IT'S FRIDAY afternoon in downtown Austin, Texas and a bunch of Scottish musicians are picking a fight. My Latest Novel have just taken to the stage to open Showcase Scotland at this year's South by Southwest (SXSW) music festival when the rib-thudding sound of a heavy metal gig drifts in from next door, threatening to drown them out. "Looks like we've competition," says singer Chris Deveney, before ripping into one of their songs at maximum volume. It's a musical High Noon.

Austin is famous for several things apart from lax noise pollution laws. It's the liberal capital of a famously conservative state (it was the only place in Texas to vote against former governor George Bush); is home to cyclist Lance Armstrong, Sandra Bullock and Willie Nelson; and every year hosts SXSW, the biggest music industry get-together in the world.

And it's the latter that has brought 17 Scottish bands here to play in the pubs, clubs, kitchens and patios of the city. Showcase Scotland has taken over the sun garden of The Lava Lounge, a Mexican-style bar where the bands play eye to eye with the crowd. It is the culmination of the Scottish bands' week in Austin, and they made quite a splash.

MTV Australia is filming Glasgow's all-girl punk band The Hedrons. The Cinematics made music legend Jeff Buckley's mother cry with a cover of his song Grace. The Fratellis jammed with The Who's Pete Townshend. Vashti Bunyan won a standing ovation in a local church. Paolo Nutini was offered a photo shoot with Italian Vogue. Welcome to SXSW 2007, Scotland-style.

Now in its 21st year, SXSW boasts over 1700 bands playing in more than 50 venues over four days. With 7000 music industry delegates in attendance, it's crucial for any band looking for their break.

"You are showcasing your wares," says BBC Radio 1 and BBC Radio Scotland DJ Vic Galloway. "The more gigs you can do in front of the more influential people, the better. If you do three or four parties, your showcase gig and maybe an acoustic set as well as handing out CDs, you make it work for you. The chances are that someone who has some influence will get hold of your CD or see you live and love it and move on it. That's all it takes."

Just ask Franz Ferdinand about what coming to Austin in March can do for your career. "Three years ago they were the buzz band," says Galloway, "and from there they went on to become huge in the US."

To help follow in the footsteps of Franz Ferdinand, the Scottish Arts Council is sponsoring 14 Scottish bands, at up to £750 per band member, to attend.

"If it wasn't worth every penny I wouldn't be doing it or be here," says Ian Smith, head of music at the Scottish Arts Council. He spent the week manning the Scottish stand at the SXSW trade show, organising the showcase and generally flying the flag. "The taxpayer needs to send me to Texas like a hole in the head, but it has to be done. It's a serious investment with a serious return, and the main beneficiary is Scotland and its music. And that's why we do it."

The talk in the town's bars is of distribution deals, marketing strategies and bottom lines, although Paolo Nutini insists he is in Austin to have some fun. "I'm sure there's other people in the camp with alternative motives, like to do business and promotions, but my main reason is to enjoy myself," he says.

Austin's Sixth Street might look like a place where cowboys used to duel, but the cacophony coming from every building is anything but old-fashioned. This year the most common sound blasting from pubs and clubs is The Fratellis. The Glasgow band played at least seven shows over the four days. Boosted by their song Flathead being used on an iPod advert, the line to get into their main gig at the Dirty Dog bar on Thursday stretched down the block.

Emma Pollock has been here before, with indie darlings The Delgados in 2004. It propelled two of their songs on to the TV show The OC. Now a solo artist, she says "Playing at SXSW tags you as being current and relevant. It marks you out as one to watch. Being here is almost as important back home. It's a chance for the Scottish people to be aware how musically productive we are."

Andrew Dansby is the entertainment editor at the Houston Chronicle and a former writer for music bible Rolling Stone. He's been coming to SXSW since the early 1990s and believes at least one band will definitely make it big in the US.

"The Fratellis," he says instantly. "It's amazing what an iPod commercial will do for a band in this country. I just saw them and they sounded really good. They make such a racket on CD I thought there must have been five of them, not three. They could tip over into big things here. Listeners in the US gravitate towards some well placed la-la-las."

As for Paolo Nutini, Dansby says he has boundless charisma. "His record should strike a chord with people here, but I think he needs some nice product placement, like an iTunes or in The OC."

It's Nutini who finishes off Showcase Scotland. The Lava Lounge is turning people away. The place is bulging at the seams. After he finishes, the excited crowd filters on to the street and past the gig next door. The heavy metal still pounds, but listened to only by a few denim clad rockers. Looks like the Scottish musicians were quicker on the draw.