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Internal strife, unpaid royalties, and the looming possibility of a sale have forced the venerable Chicago indie label to a crossroads.

By Mark Guarino

Bloodshot Records, the beloved Chicago indie label that created a home for "insurgent country," is suffering from an insurgency of its own making.

For nearly two years Bloodshot has been wracked by a staff revolt against one of its founders, by a #MeToo scandal implicating its top seller, by allegations of unpaid royalties, and by a bitter falling out between Rob Miller and Nan Warshaw, the unlikely partners who'd helped launch the business in 1993.

Bloodshot's future is unclear. Since this past summer, it's been for sale. It hired a New York company to perform an external valuation in April 2019, back when it still seemed possible that one of the owners would buy out the other. Neither Miller nor Warshaw will confirm the results, but staffer Nina Stiener says the label's value was estimated at $3.2 million. No deal has yet been signed, though, most likely because investors tend to recoil from royalty disputes and breached contracts—and because the Bloodshot catalog no longer includes some of the label's best-selling records, whose rights have reverted to the creators.

Some artists on the Bloodshot roster are complaining that their careers are in limbo. Veteran musicians who've been with the label since its earliest days fear it will collapse, in yet another blow to a Chicago music scene already depleted by the pandemic.

"I'm hugely sad, because I felt personally invested in the company, and they provided a valuable venue for my peculiar interests and collaborations," says Jon Langford, Bloodshot's longest-term and most prolific artist. "Their 26-year run is actually a remarkable achievement."

Like Sub Pop, which documented a Seattle scene that would soon blow up nationwide, Bloodshot gave voice to a fertile Chicago music community—artists that Miller and Warshaw saw emerging in local clubs such as Lounge Ax and Lower Links. The label debuted in 1994 with For a Life of Sin: A Compilation of Insurgent Chicago Country, which doubled as a mission statement.

The artists involved spanned generations, genders, and styles: along with the likes of Langford, Freakwater, and the Texas Rubies, the collection included two tracks by elder statesmen the Sundowners, known for their 30-year residency at downtown country bar the Double R Ranch, and the first solo release by a local bluegrass player named Robbie Fulks. The recordings generally adopted a punky, lo-fi aesthetic—most were cut live, with very little overdubbing, reverb, or compression, to capture the feel of a rough-and-ready show. The sound of For a Life of Sin is the sound of a red-hot barroom floor late on a Saturday night.

Success came swiftly. By the end of the 90s, Bloodshot had built a roster of quirky iconoclasts—Fulks, Langford's Waco Brothers, the Old 97'sNeko Case, the Sadies, the BlacksTrailer BrideSplit Lip RayfieldAlejandro Escovedo, Ryan Adams—who won over audiences with charmingly raucous gigs. Together they helped push what was soon labeled "Americana" into the national spotlight. Some of these artists ended up signing more lucrative deals at bigger labels, an indirect compliment to Bloodshot's ear. And competing labels popped up—Yep Roc, New West, Anti-, ATO, Lost Highway—to chase the trend, many of them subsidiaries of deep-pocketed majors.

Warshaw, 58, and Miller, 55, met in 1993 at Crash Palace, where Warshaw was spinning country records on Wednesday nights (the bar would become Delilah's later that year). She was well-known around town as a punk raconteur and had been promoting, booking, and managing bands for years. Her reputation as a connector was confirmed when Kurt Cobain's diaries were posthumously published in 2002: "Call Nan Warshaw" appears on his to-do list.

Miller had moved to Chicago in 1991 from Ann Arbor, where he'd helped produce shows for a local promoter and DJed on a local radio station. Warshaw introduced Miller to Eric Babcock, who'd become Bloodshot's third founder—and the only one with actual record-label experience. He'd already worked for years at roots-music imprints Flying Fish and Blind Pig and knew the basics.

"It was clear that they knew about old-school country and that they loved it," Babcock says. "And that they really had a really strong impulse to try to do something for the sake of this scene that we were all part of and really enjoyed."

As the three of them planned the Life of Sin release, they convinced Langford to not just supply a track but also design the artwork. They pressed 1,000 copies, which sold out in months. They'd discovered a fan base, across the U.S. and overseas, that was clamoring for this music that had yet to be declared a genre.

By 2019, Bloodshot had come a long way. Though Babcock had left in 1997, the label had survived its growing pains and the digital revolution that decimated sales of physical music media. It survived in part because it expanded its sound to include neosoul, garage rock, and a new crop of singer-songwriters such as Justin Townes EarleLuke Winslow-KingLaura Jane GraceSarah Shook, and Lydia Loveless.

