Going into Sunday night's Grammy Awards ceremony, conventional wisdom was that Durham-based Merge Records would win one. But almost no one could have predicted that it would play out as it did, with Merge's Arcade Fire losing in two minor categories before unexpectedly walking away with the evening-ending grand prize: album of the year, over a field of nominees including Eminem and Lady Gaga.

Merge co-owners Mac McCaughan and Laura Ballance missed seeing it in-person because their band Superchunk is about to start a Japanese tour. McCaughan was already in Japan by Sunday, while Ballance turned her phone off and went to bed because she had a flight early Monday morning.

But Merge publicist Christina Rentz and retail director Jamie Beck were at Los Angeles' Staples Center to bear witness. And Beck actually called Arcade Fire's victory in advance.

"Maybe I'm naive, but I'm hopeful all the time," Beck said. "We found out Arcade Fire was playing last, and I knew that the album-of-the-year winners are usually panting when they accept because they've just come offstage. So we had theories about them slipping in and surprising everybody."

Still, Arcade Fire seemed like the longest of longshots to take album of the year -- especially after losing to Black Keys for best alternative album, which most observers expected Arcade Fire to win. Things looked even more dire when Black Keys also beat out Arcade Fire for best rock performance by a duo or group with vocals.

Just under five hours after that announcement, Arcade Fire took the stage to play, the last album-of-the-year nominee to perform. Barbra Streisand was the presenter, and she seemed almost puzzled as she called out the winner.

"When Barbra Streisand stuttered out their name, we just screamed at the top of our lungs," Rentz said. "We were up on the second level and everybody around us was leaving -- they had no idea who we were or the band was. We were completely stunned."

After a quick acceptance speech by frontman Win Butler, Arcade Fire went back to their instruments and played a second song as a victory-lap outro while the credits rolled. The band's after-party was a jubilant affair, with bassist Richard Parry declaring, "We robbed a bank!"

"We were saying that it kind of felt like the world tilting a little bit," Rentz said. "I did tell Win that the best way to celebrate this would be for them to come play in North Carolina -- 'C'mon, guys, we'll have a barbecue for you!' They were leaving for England the next day for the Brit Awards and I told them, 'Good luck topping this!' They just laughed and said, 'Don't worry. It won't.'"

ADDENDUM (2/20/11): Dissent!

Merge Records co-owners Mac McCaughan and Laura Ballance are doing a series of bookstore readings for their new tome, which traces the history of the duo's two-decade-old record label -- including Thursday night at Raleigh's Quail Ridge Books. I'll be there to play a very small role, introducing them to start the program. I promise I'll be brief, so come on out. That's 7:30 p.m. Thursday at Quail Ridge, 3522 Wade Ave. in Raleigh.

ADDENDUM (9/18/09): How it went. 

Music-related books are a subject that's near and dear to my heart, and we have quite a confluence of book events coming up over the next few weeks. It starts tonight, and the schedule goes like this:

"The Girls Guide To Rocking" (7:00 tonight, Nightlight/Chapel Hill) -- Author Jessica Hopper will read from her book, a how-to guide on starting a band, aimed at girls ages 10 to 16; and then all-girl bands Pink Flag, Ghost Bees and Katie Stelmanis will play.

"A Fortunate Age" (3:30 p.m. Sept. 9, Bull's Head Bookshop, UNC-Chapel Hill; 7 p.m. Sept. 10, Regulator/Durham; 2 p.m. Sept. 11, McIntyre's/Pittsboro; 12:20 p.m. Sept. 12, NC Literary Festival, UNC-Chapel Hill) -- Various local reference points figure into Joanna Smith Rakoff's novel, including Merge Records. She'll give a whirlwind series of readings throughout the Triangle.

"Give My Poor Heart Ease: Voices of the Mississippi Blues" (1:30 p.m. Sept. 13, NC Literary Festival, UNC-Chapel Hill; 7 p.m. Oct. 29, Regulator/Durham) -- The book's publication date isn't until November, but author Bill Ferris will give previews at these events.

