Recording live performances, like this one at the Library of Congress, has become an expensive proposition.

On some levels, this would seem the best of times for the classical record business.

"The Three Tenors," that initial musical collaboration among Luciano Pavarotti, Placido Domingo and Jose Carreras, continues to sell at an amazing rate -- more than 10 million units now, making it far and away the best-selling classical recording of all time. Discs by a few young vocalists (especially soprano Dawn Upshaw, mezzo-soprano Cecilia Bartoli and tenor Roberto Alagna, no matter what they are singing) are sure to climb the Billboard charts. And there has been an explosion of interest in some contemporary music (Henryk Mikolaj Gorecki's Symphony No. 3, works by Steve Reich, Philip Glass and John Adams) and material from the Renaissance and baroque (discs by Anonymous 4, the Hilliard Ensemble, Roger Norrington and John Eliot Gardiner).

Still, the fact remains that this is a nightmarish time to be in the business of making new classical recordings. Indeed, the industry, as we have known it, might just be coming to an end.

Philip Glass (above) and the Kronos Quartet are among the few classical artists whose discs turn a profit nowdays.

Consider. Philips is in the middle of finishing up its obligations to the Boston Symphony Orchestra and Seiji Ozawa. Deutsche Grammophon is winding down one arrangement with the Metropolitan Opera Orchestra and another one with the Dresden Staatskapelle. The Philadelphia Orchestra is nearing the end of its contract with EMI Classics and, although the talks go on, there are no current plans for renewal, according to sources within EMI. Sony Classics has downgraded its exclusive contract with the Berlin Philharmonic into an every-now-and-then arrangement. The agreement between the magnificent Cleveland Orchestra and London/Decca has been drastically cut back: A long-planned Mahler Symphony No. 2 has been canceled and the completion of a half-finished recording of Wagner's "Ring" cycle, conducted by music director Christoph von Dohnanyi, has been indefinitely postponed until after the turn of the century.

A few orchestras have been spared the scythe. BMG Classics -- the successor to RCA Victor -- plans to issue its first disc with Leonard Slatkin and the National Symphony Orchestra this fall and has spent a fortune establishing (and publicizing) a new deal with the San Francisco Symphony (SFS) and Michael Tilson Thomas. But BMG itself is in some disarray, with a near-complete turnover of upper-level personnel within the past two years; sources close to the SFS and Thomas have complained that they don't know to whom they are to report.

Kronos Quartet

Meanwhile, according to the London Daily Telegraph, EMI Classics has reduced its international recording schedule from 85 albums per year to 47. And within the past five years, BMG has already cut its schedule from a high of nearly 100 releases down to about 45; by the end of 1997, that number may be reduced to 30 -- fewer than three new releases a month. The Telegraph quoted an unnamed senior vice president at BMG as saying, "We are reducing capacity but not shedding artists." This isn't quite the case: Last year, over the course of a single meeting, BMG Classics summarily dropped most of its "baby acts" -- such developing artists as pianist Barry Douglas (a winner of the prestigious Tchaikowsky Competition) and the violinist Kyoko Takezawa.

Why is this happening? There's an easy answer: Outside of a few flashy hits, the vast majority of new classical recordings simply aren't selling very well. It is now almost impossible to come close to breaking even on a major orchestral recording, traditionally the "meat and potatoes" of the business. After union costs for the musicians, stage labor and the recording engineers, a new Beethoven, Brahms or Sibelius recording with a major American orchestra can cost up to $ 200,000. Something really long and complicated like the Mahler Symphony No. 8 might easily run to half a million.

Keep those figures in mind, and then ponder the following: New CDs generally sell for between $ 10 and $ 15, a sum which must be split with distributors and record stores. First-year sales for a classical CD are considered respectable -- maybe even pretty good -- if they exceed a mere 5,000 units in the United States (add a few thousand more for the rest of the world) and many recordings never even approach that. Do your math. The numbers are bleak.

Nobody in the upper echelons of the record industry would speak for attribution in this article (as one executive put it: "How would it look for the CEO of a multi-million-dollar business to admit the game is over?"). But a glance at the current list of best-selling recordings for the Tower Records chain is instructive.

Of the Top 10 orchestral discs, fully six of them are reissues (all from Deutsche Grammophon's acclaimed "Originals" series, most of them featuring Herbert von Karajan, who died in 1989). Of the remaining four, two are directly associated with motion pictures ("Always and Forever: Movies Greatest," conducted by John Mauceri, and the soundtrack for "Mr. Holland's Opus"); one is a sort of special case ("Paper Music," well-known material conducted and sung by the successful and phenomenally gifted pop vocalist Bobby McFerrin); and only one -- an album of "African Portraits" featuring the Chicago Symphony Orchestra under Daniel Barenboim -- can possibly be considered a "music-driven" new classical recording.