The first domino to fall had nothing to do with changing tastes or business paradigms. In February 2019 a New York Times article reported allegations that Ryan Adams had psychologically abused several women, including wife Mandy Moore, and was engaging in sexually exploitive texts and phone calls with a minor. That same week, the FBI opened an investigation and a forthcoming Capitol Records album and tour were canceled.

At that point, Bloodshot had had no contact with Adams for several years. His 2000 solo debut, Heartbreaker, was his only Bloodshot album, but it had been a game changer for the label—its consistently robust sales kept the lights on for years. Miller says he was hesitant to insert himself into a situation he felt had nothing to do with Bloodshot, but reporters were calling for a statement and the label's staff looked to him to make a public denunciation. "It was as banal as possible," he says of what he wrote. "I didn't know the guy and hadn't talked to him or been in the same room with him for over 15 years."

Miller's post about Adams on Bloodshot's social media channels had an unintended consequence. Ohio singer-songwriter Lydia Loveless, who'd released three full-length albums for the label since 2011, revealed on Instagram that "for years" she had been sexually harassed, both verbally and physically, by musician Mark Panick, Warshaw's longtime domestic partner, at Bloodshot events and her own shows. "I didn't know who to tell about these behaviors because I felt afraid," she wrote. "I felt completely betrayed by Nan." She blamed the label "for allowing a man to grope, paw at and mentally disturb me for over five years."

Panick declined to be interviewed for this article. But not long after the Loveless post, he was quoted in a Chicago Tribune story by Greg Kot: "I do not remember the events Lydia describes in the same way. But I truly regret making her feel like that and really wish I'd have understood that at the moment."

Warshaw and Miller posted their own statements to social media. Warshaw said that she was stepping away from the label. "I apologize for any hell or even awkwardness I put Lydia or anyone through, due to my actions or inactions," she wrote. Miller revealed that he and Loveless had talked about the situation multiple times over nearly three years and that he'd addressed it privately as soon as he'd heard. He said he'd "encouraged her to be frank and forthcoming about it all" when she was comfortable. "I did not feel it was our place to go public with this until she was ready," he wrote. Miller also denounced Panick, calling him a "caveman," and said he'd been "permanently banned" from all Bloodshot shows and events as well as from any contact with label staff or artists.

The following month, Bloodshot announced that Warshaw wasn't just stepping away but resigning. Miller would "continue the work" of the label "while ensuring that the core values of the company are consistently represented by all associated."

The situation created shock waves on many levels. For years Bloodshot had made a point of signing and promoting women artists, and Warshaw regularly appeared on industry panels advocating for advancing women in all sectors of the recording industry. But Panick's presence in the office and at shows had clearly been a problem for years, and when Miller learned what was happening, he says he told Warshaw and the staff that Panick was unwelcome—long before anything made the news. "It certainly was a point of friction, there's no doubt about that," says Anthony Nguyen, a former staffer.

Warshaw, who met Panick in 1981, would not discuss Loveless's allegations for this story. ("The details . . . are not my experience to talk about.") She says she and Panick have spent "thousands of hours" discussing it in order to "move forward in a positive way," and that the situation has "caused tremendous reflection" for the couple. "We have a wonderfully honest and loving relationship," she says. "He's my best friend."

Warshaw claims that Miller used the allegations to force her out, concealing details from her so that she'd end up taking the fall when the full story came out. Nearly two years before Loveless's post, she says, Miller told her "out of nowhere" that a female Bloodshot artist had confided in him that Panick was sexually harassing her. He didn't initially name the artist or get into specifics about Panick's misdeeds. Warshaw says those omissions left her powerless to rectify the situation and set her up to appear unsympathetic.

"I dedicated 25 years of my life to running an indie record label, and during our most difficult period my [business] partner chose to work against me rather than work through this crisis together," she says. "He gave me an ultimatum to break up my family or leave the record label I love."

Warshaw points to a staff meeting Miller announced the day Loveless went public. He'd asked Warshaw to stay away because, he said, her presence would be uncomfortable for all parties—and she'd agreed. "I now see that as a turning point where Rob solidified the staff against me," she says.

Miller calls this claim "absurd."

