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RACHAEL YAMAGATA eagerly awaited the perfect time to break the news. After all, these people had been there since the beginning, since she first decided to venture out on her own. They were more than fans –they were friends.

Now here, on Yamagata’s Sept. 23 birthday (she will only say that she’s “twenty-something”), they were packed into the back room at Schuba’s, where her weekly performances always have the feel of a casual get-together.

“Well, I just signed with RCA,” she said, so casually that it caught many in the room off guard. “How’s that for a story?”

An audible buzz from the audience followed. Then came the applause — almost five minutes of non-stop, thunderous applause. Hours after the lovefest, Yamagata was still marveling at the response. But then came the reality check.

“It’s probably all downhill from here,” she said, taking a swig from her beer.

During an almost yearlong wooing by countless record labels, Yamagata always has had a firm grasp on the reality of the music business. Simply put, few acts make it and most acts don’t. Though the RCA Victor Group is counting on the local twenty-something singer-songwriter and her smoky, soulful sound — musically, Yamagata has drawn comparisons with balladeers Fiona Apple, Sarah McLachlan and jazzy Norah Jones — to attract “sophisticated” twenty- to forty-something listeners, success from this point on still remains a long shot.

“Getting signed is easy — anyone can get signed,” says David Drainman, lead singer of local metal band Disturbed, whose second album, “Believe,” recently debuted No. 1 on the Billboard charts. “The difficult part isn’t getting the deal, it’s keeping it.”

But in reality, getting signed isn’t all that easy. Just how does an artist get to that first rung of the rock ‘n’ roll ladder to fame? To find out, the Tribune spent four months following Yamagata, getting an inside look at the hard work it takes for an artist to get to this point and be ready to go to the next level.

FOR EVERY SUCCESS STORY from the Chicago music scene, there’s a story of those who didn’t quite make it. For every Smashing Pumpkins or Liz Phair, there’s a Nicholas Tremulis or Poi Dog Pondering. Urge Overkill and Veruca Salt had some measure of national success before various problems eventually pushed each band into musical oblivion.

The trick for any popular local artist is to transcend whatever following they mustered to garner a major label’s attention in the first place.

“It’s now a national picture,” says Chicago club owner Joe Shanahan, a fixture of the local music scene for more than 20 years. “It has become a national deal. They’re not just trying to sell records in Chicago. If you’re lucky and skilled enough to get a deal, this is where the hard work starts. This is when you have to look at how you fit into the national picture.”

And these are tough times for the music business. Album sales have reportedly fallen off 7 percent since the first half of this year and big labels with shrinking budgets are carefully searching for new, bankable talent.

In the case of Yamagata’s two-album deal, the plan is to cultivate her piano-and guitar-based sound as a long-term project. According to RCA Victor Group president David Weyner, a partnership like this is rare in the industry, with most labels preferring a quick return on their investment.

“We are not about two months of watching for a single to succeed on the radio and if it doesn’t, that means something dire for the artist,” Weyner says. “I think that is what bonded us as artist and label. Rachael is an artist of special potential whose audience is very broad.”

The hype happened almost overnight for Yamagata who, at the urging of some record industry insiders, quit her gig as lead singer of the Chicago funk band Bumpus to pursue a solo career. On a lark last November, American Records, a production arm of the Island Def Jam label, flew Yamagata to Los Angeles for an industry showcase.

The sound, Yamagata admits, was raw — she, herself, didn’t know how to describe it. But something clicked and representatives from the other labels on hand, including Capitol Records, picked up on it. The appeal went beyond the music, according to J.W. Johnson an executive from BMI, a music publishing company.

“She’s genuinely a great person,” Johnson said. “And in a way, that genuineness is her biggest asset. She’s just so appealing. And when A&R starts to buzz about somebody, everybody takes notice.”

Yamagata was pleasantly surprised.

“I got a lot of attention very quickly and very unexpectedly,” she said hours before her show at the Chicago musical showcase MOBfest last June. “Before I knew it, people started talking.”

