A Once Proud Industry Fends Off Extinction

From The New York Times, Sunday, December 8, 1996, Section 2 ("Arts & Leisure")

Like the gods in Wagner's "Ring" cycle, the producers who ran the big classical record labels in the 1950's created their own Valhalla, a shimmering fortress in the musical heavens, fit for the heroes of song and stage--the Callases, Heifetzes, Horowitzes and Toscaninis--and built with treasure wrested from their pop divisions. It was generally agreed, back then, that this arrangement preserved something crucial in Western civilization. But by the 1970's, when the fortunes of pop labels dwarfed those of the classics, a generation of number crunchers had seized the corporate reins.

"You can keep your castle," they told their classical executives, "but you're responsible for its upkeep."

The classical record world has not adapted well to this drastic change of circumstances. During the 1980's, the business enjoyed a windfall with the transition from LP to CD, when collectors bought their favorites anew; but instead of regarding this sales jolt as temporary, the labels flooded the market with reissues while expanding their current rosters, recording budgets and release lists. When sales for the entire industry slumped this year, the classics lines were like dinosaurs, lumbering under their own weight. And having watched the classical share of the market plunge from 7 percent in 1987 to an all-time low of 2.9 percent this year, classics executives are desperately trying to reinvent the business.

They are dropping orchestras and encouraging soloists to propose crossover projects. Jazz musicians with a spin on the classics are being courted. New Age and world music are joining the product mix, and executives whose predecessors battled over divas and maestros are now bidding for the soundtracks to everything from "Immortal Beloved" to "Braveheart."

"For pure classical music, it's not a pretty picture," said Cor Dubois, the president of BMG Classics.

Under pressure to turn profits, classical label heads have few allies. Consumers, rebelling against $17 CD prices and bored with the interpretive facelessness of many current artists, are ignoring new releases by all but a few superstars. Hefty performers' fees, especially those of American orchestras, make it impossible to recoup production costs even at those prices, an issue highlighted by the recent strike of the Philadelphia Orchestra.

Retailers, responding to the stagnating market, are reducing their stocks. And classical radio stations, having adopted a wallpaper format that precludes vocal music and new music, ignore the few hot sellers: "The Three Tenors," Cecilia Bartoli and works by Arvo Part and other post-Minimalists; it is as if top-40 stations in the mid-60's had decreed that they would play only Wayne Newton and Perry Como records.

In a business in which sales of 5,000 record copies were long considered respectable, fluke hits like "The Three Tenors" and "Chant" have sold in the millions worldwide, leaving executives hungry for more. But sequels, remakes and coattail riders are less successful. Harebrained gambits like "Symphonic Rolling Stones" and "Symphonic Elvis" have fared poorly, although marketers say that compilations like "Classical Music for Dummies" and "Idiot's Guide to Classical Music" have a large constituency.

There are hopeful signs. Several labels are courting young composers like Aaron Jay Kernis and Richard Danielpour. And carefully remastered reissues of legendary recordings continue to pour from the vaults. But there the good news mostly ends.

The Old Crowds Out the Faceless New

Traditionally, the main business of classical labels has been the recording of the standard repertory, and here they are taking a dreadful beating.

"When I look at the business, I see overproduction, oversupply and a decreasing demand," said Mr. Dubois of BMG. "We have to reduce the quantity of recordings we release. It is virtually impossible to manage a tremendous number of new recordings in a professional way, giving every one the attention it deserves."

In recent months, producers at virtually every major label have scrutinized their lists, eliminating projects unlikely to earn back investments and trimming programs anywhere from 20 to 70 percent. Executives deny using a uniform benchmark, but insiders at several companies say that recordings likely to sell fewer than 50,000 copies in their first year are doomed.

American orchestras have been especially hard hit in the reconfiguration. Current union rates and work rules make the cost of recording symphonic works in the United States 60 percent higher than in London.

A look at a current Sony Classical project, an album of John Williams film music with the violinist Itzhak Perlman, shows how American ensembles have priced themselves out of the market. The recording was to be made in London, in four three-hour sessions. When a Sony executive remembered that the company owed the Pittsburgh Symphony a fee for canceled sessions, the company planned to move the recording there.