"I was her last ally," he says. "I tried to have cooler heads prevail, to give her a few months to step away, show contrition, admit fault. I had no desire to take over all her duties. It was a terrifying prospect for me to not have a partner that I had for all these years."

He adds that Warshaw should've known the allegations he'd originally shared involved Loveless. "I said it was an artist at our South by Southwest showcase that year," he explains. "Lydia was, that year, the only female artist. I assumed, falsely, that Nan could extrapolate that I didn't mean that the Waco Brothers were being harassed."

Even with Warshaw gone, everyone expected Bloodshot to continue. But then things got worse.

Since the beginning, both Warshaw and Miller had insisted that Bloodshot wouldn't resort to the sleazy but technically legal business practices common in their industry. They would protect artists and put their interests first. Warshaw describes her outlook as similar to that of a nonprofit—she wasn't in it to get rich—and Miller agrees that the label's focus on artists' needs set it apart. "I like to think because we were earnest and up-front and not in the power centers of the industry, we could behave in a way that was very organic and on a scale that was comfortable for everyone," he says.

But good intentions are one thing, and outcomes are another. In early 2019, after Warshaw's exit, Bloodshot conducted an internal investigation to sort out its finances—since Warshaw had been in charge of much of the bookkeeping, it had to be reassigned. This process revealed that Bloodshot had shorted many of its artists money. Label staffer Nina Stiener, tasked by Miller to digitize more than two decades of paperwork Warshaw left behind, estimates that Bloodshot owes at least $500,000 in unpaid royalties and other related earnings to artists and songwriters. Nobody would say how many have been affected.

Miller says that after the discovery of this mess he offered to resign and sell his half of the label to Warshaw (she owns the other 50 percent). She declined, suggesting that because she "wanted this business divorce to resolve quickly" she would sell Miller her share instead.

Miller refused. He didn't trust the assessment of Bloodshot's worth, he says, because the valuation company the label had hired hadn't taken into account the damage from the Panick situation or the unresolved obligations to its artists. The appraisal also assumed Bloodshot would remain profitable through 2020. In reality, because of internal strife and the pandemic, it's released only two albums of new music this year.

Miller and Warshaw not only disagree about the company's true value but also about the amounts it owes its artists (neither would discuss numbers on the record). An auditing firm would realistically solve this problem, but none has been hired. Warshaw says both she and Miller would have to agree to the expense of hiring such a firm, but he hasn't responded to her request. Miller denies that Warshaw has ever asked.

To Miller, the blame for the accounting irregularities rests squarely on Warshaw's shoulders. Their division of labor, though never etched into an official corporate agreement, charged him with manufacturing and logistics (shipping, distribution, mail order) as well as writing marketing and advertising copy. Warshaw was responsible for legal matters and for generating and paying mechanical royalty statements and master royalty statements, plus arranging payouts on the licensing agreements the label negotiated for its artists. They operated together, Miller says, by "mutual trust."

"Our jobs were very siloed. Obviously, in hindsight, that was a structural mistake. I didn't check her work; she didn't check mine," he says. He calls the number of royalty obligations he found once Warshaw left "breathtaking."

"I was not expecting that at all. It was a total surprise," he says. "I had trusted she was doing her job fully and consistently, as I always tried to do."

Stiener, 26, spent three months in early 2019 organizing and digitizing approximately 10,000 documents Warshaw left behind in stacks in her office, plus about 15 boxes of contracts, invoices, and other material from the label's basement. One problem is that much of the accounting was still being done manually in Microsoft Word. The label hadn't switched to Excel, a common spreadsheet software for financial documents, until 2015.

Once everything was accounted for, the process to assess payouts to artists was just as daunting. Stiener discovered the label was paying master royalties to a handful of marquee artists—Alejandro Escovedo, Justin Townes Earle, Graham Parker, Ryan Adams—but to no one else. (Loosely speaking, master royalties go to artists, mechanical royalties to songwriters.) Artists with relatively modest sales, including the Bottle RocketsCorderoAl Scorch, and Ha Ha Tonka, had not seen payments since 2010. Stiener says that Loveless had only recouped $2,000 after three albums, while Memphis-based singer-songwriter Cory Branan, who also has three records on the label, is owed a little more than $10,000.

"If they can't pay, I'd like my records back," says Branan, who claims he hasn't received royalty statements in two years—which if true would put the label in breach of contract. Warshaw, he adds, has not responded to his e-mails or requests to audit the books.