Things happened so quickly, in fact, that Yamagata barely had time to put together a band for the MOBfest shows. She enlisted some members of Bumpus, including her boyfriend, James Johnston, to help her out. They managed to get in two quick rehearsals before MOBfest.

It could have been weird — members of the band she left helping her get her own project off the ground — but all parties involved agree it hasn’t been a problem.

“Basically, what speaks for itself is that we’re all in her band,” bass player Robert Polichek said as Yamagata prepared for the MOBfest show. “This all started to happen when all of us were pursuing personal side stuff. Overall, it’s been a positive experience for everyone. This is a friendship thing.”

Yamagata now is nervously pacing backstage at Martyr’s before the MOBfest show. She gives her newly assembled band a funny little pep talk.

“If anybody [screws up], don’t worry about it,” she says. “If it sucks, who cares? Let’s just have some fun.”

It doesn’t. Yamagata spends 20 minutes shaking hands and casually chatting with representatives from roughly 10 labels on hand for her set. Later, backstage, Craig Winkler, Yamagata’s manager, is beaming. After speaking further with the labels, he believes Yamagata’s show will be the talk of the MOBfest weekend.

Yamagata just shrugs it off.

“Who knows whether something will become of it or not,” she says. “I’ve heard lots of things. There are Veruca Salt stories where they were signed after just two shows. Or, there are bands that have been doing this for 12 years and are still going to MOBfest to get discovered. Who really knows what the next `Big Thing’ is?”

In the 1980s, Chicago’s next big thing was Nicholas Tremulis, whose fusion of funk, R&B and big band sound had him selling out shows locally, and poised to make some noise nationally, after he signed with Island Records.

“Everyone felt so completely like this was one of Chicago’s true musical ambassadors and he’s still a force of creativity,” says Shanahan. “But when the major label deal came, with a big tour, people expected him to blow up and become bigger than life. It didn’t happen.”

The same could be said for Poi Dog Pondering, a promising Chicago-area band of the 1990s. While the band has kept its local following, the huge national following never materialized.

“At that time, they were selling out five nights at the Vic and two nights at the Aragon,” Shanahan says. “These guys were poised for big things and the sound just didn’t translate in other markets. These situations show the music highway is littered with what I believe are truly talented people that aspire to go on to bigger things via the major label concept but it didn’t go any further.

“It doesn’t mean they’re less talented — it just didn’t happen.”

One Chicago band that, so far, has followed in the footsteps of Liz Phair and Billy Corgan’s Smashing Pumpkins is Disturbed, which has been together since 1997. But Drainman remains strongly grounded in reality.

“The odds of succeeding continue to decrease the further you go along,” Drainman cautions. “It gets more difficult to maintain whatever success you’re lucky enough to attain and it makes the progression to even greater success just as difficult. Stagnation is death. You need to always be moving forward. That’s what any band can wish for.”

In late July, a month after the MOBfest show, things appear to be moving forward for Yamagata.

“That show got a lot of heat on it,” Yamagata’s manager, Craig Winkler says, while having lunch at a Wicker Park cafe.

Winkler is not your typical manager. There isn’t any of the stereotypical fast-talking you find with people in the music business. He’s got a certain Chicago-style casualness that goes well beyond his low-key get-up of T-shirt, shorts and sandals. Maybe it’s because Winkler and Yamagata are new at the business of negotiating a record deal. Winkler runs a local CD manufacturing company. Yamagata is his first and only client. At the age of 34, Winkler is learning this managerial business as he goes along.

“I did this because Rachael asked me to and because she knows I believe in the music,” he says. “I really respect Rachael’s music and I think it’s fresh. I wanted to do whatever I could to get it to the right people.”

Yamagata looks up from her salad.

“There are so many good acts right here in Chicago that never get in the right hands,” she says.