Then someone did the math. British union contracts require two 10-minute breaks in each three-hour session, leaving 10 hours 40 minutes of recording time. American contracts, which require three 20-minute breaks, whittled the recording time to 8 hours. When that proved unacceptable to Mr. Perlman, Sony chose London rather than pay for an extra session in Pittsburgh.

Of the traditional Big Five American orchestras, the New York Philharmonic, the Chicago Symphony and the Cleveland Orchestra currently have recording contracts, although Decca/London has cut Cleveland's project list in half since 1991. The Boston Symphony has had no label for several years, and the Philadelphia Orchestra lost its contract with EMI in August. Orchestras like the Los Angeles Philharmonic, the San Francisco Symphony and the National Symphony retain major-label ties, and some smaller orchestras have kept themselves on record by underwriting their session costs.

"We have to be very selective," said Richard Lyttleton, the president of EMI, "and frankly, we cannot justify the additional cost of recording in the United States when there are very fine European orchestras that are attuned to what is happening in the market."

It is easy to see why labels are resisting new recordings of the standard repertory. Many listeners find most current performers interpretively bland, and with classic recordings by legendary conductors available in pristine CD transfers and at midprice, collectors buy them instead. A reissue of a Herbert von Karajan recording of a Mozart symphony with the Berlin Philharmonic can be expected to sell thousands of copies; a recent Claudio Abbado version with the same band stalled at a mere 200.

"One principle I thought was inviolable," said a Sony executive who spoke on the condition of anonymity, "was that whatever happened in the marketplace, people would be interested in hearing the latest conductors and instrumentalists in the standard repertory. Now the feeling is exactly the opposite. Standard is the kiss of death."

The conversations executives dread, in fact, are those in which senior conductors ask to record new Beethoven, Brahms or Mahler cycles.

"If that's what they want to do, we'll have a long talk with them," said Mr. Dubois of BMG. "And we'll try to schedule that talk for three or four years from now."

Cold, Hard Facts Come Home to Roost

How did the record business arrive at this sorry pass? One view holds that the business has not really changed but that the advent of Soundscan--a computer system that records sales at the cash registers of major chains--has clarified the problems of the market.

"Before Soundscan, you spent $100,000 recording a Brahms symphony, you spent $25,000 mounting a promotional campaign, and you shipped 10,000 copies," said Robert Hurwitz, the president of Nonesuch. "Two years later, 7,000 have come back. But the returns are 500 here, 300 there, and you've released another 200 records since the Brahms, so you don't really notice.

"Today, you spend your $100,000, you mount your campaign, you ship your 10,000 disks, you look at Soundscan, and you see: Week One, 110 copies. Week Two, 86 copies. Week Three, 70 copies. All of a sudden, from the most basic, common-sense business reality, you say: 'Wait a second. Something's wrong.' I think this has always been the case. It's just that now we're hit with cold, hard facts."

One thing those facts suggest is the degree to which the industry overestimated the CD boom. When CD's made their first inroads, a dozen years ago, classical sales were the first to grow. Collectors, assured that digital sound was superior to analog, sought gleaming new recordings of their favorite works. Then, enchanted by the format's indestructibility, they replaced their favorite LP's with CD reissues.

Labels celebrated by expanding their recording programs. Companies like Virgin and the Warner-Elektra-Atlantic group started classical lines. Bertelsmann, the German publishing conglomerate, bought the moribund RCA in 1986, and Sony, the Japanese electronics giant, acquired CBS Masterworks three years later. Retailers like Tower, HMV and Virgin expanded rapidly, and chains that had catered mainly to pop buyers added classical departments.

Virtually everything customers see in these elegantly appointed departments is paid for by the labels, a new twist that has substantially increased the cost of marketing. Placing a record at a listening post in a big chain runs $3,500 a month. Special display space is paid for, too. And advertisting costs are for the most part no longer shared by retailers.

"We recently had a record that sold 100,000 copies," an executive for a major label said, "and those of us who used to pat ourselves on the back for selling 9,000 were pretty happy. Then the vice president for finance came in and said, 'Yes, but do you know what you spent to sell those 100,000?'"