"There was no attempt to address any of those issues," he says. "Any potential buyers need to know this is happening." He worries that a sale of the label would mean he'd lose any recourse to retain his masters "or to see some of that money."

Still, like other artists interviewed for this story, Branan is confident that "incompetence," not corruption, is the root of the problem. "I hesitate to attribute anything devious to all of this," he says. But Branan says he can't justify how he learned Bloodshot was for sale: not through Warshaw or Miller but through Stiener. "Selling the label without telling the artists is, to me, unconscionable," he says.

Fulks, one of Bloodshot's prestige artists, is owed about $10,000 in royalties for his first two records, says Stiener. Fulks says he signed a deal in 1996 whose terms were "aggressive and modeled on practices of much larger companies," in contradiction of the label's self-image as friendly to artists. But because at the time he'd already invested 15 years into his career with no other offers, he had little leverage. Fulks remembers a prescient warning from his attorney: "You'll lose more money the more records you sell for them."

"I felt educated in the style and approach of the company—that it was stingy and paternalistic—and felt convinced that I needed to deliver their two records, expect little money or reward, and move on to a place whose stinginess and paternalism might at least be justified by higher budgets," Fulks explains via e-mail. He says that when he renegotiated his Bloodshot contract with Warshaw in 1999, she admitted to him that the earlier arrangement was unfair. He ended up re-signing with a far simpler contract—just one page promising a 50-50 payout for new recordings. He's been paid ever since, he says.

In March 2020, Bloodshot and Warshaw passed documents back and forth in a united effort to resolve the delinquency issues. But even that process has hit roadblocks. The label gave Warshaw a mirrored copy of her company hard drive, but she says it had been restructured without her permission, making it difficult for her to locate files. "I no longer have access to everything that was once on the computer," she says.

Stiener says it was hard to get clear answers from Warshaw, and that by June she'd stopped cooperating altogether. In some instances, Stiener and other staff worked to create corrected versions of what she says were erroneous royalty statements Warshaw had on file. Miller says a single factor distinguished the new statements: "Math."

"I found one Robbie [Fulks] statement where the math is so wrong. She was supposed to carry a zero so he was owed $10,000, not $1,000," Stiener says. "I did not defer to her statements at all [after that], because I could prove my numbers."

Warshaw says she was committed to a smooth transition, but that Miller thwarted that effort. In April 2019, Miller had allowed her to return to the office to put her files in order. She says she arrived to find "he had removed 25 years of files from my filing cabinets, including all historic artist contracts." She also says she was locked out of key business accounts. Miller does not deny this, but he says the situation has since changed: today Warshaw has full access to all accounts, and she doesn't let him into one.

"If there were moments early on when she was [locked out], it was accidental. We were operating in a crisis. We were trying to figure out aspects of the job we had never done. Mistakes were made, but they were rectified," he says. "I have nothing to hide from her."

For her part, Warshaw admits she is "not perfect—no human is."

"Whatever royalties may still be due, I have insisted that all artists be paid in full and that the artists are paid before Rob or I see any profit," she says. "I continue working to make sure every artist is accounted for and fully paid."

When it comes to Bloodshot's ongoing conversations with artists about their royalties, however, Miller says Warshaw "continues to disagree, without showing why, about what our obligations are." The last time Warshaw asked Miller to buy her out was in January 2020, and he once again turned her offer down.

"It was not reasonable," he says, in part because it didn't take into consideration the royalty issues. "None of the information we have shared with her over the months has dissuaded her from believing what we think is an inaccurate appraisal."

Current Bloodshot employees contacted for this story would not speak on the record for fear of reprisal, but their frustration is clear. In July, they collectively posted an open letter to the label's artists, summarizing the royalty discrepancies and blasting Warshaw for keeping everyone in the dark about the terms of a potential sale. "We believe this potential sale could jeopardize the artists' and songwriters' ability to obtain fair compensation and trustworthy control of their work," they wrote.

Warshaw responded through attorney Jeff Becker with a cease-and-desist order threatening legal action against each staffer, a step that she claimed was necessary "to inform those who were spreading misinformation to immediately stop doing so, in an effort to ensure that only accurate and factual information was being shared with the artists."

"I really had no choice," she says. In a copy of the cease-and-desist letter obtained by the Reader, Becker said the staff's claims were "entirely misinformed" because they were not privy to Warshaw's "confidential negotiations" with Miller.