Yamagata must be in good hands. Winkler tells her about an upcoming show at the Elbo Room that will be attended by representatives from the Universal, Hollywood and RCA labels. If things go well there, Winkler says, he expects an offer to be made.

American Records executive Antony Bland has been tracking Yamagata for almost a year now. He heard about the exotic singer-songwriter (Yamagata is part Japanese, German and Italian) whose soulful style was in the mold of Norah Jones and Cassandra Wilson from a friend of a friend, he says. So Bland flew to Chicago to see her perform.

“She was so captivating on stage,” Bland remembered.

This was last November and Bland convinced Yamagata to make a trip to Los Angeles for an industry show for Island Def Jam. “It wasn’t the greatest show,” Bland admitted. “But there was something there. I kept in touch with her.”

In August, Bland caught Yamagata in Indianapolis and was impressed with how much her live shows had improved.

“There truly was a magic on stage,” Bland says. “She does that one song by the Black Crowes [“Seeing Things”] — frankly, I think she does it better than the Black Crowes — and there is so much emotion to it. After the show, people were getting their pictures taken with her.”

No doubt, the RCA executives picked up on that after the Elbo Room show. After receiving a standing ovation, it took Yamagata more than a half hour to wade through well-wishers and make it upstairs to meet with them.

“A lot of this business is timing and that show was a prime example of that,” said local singer-songwriter Melissa Rose Ziemer, a good friend of Yamagata’s who also happened to be on the same Elbo Room bill. “RCA happened to be there to see her at her pinnacle. During the course of this year, she was really trying to fine-tune that sound and the Elbo Room was a pinnacle moment for her.”

That performance all but sealed the deal with RCA.

“She’s very engaging in between songs, which is especially rare in this business,” Weyner said after the show. “It’s borne of a growing confidence she feels. She had been in a band as a lead vocalist but as she comes out as a solo performer, she’s gaining a certain confidence that is palpable.”

That confidence was apparent early in September.

Yamagata and Johnston had just returned from a much-needed European vacation while Winkler and Yamagata’s attorneys looked over RCA’s contract. Yamagata was scheduled to open for the Mighty Blue Kings at House of Blues.

Yamagata was admittedly jet-lagged when she hit the stage and the place was only half full, thanks to a slow-arriving crowd there mainly for the Mighty Blue Kings.

Midway through Yamagata’s set, the crowd had picked up and she finally had the attention of the people who had been talking. She began to tell one of her stories.

“Shut up and sing,” a guy yelled from the growing crowd, which had gathered at the foot of the stage.

“Say that after the show and I’ll kick your ass,” Yamagata said, without missing a beat. The crowd went wild, applauding her gumption.

After the show, Winkler made his way backstage, where Yamagata was talking to Chris Stowers and Jeff McClusky of McClusky and Associates, one of the music industry’s most powerful independent promotion companies.

“You’re a major-label recording artist,” Winkler said with a laugh. “Time to get a tattoo.”

The deal is done.

“Part of me, at some level, always expected it to happen,” Yamagata says. “But every now and then, I still catch myself saying, `Oh my God, this is so amazing; I can’t believe this is happening.’ You just never know how it’s going to work out.”

Those who know Yamagata and how hard she’s worked to get this far think this is the start of something big for her.

“There’s always going to be hoopla around a young hopeful,” says Chris Stowers of McClusky and Associates. “All you can do is pray that everybody does the hard work and all the pieces fall into place. Realistically, it is still a crapshoot — that’s the nature of the business. But I really believe Rachael is going to be out there for the foreseeable future.”

For how long though? As long as Liz Phair? Longer than Veruca Salt?

Right now, it’s anybody’s guess.

The label is currently working with her to find a producer, and the plan is for her to have her first album out within a year.

“We love to see truly talented people get their shot at it,” Shannahan says. “Getting there is a big deal. But now the hard work starts. It’s kick-off, the puck has been dropped — however you want to say it. The game begins now.”

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To listen to Rachael Yamagata’s music and to see more photos, go to chicagotribune.com/rachael.