Defections, Shakeups, Retrenchments

The new uncertainties of the business are nowhere more evident than in the disarray in the labels' executive offices. At BMG, a decade of explosive activity directed at reviving RCA and acquiring specialty labels proved costlier than Bertelsmann had expected. During the last year, executives have passed through at a startling rate: one director of artists and repertory lasted only three days.

At Sony Classical, Gunther Breest spent six years establishing a European presence for the company, moving the label's headquarters from New York to Hamburg, Germany, coaxing Deutsche Grammophon artists to defect and, like his BMG colleagues, buying labels with distinct repertory focuses. But he also filled the ledgers with red ink. When he resigned abruptly in 1985, his staff of 80 was fired, and the power shifted back to New York, where Peter Gelb was given responsibility to turn the label around.

The Polygram Classics labels--Deutsche Grammophon, Philips and London--have been adrift in the 90's. In the last year, Christopher Roberts, the president of the division, has sought to give each a distinctive character, stressing London's strength in vocal music and Deutsche Grammophon's traditionalist reputation while redefining Philips as a catchall for film scores and crossovers. But sales lag behind projections, and similar problems at Polygram's pop labels have led to published reports of mass firings and a sale of the record division by its parent, Philips Electronics.

EMI has so far avoided a shakeup. But at Warner Classics, which owns Erato, Teldec, Finlandia and Nonesuch, the marketing department has been merged with that of the Atlantic pop division as part of a larger Warner retrenchment.

Following Nonesuch Into the Present

One company, at least, seems unaffected by the industry downturn. Since 1983, Nonesuch's staff has grown from 3 to 10, its sales have increased twentyfold, and Mr. Hurwitz says the label turns a profit on the 25 disks it releases every year.

The core of its catalogue is new music: the senior Minimalists--Philip Glass, Steve Reich, John Adams and Louis Andriessen--are all under contract, and the label offers the explorations of the Kronos Quartet and occasional free-standing projects like its million-selling recording of Henryk Gorecki's Third Symphony. World music, light jazz, theater songs and soundtracks are also represented, and about 20 percent of the releases are of standard repertory. With sales of 500,000 copies of the latest Gypsy Kings album balanced against the more modest sales of Richard Goode's Schubert and Mozart disks, Mr. Hurwitz claims an average sale of 80,000 for his 1995 releases.

"I was fortunate," he explained, "in that my mentors and role models--Goddard Lieberson at Columbia, Manfred Eicher at ECM and Bob Krasnow at Elektra--preached that if you trust your own instincts, your own ears and your own passions, the public, ideally, will follow. What they did not preach was how to read the charts, see what's selling and go out and copy it."

In a way, Nonesuch has become a template for the larger labels, particularly Sony Classical, the company that is changing the most dramatically. Though it releases 10 times as many disks as Nonesuch and has a higher quotient of crossovers, soundtracks and other projects of questionable durability, Sony has lately stepped up its jazz collaborations and added world music to its catalogue. Most important, it has embraced new music. Disks devoted to Sofia Gubaidulina, Gyorgy Ligeti, Alfred Schnittke and Peter Lieberson have appeared, and the label has put Mr. Danielpour, Tan Dun and Elliot Goldenthal under contract.

What separates Sony's new-music program from those of other labels is its integration of composers and star performers into a kind of repertory company. Before signing Mr. Danielpour, Mr. Gelb ascertained that Yo-Yo Ma and Emanuel Ax would happily perform and record his concertos. Mr. Ma was also enlisted to play the solo line in Mr. Goldenthal's Vietnam oratorio, "Fire Water Paper," and Sony has commissioned the composer to write a work for Wynton Marsalis.

This new awareness of contemporary music, dawning at other labels too, may be the hidden salvation in this record-world "Götterdämmerung," a way of redressing problems of the industry's own making. At long last, 19th-century repertory is being made to stand aside as current composition reasserts itself as a driving force in musical life. And orchestras, if they hope to record, will also have to give it more attention.

The standard repertory may benefit, too. Many musicians have lamented the homogenizing effect recordings have had on music-making. Perhaps consumers' rejection of cookie-cutter performances will be the kick in the pants that forces performers to find something fresh to say about these works. If, that is, the classical-record world survives long enough for this rebalancing to take hold.

Copyright 1996 The New York Times Company

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