Independent labels are reveling in their success after grabbing the spotlight and many of the biggest awards at the Grammys. It marked one of the biggest nights in years for indies, setting the stage for a surge in their online music sales.

Meanwhile, the rest of music industry is trying to figure out if the unsung acts from smaller labels are winning major awards because of the viral nature of the Internet - or in spite of it.

The presence of the indies during the annual awards show has grown in recent years as more bands appeal to fans directly through Facebook and YouTube instead of traditional sales channels.

A record number of nominations this year and the most wins in two years proved that a good band can break out despite lacking the resources of a major recording company.

"This was a major, major night for the independents," said Daniel Glass, CEO of Glassnote Records, whose band Mumford & Sons performed during the show and was nominated for best new artist but didn't win.

Canadian indie band Arcade Fire won for album of the year -- an unprecedented third straight time an indie label act has taken the top crown. In all, independent label artists won awards in 45 of 108 categories, the most since 2008, and they accounted 273 of the 542 nominations, up from 231 three years ago, according to the American Association of Independent Music.

Despite the critical acclaim, just 11 percent of the music sold last year came from artists signed to labels other than the majors Universal Music Group, Sony Music Entertainment, Warner Music Group Corp. and EMI Group Ltd., according to Nielsen SoundScan.

The relative obscurity of some acts left some Twitter posters stunned ("Album of the year goes to who ?" one tweeted) but with 484,000 albums sold since "The Suburbs" was released in August, according to SoundScan, Arcade Fire has a solid following.

"There's a lot of great music being made outside of the major label system," said Recording Academy President Neil Portnow. "It's created a window of opportunity for some very independent, forward-thinking, risk-taking entrepreneurs."

The most stunning victor of the night may have been Esperanza Spalding, a little known but well-loved jazz bassist and vocalist who topped 11Justin Bieber, the teen sensation with a half billion video views, for best new artist.

Spalding's Concord Music Group, among the largest of the independent
labels with more than $100 million in annual revenue, said votes might have split among the other popular nominees, Bieber, Drake, Florence + The Machine, and Mumford & Sons, allowing his star to shine.

"I think the truly sophisticated voters, the member base of (The Recording Academy) ... had no choice but to vote for her. This is an artist that really has undeniable talent and superior musicianship," said Concord's chief label officer, Gene Rumsey.

Portnow insists that the system set up for the Grammys' 12,000 voting members helps prevent results that only favor the most popular artists. Major labels have too few qualified voting producers to guarantee wins for their artists, and artists tend not to vote in lock-step with their label mates, he said.

Instead, all of the voters gain equal access to the nominees' music online on a password-protected site. Sometimes during a listening session, the cream can unexpectedly rise to the top, he said.

For independent labels, a win can be transformative.

Google was flooded with "Esperanza Spalding" searches after her win was announced. Online album sales hit 3,000 over 12 hours on Sunday night up from an average of 300 the previous week, according to Mike Gillespie, Concord's senior vice president of sales. The company plans to ship up to 100,000 physical CDs this week, up from the normal 2,000 to 3,000 discs, as stores like Best Buy stock up on the winners. If sold, the amount would more than triple her sales so far.

Arcade Fire's Durham, N.C.-based indie label, Merge Records, was so unprepared for the win that its founders Mac McCaughan and Laura Ballance, of the band Superchunk, were in Japan on tour and didn't attend the live show.

Merge publicist Christina Rentz said there was virtually no campaigning for Grammy votes aside from a small ad in Billboard magazine.

"We don't play the game. We don't know how it's played. And this happened," she said. "Hopefully it'll encourage musicians to know that you can do it your way and have recognition from the bigwigs."

Courtney Holt, the president of MySpace Music and a voting member of the Academy, vouched for the legitimacy of the Grammy system. He thinks the ballot serves as a gut check among fellow artists, who aren't as swayed by what music is selling the most.

Holt hailed Arcade Fire as a "band's band" that earned the respect of other musicians. The group represented the closest thing to the archetypal rock band in a category whose other nominees were Eminem, Lady Antebellum, Lady Gaga and Katy Perry. Given the popularity of those artists, Arcade Fire also probably won support for being the underdogs.
"People talk about the rise of independents in the modern music business," Holt said. "Maybe this is an example of that being celebrated."

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