Nonetheless, the lack of communication "has been frustrating" for the label's artists and their managers, says Kathie Russell, an attorney who represents Bloodshot artist Sarah Shook. She sides with the staffers. "They are scared," she says. "They were able to give us information. I don't blame them for doing so. Why in the world would Nan purposely try to shield artists on the label from information?"

If neither Miller nor Warshaw buys out the other, it seems likely that a third party will purchase at least part of Bloodshot. For private equity groups and other investors, record labels are desirable acquisitions because of their back catalogs, says Stephen Ma, a Los Angeles-based entertainment attorney who represents publishing companies. Chicago indie Victory Records, which specializes in hardcore and metalcore and has several gold and platinum releases in its catalog, sold to Concord in summer 2019 for an estimated $30 million.

"The market's pretty strong for catalogs right now, because everybody needs content," Ma explains. "There are so many services now, so many platforms that didn't exist ten years ago, and music is a big part of that. It's a real source of revenue."

Streaming has made publishing a more lucrative and reliable asset for investors than live entertainment. This month, the Universal Music Publishing Group announced it had purchased Bob Dylan's entire catalog of songs for an estimated $300 million. To take advantage of the increasing premium placed on their work, younger artists such as the Killers and Calvin Harris are also selling their publishing catalogs to private equity firms.

The demand for indie-label catalogs is especially high. With so many major-label catalogs already spoken for, investors sense that the number of available catalogs able to stand the test of time is dwindling.

"There's some sense of concern of scarcity that's coming for indie content," says Keith Bernstein, CEO of Royalty Review Council, a California firm that performs financial due diligence for investors interested in buying entertainment properties. "Masters are unique, and the good stuff that you want is either disappearing or seldom becomes available—and if it's something that you want that becomes available, you need to act fast. You're seeing people feel if they don't buy something that is available right now, owning the type of catalog with great masters like they visualized will not necessarily happen. There are aggressive buyers right now and some are willing to pay higher [prices]—and that's also stimulating music copyright owners to sell. One is feeding the other."

Bernstein notes that despite this strong demand, most buyers will walk away if a label's historical income doesn't appear fully supported by proper documentation, or if royalty accounting doesn't seem accurate based on past record sales.

"Usually, the labels with solid business-management people and good attorneys get the deals done faster because everything is well-organized and they are able to quickly answer questions raised," he says.

"But sometimes, when it feels like things are dysfunctional and people at the label do not get along, that's where things can fall apart. There's more that goes into evaluating a catalog than just the numbers."

This month, Bloodshot is considering a deal with a potential buyer that would employ what's called a holdback model—a process that, according to Bernstein, places a percentage of the buyer's money into an escrow account that can be used to iron out any royalty inconsistencies.

The purchase could also involve the acquisition of only a portion of the label's catalog, according to a source close to the potential transaction (who wishes to remain unnamed because they're not authorized to speak publicly about the deal). This would let the Bloodshot name remain with the label, and Miller or Warshaw would have the option to continue running the company.

This type of transaction could "breathe new life into Bloodshot," says the source, allowing the label to work with longtime artists on future releases and even sign new ones. A deal like this could also do more to "keep the catalog alive," because the new owner would have access to more licensing opportunities across new media platforms, possibly giving artists greater exposure and earning potential.

This anonymous speculation suggests that the potential new owner at the table is likely an established music company, not a private equity firm.

Stiener says that if the sale does not happen soon and more time drags on without answers, Bloodshot's artists may feel forced to choose "the nuclear option." At least 25 of them have signed on to a class-action lawsuit over missing royalties, organized by Russell but not yet filed. Their fear is that terms established with a new owner will not address what they are owed. "The artists prefer the label to survive because they know we are good with the money," Stiener says.

For now, everybody is waiting. This year has already denied Bloodshot's musicians touring income, put their health at risk, and trashed the infrastructure of their industry. The idea that their record label might collapse only adds to their anxiety.

Among those musicians is Los Angeles-based Jason Hawk Harris, who came aboard with Bloodshot in November 2018—he was the last artist it signed before business hit the skids. Joining the Bloodshot roster, he said, was a dream come true. "It's a legendary record label," he says. And Miller and Warshaw acted on their reputation by giving him "complete artistic control."

His hope now is that Miller will continue to lead the label and Warshaw will exit through a sale.

"Bloodshot is the perfect record label for me. I get to do the music that I want with people I trust to protect and guide my career," he says. "But who knows the future? A thousand things could happen."

 

 

 

 

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