As told to Ian Mount

Chip Davis has the dubious distinction of being the first man to be mocked for playing New Age music. Under the name C.W. McCall, Chip Davis and partner Bill Fries had 13 No. 1 country hits and a crossover No. 1 single -- "Convoy" -- that sold 10 million copies and begat a Sam Peckinpah film. But when he combined his loves of Supertramp and classical music into an elaborate mixture of synthesizers and horns under the band name Mannheim Steamroller, it so confused music industry marketers that they refused to sell it. So Davis formed a record label, American Gramaphone, and took this early New Age album -- titled Fresh Aire -- straight to the people. Twenty years and 30 million albums later, he's built his Omaha-based label into a $40 million company complete with Mannheim Steamroller music products designed for each season, a 36-page clothing and lifestyle catalog, and a marketing plan that eschews big music stores for the candy aisles of drugstore chains. In October Davis celebrated the 20th anniversary of American Gramaphone by releasing the Mannheim Steamroller CD Christmas Celebration.

Fresh Aire started as a lab experiment in the recording studio. I was a classically trained musician, and I wanted to see if you couldn't take classical thought and intermingle it with the rhythms and instruments of today. And it was like, "Harpsichord and drum and synthesizers and French horn sections. Hey, this is cool!" But at the major labels nobody could figure out how to market it, so no one would take it.

My reaction was, "I don't care what you guys say. I'm going to do it." If I listened to everybody who's given me advice, I'd never be sitting here. We wouldn't have a record label in Omaha because you can't have one here, right?

In a way, it was accidental that it took off. My engineer at American Gramaphone thought of sending it to the Consumer Electronics Show, where a particularly aggressive group of hi-fi distributors took to it. They used it as a demonstration album because of its quality. Guys would say, "I'll take those speakers. What are you playing?"

We distributed CDs through reps who called on mom-and-pop hi-fi stores. One of our first retail venues besides hi-fi stores were wine-and-cheese stores. Wine enthusiasts like Fresh Aire music when they're sitting back and having a glass of wine and a chat.

We still use the same concept. Reps go to small music stores, drugstores, grocery stores, all over the map. We have a couple of guys in nontraditional sales, like groceries, and a distributor that deals with independent music stores. Dwight Montjar, my head of sales, was a buyer at Target. I always felt when you bring someone on, you bring in someone from an area you want to sell in. I know drums and bass and a B flat from a C, but I don't know how to get shelf space in Target.

In 1984, after selling 500,000 Fresh Aire albums, I wrote my first Christmas album. I was told by retailers that I shouldn't do one because it would be perceived that I was out of ideas. Everybody's notion of Christmas music at the time was the $2.99 albums out there. It was all the same: some artist singing a Christmas carol. But I said, what if you did Christmas music with a little class, using classical music? Now, 23 million copies later, the No. 2 Christmas artist behind us is Elvis Presley, with 16 million.

I have seasonal products. We did that with our Christmas albums, so I thought, "Why don't we create other products that work like that?" I treat Halloween as a fall harvest season. Then I have an album called Romantic Melodies that we look at as more of a Valentine's Day/first quarter product. After that I have American Spirit, which focuses on the second quarter -- Father's Day, Flag Day, the Fourth of July, and Memorial Day.

Any place people go and you can put music in their path is a very legitimate way to sell music. I'd say the central hump of our fans is baby boomers like me. They haven't had a place to buy music, so by putting our CDs in grocery stores they're in the path of people who want to buy them. The trick is, you have to have music -- or any product -- that's appropriate to the path you're putting it in. Last year we did some things with Wal-Mart like putting our Halloween CDs on clip strips -- those things you see bags of chips on -- and putting them in the candy department. That's putting Halloween music in the path of Halloween candy buyers. But putting it next to the turkeys -- that would be irrelevant.

I don't go out and do big market research things and hire focus groups. I'm pretty much part of my fan demographic. I seek out products that I like and typically they like them too. The first product I made like this was Sunday Morning Coffee, a record to listen to while you're drinking coffee and reading the paper. As a promotion, we sent out bags of coffee with the CD. It worked great, so we thought, "What else can we do like this?" I came up with cinnamon hot chocolate. That was mostly for Christmas but it took on a life of its own. We've sold 200 tons of hot chocolate and 50 tons of coffee.

I play about 30 live shows a year, so I have my finger on the pulse of the fans. Sometimes at a concert I ask them to tell me what they'd like to hear at I get thousands of responses. They've picked virtually all the pieces on three of four Christmas albums. If they participate by telling me what they want, I send them a free copy so they can hear how their choices came out. A side benefit is that they become my best salesmen. They'll play it for other people and say, "This is what I chose."

If there's one thing we did wrong, it was to diversify more than we should have. In 1985, we thought we could apply our system to successful artists like John Denver. We sold a fair amount of product. But they wanted to go to bigger labels. I decided to spend the money on things we already knew how to sell and had more control over. I could call a hot chocolate manufacturer and say I need 50 tons of cinnamon hot chocolate with this recipe by this date because I'm going to sell it with our Christmas album. That I could control.