we want to find music that we like and figure out a way to sell it."