As the president and CEO of Merging Media Inc. which is also based on the South Side and affiliated with the club, he believes he's also looking at a major new source of business -- for his company and for the entire music industry.

"I think it's a whole new trend. I think it's maybe going to be the salvation of the recording industry," said Mr. Cardamone, referring to his DVD-based concert videos.

It's a big claim for someone leading a relatively small company. But Mr. Cardamone's optimism stems from the upcoming release of the first concert DVDs to be marketed under Merging Media's Club Cafe Live label.

In what could be a major boost for the fledgling label, Merging Media has landed agreements from two national recording artists, singer songwriter Jill Sobule and Adrian Belew and the Bears. Both artists will release their first live concert DVDs under the Club Cafe Live imprint, after performing at the club in recent years.

While both artists are niche performers, they're also well-known and critically respected. Jill Sobule may still be best known for her mid-90's hit song, "I Kissed A Girl," but has also recorded critically acclaimed albums on major labels such as Atlantic and MCA. A legend within music industry circles, Adrian Belew has performed with such artists as Frank Zappa and the Talking Heads.

Currently, Merging Media is in talks with Cambridge, Mass.-based Rounder Records, a well-known independent music label, that distributes it's mix of CDs and DVDs throughout North America through industry giant Universal.

Paul Foley, GM of Rounder, acknowledged that his company is "very interested" in handling and distributing Merging Media's Club Cafe Live CD series.

"We have made a strong move into the DVD market in the last year and half," said Mr. Foley. "We believe that's an area where we see real growth."

How was Merging Media, with a brand- new DVD label and no history of producing and promoting a music product on a national basis, able to sign artists such as Mr. Belew and Ms. Sobule?

"Neither of them were on record labels," said Mr. Cardamone. "So it was easier dealing directly with the artist."

Also, the music industry as a whole continues in a state of major transition: The major record labels continue to consolidate; profits are harder to come by; and musicians are left with more technological choices to produce and promote themselves.

As the New York-based agent of Ms.Sobule, Jack Leitenberg saw the decision to release a DVD of her live performance at the Club Cafe as an easy one.

"Anything that will help get my artist or an act to a wider audience has to be explored -- especially for someone like Jill who has a niche audience," said Mr. Leitenberg. "These guys seem to have a setup at the club and are making it a really first-class facility. To me, it's a no-brainer. If they're playing there, why not do something and see how it comes out?"

The DVDs technically are a higher quality product than the concert videos of the 1980s. At the same time, Merging Media's production costs are much lower because of the scale of the technology and the size of the club.

Mr. Cardamone has been positioning his young multimedia company to benefit from the rapid changes in the music industry for some time -- even if he hasn't always known which opportunities to pursue the most.

An Internet entrepreneur, Mr. Cardamone reaped $65 million in a stock deal by selling his company Electronic Images to USWeb, which was later renamed marchFirst. After buying himself out of marchFirst, Mr. Cardamone launched Merging Media in 2000.

As a showcase for the company, he and his staff turned the longtime Club Cafe nearby, which he had recently purchased, into a state-of-the-art recording studio. At the club, performers could not only play in an intimate setting to crowds of little more than 100 people, they could have their performances digitally recorded for both music and video.

While the initial plan to capitalize on the company's ability to Webcast those performances fizzled in the wake of the dot-com bust, Mr. Cardamone compiled a catalog of 160 live performances.

Mr. Cardamone said he is in discussion with another 10 artists, which he wouldn't name, for DVD releases.

Featuring a casual yet posh ambience, strong acoustics, and plenty of high-tech digital recording options, the club's capabilities draw the kinds of national performers who might otherwise opt for a larger venue.

"I love the Club Cafe. I think that's a wonderful place to play," said Mr. Belew, who tours worldwide and resides in Nashville. "I like it because it's intimate."

Meanwhile, the music industry continues to grind through a technology-inspired identity crisis, with companies large and small still working to find a way to profit from the downloading of music via the Internet.

The changes have often left even performers such as Mr. Belew, who has also played with such music stars as David Bowie and Paul Simon when he's not playing with his own band, looking for new answers.

While he has produced several albums with his band, the Bears, they no longer reach a sales benchmark large enough to attract the interest of major labels.

Mr. Belew describes a music industry in which major labels aren't interested and can't make money on any act that can't sell at least 500,000 copies.

"We're in the D.I.Y. category of people trying to figure this out themselves," said Mr. Belew. "In the music business right now, record labels are all but extinct."

To adapt, he believes musicians need to find partners best able to understand the new opportunities.

For him, Merging Media met that test.

"We liked their ideas. We liked their offer," said Mr. Belew. "This is all new territory for the most part. The music biz is changing quickly and you need to find allies and work with them. These guys are good people and we had a good feeling about them."

What gives Mr. Cardamone a good feeling are the gaudy growth statistics experienced by DVD sales in recent years.

He's quick to quote the oft-said factoid that DVD technology has been the fastest- growing consumer electronics device ever. Indeed, industry stats back him up.

While DVD players were only introduced for sale to consumers in 1997, DVDs are now played in more than 48 million households in the United States. According to trade publication Video Business, consumers spent $4.8 billion buying DVDs in the first half of 2003 alone.

Since sales of music CDs have fallen, Mr. Cardamone's argument goes, why not sell music played in concert on DVDs -- a quickly growing market -- instead? Mr. Cardamone says his new DVDs will sell for about $20 a pop, however he didn't have any potential overall revenue estimate.

To make a profit, Mr. Cardamone said Merging Media -- which will sell its Club Cafe Live DVDs directly through its own Web site as it negotiates distribution rights -- only needs to sell as many as 10,000 copies.

Those numbers and the ability to reach a niche audience are what Rounder's Mr. Foley finds appealing. Rounder's selection of musicians perform in genres of blues, folk, country and rock.

"Rounder's has been successful at recording releases of artists that the majors can't make money releasing or aren't interested in releasing," said Mr. Foley. "We're interested in this deal because we know how to make that economy of scale work."

With Rounder having recently started offering its first music DVDs, including what he said was the industry's first two-sided DVD to play music on one side and video on the other, Mr. Foley expects it to be a major growth segment.

He estimates that DVD sales will become 25 percent to 50 percent of Rounder's sales in the future.

"The industry is waking up to the fact that consumers do view music video as a good added value," he said.

While both of Club Cafe Live's first releases are established artists, Mr. Foley sees great potential in helping to use Merging Media concert DVDs to help break new artists.

"I think the novelty there is going to be that you get in and see an artist in the early stage of their career," he said of Club Cafe. "It will be such a cool presentation. There's a lot of artists who want to go back and play smaller clubs."

"We're like the guinea pig on this thing," said Mr. Leitenberg, the New York agent. "We're willing to grow with them on this."

Mr. Belew echoed the thought while admitting he has no idea what to expect from the first DVD release for the Bears on Club Cafe Live.