Factory Records was a Manchester based British independent record label, started in 1978 by Tony Wilson and Alan Erasmus, which featured several prominent musical acts on its roster such as Joy Division, New Order, A Certain Ratio, The Durutti Column, Happy Mondays, and (briefly) James and Orchestral Manoeuvres in the Dark. Like the label 4AD Records, Factory Records used a creative team (most notably record producer Martin Hannett and graphic designer Peter Saville) which gave the label, and the artists recording for it, a particular sound and image. The label employed a unique cataloguing system that gave a number not just to its musical releases, but to artwork and other objects.

Factory's genesis was in January 1978, when Wilson, a TV presenter on Granada Television, formed a partnership with Erasmus, an unemployed actor and band manager. The Factory name was first used for a club in May of that year, which featured local bands including The Durutti Column (managed at the time by Erasmus and Wilson), Cabaret Voltaire from Sheffield and Joy Division. Advertising for the club was designed by Peter Saville, and in September the trio decided to release an EP of music by acts who had played at the club (The Durutti Column, Joy Division, Cabaret Voltaire and comedian John Dowie).

Rob Gretton, manager of Joy Division, decided he didn't want the band to sign to a London record label, preferring to do it all in Manchester; At that time there was a fairly successful punk label in Manchester called Rabid records, run by Tosh Ryan, formerly of music collective Music force and run with Martin Hannett. They had had several successful acts including Slaughter And The Dogs (whose tour manager was Rob Gretton), John Cooper Clarke and Jilted John. Rabid were hit and run merchants, build a band up with a few punk singles and then license them to bigger labels (Jilted John to EMI, Slaughter & The Dogs to Decca, John Cooper Clarke to CBS).

Tony Wilson would often be around the Rabid offices and of course Rob Gretton was friends with Tosh Ryan, Martin Hannett and others in the set up as they were all from the same council estate in Wythenshawe. After his seminal TV series 'So It Goes' which gave TV debuts to the likes of Iggy Pop, The Sex Pistols, Buzzcocks etc, Tony Wilson was interested in the way Rabid records ran, and was convinced that the real money and power was in album sales where as Rabid were just singles and then licensed their successful Manchester acts off to bigger companies for the albums. With a lot of discussion as to the pros and cons, Tony Wilson, Rob Gretton and Alan Erasmus set up Factory, stealing Martin Hannett from Rabid and thus the legendary Factory Records was born, with Wilson, Erasmus, Saville and producer Hannett as partners in the enterprise.

In 1978 Wilson compered the new wave afternoon at the legendary Deeply Vale Festivals and this was actually the fourth live appearance by the fledgling Durutti Column and that afternoon Wilson also introduced an appearance (very early in their career) by The Fall featuring a young Mark E. Smith and a young Mark "Lard" Riley on bass guitar.

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