Considering the state of the music industry, it’s hard to be a musician these days. Fledgling musicians have to promote, market, and advertise their shows by themselves. And at the end of the day, instead of getting paid to do a show at a music venue, they need to pay the venue. Three seasoned musicians named Michael Teach, Michael Narvaez, and Jacob Covington had this in mind when they founded Chicago Acoustic Underground (CAU), a hybrid Internet music show, record label, and booking agent.

“It was much easier to be a singer-songwriter back in the ’70s, when I was performing,” Teach said in his combination apartment/recording studio overlooking Armitage Avenue. “You would go to a venue in the afternoon and play for the owner. If he liked it, he would put it on that night. The beauty of it was, when you walked off stage, cash would be in your hand.”

Teach and his friends came up with the idea for CAU five years ago as a solution to the problems plaguing struggling artists and the music industry as a whole. The three decided to handpick the best original artists they could find at Open Mic nights throughout the city and feature them on podcasts, which they posted on the Internet on a homespun, bare-bones website.

“This was five years ago, too, so no one knew what in the hell a podcast was,” Teach reminisced.

But to their surprise, the site began to succeed. They began by producing one podcast per week and putting it up on the site for download. By six months, they had 1,000 hits per month. After four years, they had a million hits per month in 42 countries and were recording a podcast almost every day. They now have five artists signed to their record label and organize numerous live shows.

Starting as a small-scale organization, CAU is now larger, with a music division, production division, and publicity division. And everyone—down to the entertainment lawyer the organization consults—is a musician.

However, Teach stressed that the organization is still laid-back and friendly. He cited this as an advantage to the music industry’s bureaucracy, which is one reason it finds itself in trouble in the digital age.

“The music industry is in total chaos,” he said. CAU has an insider view of the pandemonium unfolding—several of their artists have gone on to sign with major labels, including Crystal Bowersox, a runner-up on season nine of American Idol who just signed with Sony.

“Sony has no idea what to do with the new paradigm,” Teach said, referring to the digitization of music and steep drops in CD sales. “One division has no idea what the other is doing.”

CAU, on the other hand, is relatively small and tight-knit, making it easy for it to adjust quickly to new technologies and trends. CAU’s record label, named CAUdog after Teach’s extremely sociable dog Buffy, produced 1,000 CDs of the first artist to sign with them, a band called Goodbye Home. When only half of them sold, the organization quickly adjusted its business model, producing only 200 CDs per album release and making the rest available for sale online only.

“We’re the small guys, so we’re adaptable,” Teach said. “For Sony to make the same change would be impossible.”

Another thing a large record label can’t do is act as an advisor for fledgling artists, something CAU always strives to do. Teach and the CAU team listen to hundreds of artists and give them tips, advising them on what areas they need to improve and giving marketing and publicity advice.

“A lot of artists need promotional help,” explained Hannah Frank, the organization’s publicist. “They’ll be trying to do it themselves and they won’t know how, or they’ll hire some entertainment company for 3,000 dollars to give them a nationwide blitz of press which local artists really don’t need.”

The relationships CAU has forged with its artists have often crossed the boundary from professional partnerships to lifelong friendships.

“When I discovered Crystal Bowersox, she was literally singing for her supper on the Red Line,” Teach said. He believes by showing this kindness towards the artists, the organization encourages them to stay in Chicago, keeping it a great city for music.

The organization also has plans to expand. Teach hopes to purchase a building to both house the recording studio and serve as a place to broadcast streaming music shows on the Internet similar to the podcasts. The live audience for these shows will be by invitation only. They are also planning to start sponsoring CD release shows for artists.

So far, this hard work has paid off. The organization is set to make a profit for the first time in 2011.

It helps that everyone in CAU was once a struggling artist, Teach believes, putting them in a unique position to understand and help new musicians.

“Everyone knows about the pain and the Ramen noodles and the challenges,” Teach said.