"Our Noise: The Story of Merge Records, The Indie Label That Got Big and Stayed Small" (7 p.m. Sept. 15, Regulator/Durham; 3:30 p.m. Sept. 17, Bull's Head Bookshop/Chapel Hill; 7:30 p.m. Sept. 17, Quail Ridge/Raleigh) -- Merge co-owners Mac McCaughan and Laura Ballance will discuss the history of their record label, which celebrated its 20-year anniversary last month.

There's been precious little good news about the record industry in recent years, which makes the story of local label Merge Records all the more heartwarming. The label is marking its 20-year anniversary this month with a series of events, some of which you can read about in a feature in Sunday's paper.

Even though Merge has made Billboard's top-10 more than once, it's still a small business where networking counts for something. Ivan Howard of Merge act Rosebuds recalls how his band wound up signed to Merge, via an interaction with co-owner Mac McCaughan.

"I had sent them a demo and got back the standard form letter: 'Thanks for your submission, we'll listen when we get a chance,'" says Howard. "Then Mac was looking for a band to open for a Portastatic show and said he liked the EP he had at the office, and he asked who was putting it out. 'I, uh, sent it to you to put out -- I hope,' I said. 'Let me talk to Laura [Ballance] and see what she thinks,' he said. That was all it took.

"Everything is what you make of it, and Merge allows bands to make their own way," Howard adds. "That can be good or bad, it all comes down to the choices you make. But they just support what you do, which can spoil you -- the fact that somebody actually believes in what you do and not just the money."

There's plenty more where that came from in the feature in Sunday's paper. Also, WUNC-TV is running a feature on Merge on its "North Carolina Now" program, Tuesday at 7:30 p.m. And you can take a listen to this recent NPR feature, or preview the upcoming Merge history book. 

ADDENDUM: Here's that WUNC-TV feature. 

In its early days, Merge Records had to depend on the kindness of its peers to survive -- most notably Chicago-based Touch and Go Records, which served as Merge's main distributor when the label was moving from seven-inch singles to full-length albums in the early '90s. Nearly two decades later, Durham-based Merge is one of the most prosperous and respected independent labels in the land. But Touch and Go has fallen on hard times. The label announced on Wednesday that it is closing its distribution operation, prompting the statement below from Merge co-owner Mac McCaughan.

Touch and Go basically allowed Merge to exist as something other than a singles label... We did our first full-length (the Superchunk "Tossing Seeds" comp) in 1992 because Corey [Rusk] agreed to take on Merge as a label under the Touch and Go umbrella. We've worked with Touch and Go since then -- 16 years -- and they are the most straight-up and ass-busting-for-music-they-love people we know.

It's a sad day for music, independent music and punk rock in particular, and the music business as we know it in the real world.

Back in the early 1990s, Mac McCaughan was a guy in a band who ran a small record label on the side. He's still got a band, Portastatic (and occasionally Superchunk). But that once-small label takes up a lot more time. By now, Merge Records is one of the most reputable record companies in America, working with some of the biggest names in the indie-rock universe. So steering that ship is a full-time job for McCaughan and Merge co-founder Laura Ballance.

"Laura and I have different things we do with Merge," McCaughan says. "For myself, a lot of it is making decisions, answering questions on the phone, e-mail -- like most jobs, you know. It also involves conceptualizing things. We don't tend to do things too far in advance, there's no five-year plan. But we do have to look into the future: What do we want next year to look like? Who's working on records now? Who will be done when and how do we space them out? What do we want to do that's bigger than individual releases?"

One of those larger projects is a 20-year-anniversary box set drawn from Merge's catalog, curated by a wide range of friends and peers including David Byrne, author Jonathan Lethem, comedian Zach Galifianakis and chef David Chang. Meantime, Portastatic will play Saturday in Raleigh, opening for Magnetic Fields.

For more, see this interview with McCaughan.