As South by Southwest demonstrates, small, independent venues are vital to the new touring economy for bands.

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The South By Southwest festival in Austin began in 1987 partly as a ploy. Musicians and concert nerds had cultivated their own vibrant local scene, and wanted to find a way to bring touring, non-Texan musicians in to perform, connect, and collaborate. The idea was part selfish—what music fan doesn't wish for their dream bands to come to town?—and part utopian vision: a weeklong party with a purpose.

It's the same type of thinking many club owners follow when envisioning their venues. As New York City bar founder Nick Bodor puts it, "We just set up the type of places where we'd like to hang out." Bodor co-owns several successful music venues in New York City, including Cake Shop, a concert space, bar, and coffee shop hybrid on the Lower East Side, and Bruar Falls, a wood-paneled joint in the heart of musician-saturated Williamsburg, Brooklyn. On Wednesday in Austin, as crowds surged into hundreds of venues of all sizes, styles, and varying degrees of sound quality, Bodor lead a panel on the lofty fourth floor of the town's futuristic convention center. The topic couldn't have been more relevant to the festival that hosted the discussion: "Creating a Scene in 2012."

Music scenes like the ever enlarging one that reassembles each year at South By Southwest revolve largely around the locally-owned, mid-size venues that foster them, Bodor and his admittedly biased co-panelists agreed. And, in an age where musicians are forced to confront the fact that album sales will likely never be a viable form of income, and touring is becoming increasingly important, small, non-corporate run venues are becoming vastly more vital as well.

"The live scene has become much of the music industry," says James Moody, the self-described "chief" of Mohawk, a venue he founded in Austin in 2006. Mohawk is by no means a hole in the wall. Pitchfork hosted two well-attended unofficial "parties" there this week, and the place boasts multi-leveled indoor and outdoor areas, two stages, multiple bars, and scenic views of the boisterous Red River Street. But it also has an easiness and accessibility to it: There are local beers on tap, and annual, non-SXSW events that are heralded by locals, such as a beard-growing contest and a queso dip competition. It's not a corporate-owned mega dome with security staff pawing through bags at the entrance and $10 Miller Lites on sale.

These are exactly the types of clubs that Bodor, Moody, and company feel are crucial for the types of bands that overwhelmingly populate South By Southwest—the groups with modest-to-ample followings, who might earn music-blog acclaim and overwhelm DIY performance spaces, but whose members still have day jobs or bartending gigs.

The strategy behind a place like Mohawk has several prongs, and one of them was selecting the right location. Moody acknowledges that Austin's Red River Street scene existed before Mohawk did. "It's an ecosystem idea, and it starts with affordable rent," he says. The Red River area, much like Williamsburg, the Lower East Side, Athens, Georgia, and many other music-centric neighborhoods, initially attracted musicians with its affordability. "Red River was an undesirable neighborhood—which made it desirable for people who like rock and roll." Other perfectly located American venues opt for prime placement on popular tour routes. The Bottletree in Birmingham, Alabama, for example, and the now-defunct Connecticut punk club The Anthrax opened after seeing opportunity in Birmingham's status as a band thoroughfare.

Chris White, another panelist, has worked as a booker in New York since 1995 and is instrumental in opening The Wick and The Well, new venues coming to Brooklyn's Bushwick neighborhood. It's a logical idea: Bushwick is an area just past Williamsburg that's become home to many musicians in recent years, as Bedford Avenue-area rents crept upward. DIY spaces—usually lofts where early 20-somethings live, build their own plywood stages and bars, and sell cheap tickets at the door to host shows—previously blossomed there, and a few continue to survive. But for many, their life spans are as brief as a few short months or years, thanks to police crackdowns. White isn't aiming for The Wick to replace these types of spots, but he does want it to be a legal alternative for the bands that often play them.

It's easy for the like-minded bookers and venue owners sitting on a panel to confirm one another's notions of what will save music from the fatal threats of illegal downloading and corporate domination. But at least the musicians who play South By Southwest are of the same mind as well. I rode to the festival from Washington, D.C. in a 15-passenger van with my friends in two bands, and an impressive collection of guitars, amps, pedals, and keyboards carefully crammed in the back. During the days-long ride, we talked about what musicians want now, in 2012, as opposed to what they strove for in the 1980s or '90s.

It was an undoubtedly small, unscientific survey, but the consensus was that few are seeking fame, fortune, and a major label record deal anymore. Their approach is more humble; they want to quit those temp jobs and beer-slinging gigs and subsist modestly on music alone, even if it means touring for most or all of the year.

And, overly idealistic or not, that's what the panelists in Austin claim to want as well. Michael Slaboch, talent buyer at Chicago's The Hideout, grew up cramming into dark basements at house shows, in the constant pursuit of live music. His personal and professional life merged into his desire to bring that sentiment to a club setting. He can boil his mission down simply: "I just want bands to make money. That's the challenge."

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