With its convenience store/gas station, two greasy-spoon diners, and a row of mostly empty commercial buildings dating back to the turn of the last century, the former railroad-yard town of Water Valley, Mississippi, is an unlikely home for a record label that’s a force to be reckoned with. But directly across the street from the combination police department and town hall, in a nondescript one-story structure that looks to have once been a bank’s branch office, Matthew Johnson and Bruce Watson run Fat Possum Records, an enterprise that seems to thrive — at least artistically — despite the declining odds in the music game.

This year the label, which started in a former law office just off Oxford’s bucolic town square in 1991, won its first Grammy — a longshot — for the R&B legend Solomon Burke’s artful comeback album Don’t Give Up On Me. But even if you’ve never heard of the label or any of its artists, who include the Mississippi hill-country-blues masters R.L. Burnside and the late Junior Kimbrough, the diamond-toothed and hobbling octogenarian Delta sparkplug T-Model Ford, and blues-rockers 20 Miles and the Black Keys, you’ve been exposed to its sound.

Kimbrough and Burnside, the artists who inspired Johnson and his then-partner Peter Lee to start the label, are the progenitors of the current wave of bass-less bands that includes the White Stripes and the Black Keys. They are architects of a style specific to the juke joints of the Mississippi hills that’s built on raw, super-amplified, filthy electric-guitar solos and screaming slide licks and rhythms that seem as formidable and chunky as the churning gears of a speeding steam locomotive. This is rough, simple, and simply great music that aims for the heart via the ears and the feet, possessing a power similar to that of primitive rock and roll.

Kimbrough and Burnside were inspired by other, now long-gone artists who lived in the Mississippi hills, like Fred McDowell and Joe Calicott, who translated the beat and the flashing vocal and reed lines of the region’s straight-from-Africa fife-and-drum band tradition (prolonged into this year by the recently deceased Othar Turner) into bar-room music. Through albums like Kimbrough’s idiosyncratic and masterful All Night Long, Burnside’s Too Bad Jim, and hybrid blues/hip-hop experiments like Burnside’s Come On In — plus as much hype as Fat Possum and its financial sponsor, the powerful punk-born indie label Epitaph, can muster — they in turn have inspired the likes of Jack and Meg White and other scruffy players waiting in the wings.

And if the CDs alone haven’t been enough to enlighten a new generation of musicians, there’ve been plenty of chances to see Fat Possum artists practice their old-style crowd-pleasing first hand. The label makes a practice of putting its stars on the road as much as possible to stimulate album sales, win new fans, and get the players paid. Before Kimbrough’s death in 1999 and Burnside’s recent heart troubles, both men toured widely. Now the antique party animal Ford and the dignified acoustic bluesman Robert Belfour, who hails from Memphis and has two discs on the label, are regulars across the country. This past Wednesday they played Cambridge’s House of Blues, following the Black Keys, who were at T.T. the Bear’s last Friday, into town. The often-sodden singer/guitarist Paul " Wine " Jones can also be found at clubs and festivals scratching out his intense version of the label’s signature one-chord drone.

Actually, the influence of the loud, rural Fat Possum sound has reached well beyond the guitar/drums rock contingent. It’s caught the interest of Beck and Iggy Pop, who have had Fat Possum artists open their shows. It’s been embraced by delegates of jam-band nation. The Georgia-based Widespread Panic have covered Kimbrough’s songs. The North Mississippi All Stars, who record for the Wellesley Hills–based Tone-Cool Records but live just a short drive from Burnside’s Holly Springs stomping grounds, made a debut based almost entirely on McDowell, Kimbrough, and Burnside tunes, and they continue to reflect the blues tradition of northern Mississippi even on their sophisticated, highly crafted new Polaris. In the cracks, there’s a school of hip sidemen, like Tom Waits/Beck guitarist Smokey Hormel, who have worked licks from the likes of Kimbrough, Burnside, and Jones into their own repertoire and carry at least a taste of Fat Possum’s heady musical moonshine into each new session or gig.

But as label head Johnson might put it, widespread influence and a buck will buy a cup of coffee in Memphis, provided you don’t go to the ritzy Peabody Hotel. If not for the support of Epitaph and occasional lucky breaks, like Burke’s Grammy and the college-radio breakthrough that Come On In made in 1998, the label would be part of blues history instead of creating it. After all, the blues market accounts for less than two percent of total US CD sales, which are in severe decline across all popular genres. And Fat Possum’s percentage of that percentage is small. Johnson speculates that the Black Keys could become one of his label’s bestselling artists based on first-week sales of 2000 copies for their new Thickfreakness. At the opposite end of the business scale, another new artist with an underground track record, rapper 50 Cent, sold 872,000 copies of his major-label debut during its first week on sale.

" If at the end of the day all the record labels end up going out of business and we’re all judged by the value of our albums in the used racks, I know mine will be more valuable, " the laconic Johnson offers. " I just hope it’s not because so few were pressed. This sort of survival-is-triumph thing is bullshit. Even with something like Solomon’s Grammy, all we can hope for is that it will maybe get us a little more exposure and get our debt reduced a little. "

Johnson’s goals for the Black Keys are tempered by his experience with other primal rock bands, like the Neckbones and Country Teasers, and the John Spencer Blues Explosion spinoff band 20 Miles. Of the three, only 20 Miles remain active, and their low sales figures qualify all three as strictly cult acts. " Fat Possum is a blues label, and while blues albums get no respect, I only signed the Black Keys because they’re a cut above the other punks out there. I don’t want the label to ever be a garbage can full of garage rock. "

The trouble is, the supply of genuine rural Mississippi blues artists old enough or sheltered enough to have avoided the influence of modern popular musicians like Prince and Stevie Ray Vaughan is dwindling. " When we started, who we should sign was obvious, " Johnson points out. " The guys were playing in our own back yard. But the truth of the matter is all of the real juke joints like Junior Kimbrough’s club are pretty much gone. They’ve been driven out of business by the casinos or just gone to seed.

" Even in the mid ’90s, I could find people by driving down to Natchez and asking around at music stores and bars if anybody knew any blues musicians. That’s how I found Elmo Williams. He hadn’t played in six or seven years before we found him and made an album. I swear I drove down to Washington County 18 times before I found Asie Payton. "

Then there’s the liability of working with older artists in an industry where career development is vital. Payton died of a heart attack shortly before his debut album was released, in 1998, and Williams has yet to make a follow-up because of various troubles. Johnson’s latest signing, Charles Caldwell, a spirited singer and player whose terse guitar phrases and penchant for hammer-ons ring a bit like a backwoods Hendrix, is another case of triumph turned tragedy. " People kept telling me I should hear him, but he’s local and I thought I’d completely mined this part of Mississippi. But I finally broke down and went to see him, and isn’t he great? " Shortly after the label’s resident producer, Bruce Watson, began recording Caldwell’s debut, however, Caldwell was diagnosed with pancreatic cancer. Johnson plans to issue the album but wonders whether Caldwell will see its release.

Another of Johnson’s recent gambles has been the purchase of the archive of field recordings made in the late ’60s by musicologist George Mitchell. Earlier this year, that yielded a brilliant CD of slide legend Fred McDowell and harmonica wailer Johnny Woods jamming in a cabin, Mama Says I’m Crazy, and a solo disc of singer-guitarist Joe Calicott called Ain’t a-Gonna Lie to You as well as Burnside’s first at-home recordings. " I figure if nothing else, George’s tapes assure us some high-quality releases for a couple years. If it doesn’t pay off . . . well, if I’m trying to become rich, I’ve already ruined my life anyway. "

Johnson’s story of signing the Black Keys is equally deadpan. " We heard they had a gig in Texas, so we booked one for them here in Oxford. They were excited because they figured there was maybe $200 in it for them, and maybe 10 people showed up, so we figured we might as well sign them. "

A summer tour with Beck this year may provide the Black Keys with the kind of exposure they need to become Fat Possum’s great white hope. Favorable press and word of mouth enabled the duo of guitarist Dan Auerbach and drummer Patrick Carney to sell out their show at T.T.’s last Friday. Their performance was brash and unrestrained, a full-tilt, sweaty bacchanalia of moaning low-tuned six-string and brutally bashed drums that straddled the realms of garage rock — including an encore cover of the Sonics’ " Have Love Will Travel " — and the terse blues of the Mississippi hills.

For the Black Keys, who are in their early 20s, the Fat Possum albums of Kimbrough, Burnside, Ford, and other loud senior ruralites have been a major inspiration in defining their sound. For Fat Possum, the Keys’ tour with Beck will be the best test yet of its music’s future. It may tell us whether even a hybrid style of blues invented to be played in front of small crowds in intimate juke joints can translate to the big stages of outdoors sheds and possibly to the mainstream — and provide Johnson an inkling of just what his label’s CDs might be worth in the future.