"It's no secret to anyone in the music business that the recording industry is undergoing some very significant changes," Thomas W. Morris, the executive director of the Cleveland Orchestra, says. "It's been a dozen or so years since the last major technological innovation -- the CD -- and there's an absolute glut of material on the market, at many different prices. It's confusing to the buyer -- it's confusing to us -- and sales are down worldwide."

Legendary acts such as Leonard Berstein, Glenn Glould and Maria Callas are still big draws at record stores, making it harder on new artists.

The back catalogue of a record company has always been an important asset, but nowadays this seems a case of the proverbial tail wagging the dog. For example, it is thrilling to have the complete recordings of violinist Jascha Heifetz available in one huge collection, sounding better than ever (BMG brought this out last year). But our ability to infuse the work of past masters with vivid new life also means that today's performers have to compete not only with their contemporaries but also with the ghosts of geniuses past. It sometimes seems that, through technology, we are establishing a permanent pantheon of great artists -- many of them long dead -- and that no newcomers need apply.

Waxing Nostalgic

In the past, everything needed to be re-recorded every few years to keep up with advancing technology. Remember the early 78s, those fabled Caruso discs that seem to occupy space in everyone's attic? We heard the artist through a sizzling hiss that sounded as if somebody were frying an egg just inside the loudspeaker. And because the 78 had only a 4 1/2-minute playing time, it was constantly necessary to get up and change the disc -- not exactly the ideal format for a five-hour Wagner opera! Moreover, 78s were notoriously impermanent: If you dropped them once, they were gone.

The advent of the LP, in the late 1940s, changed everything. You could now get pretty close to an unbroken half-hour of music on one side and the discs, while scratchable, were not easy to break. Much of what was best on 78 was ultimately transferred over to LP; new recording activity increased exponentially. By the late '50s, we had countless Beethoven Fifths from which to choose (we now have well over 300, in and out of print). In the mid-'60s, there was only one complete cycle of the Mahler symphonies (by Leonard Bernstein) and one complete recording of Wagner's 16-hour "Ring" (by Georg Solti). By the mid-'80s, there were a dozen unified versions of each of them.

Enter digital technology and the compact disc. Now it became possible to transfer recordings of the past to a new format with hitherto unimagined force, vividness and -- given tender care of the CD -- a certain permanence. Recordings from 30, 40 years ago no longer sounded antiquated; indeed, in some cases, they could have been made yesterday. No music lover can regret this -- it is cause for jubilation. But not without certain premonitions, especially the fear that we may be in the process of recording ourselves out.

When I count up my favorite "new" releases at the end of each year, I am always startled by how many of them are reissues -- many, perhaps most, of which would cost a buyer less than would a new recording. Reissues are particularly profitable for record companies, after all. There are no studio costs to pay, only some residuals to the artist (or artist's estate) and, in the case of orchestral music, a possible fee to the Musicians' Union. There can be no doubt that it is less expensive to reissue an existing recording than to create a new one and, in the case of, say, Glenn Gould or Vladimir Horowitz, the artist may arrive with a ready-made legend and the disc will all but sell itself.

Now assume you're a typical classical FM listener -- not a musician, nor a fanatic collector, just somebody with a certain fondness for classical music, somebody who buys maybe 10 to 20 compact discs every year. One day WETA plays a beautiful Chopin prelude on the air and you decide you have to have it. So you walk into a store, browse through the Chopin section and notice that you can buy a set of the preludes played by Joe Recent-Juilliard-Graduate for $ 15.99 or take home an older (but decent-sounding) performance by the legendary Arthur Rubinstein for $ 9.99. Again, on the assumption that you are not one of those collectors who want every set of the preludes ever made, which recording are you likely to buy?

Right now there are more than 40 versions of the Chopin preludes in the catalogue. It's extraordinary music, no doubt about it. But is there really an audience for these discs? What about 100 recordings of Vivaldi's "Four Seasons"? Twenty-five recordings of Mahler's Sixth Symphony? If you were a stockholder in Deutsche Grammophon, would you really want your CEO to order up another multi-million-dollar Beethoven symphony cycle, especially when the label already has complete sets recorded by Claudio Abbado, Leonard Bernstein and Herbert von Karajan (three different versions), as well as distinguished performances of individual symphonies by Karl Bohm, Ferenc Fricsay, Wilhelm Furtwangler, Carlos Kleiber and a dozen others, dating all the way back to 1913 and Arthur Nikisch's very first recording of the Beethoven Fifth?

Don't misunderstand me. In no way am I suggesting that the classics of the past are "played out" or that they have revealed all of their secrets. The Beethoven "Eroica" will surprise us every time we hear it; it is a supreme masterpiece, by any standards. So is Shakespeare's "Hamlet." But imagine a world in which Columbia Pictures would make a film of "Hamlet" one year, and then Disney, just to keep up, would make its version the following year, and then Tri-Star would weigh in with a "Hamlet" right after that -- and so on, ad infinitum. Now take matters one step further, and imagine that all of the film studios bringing out these multiple "Hamlets" already have dozens of other versions already in their vaults.

From a purely aesthetic point of view, it's kind of a lovely idea. But it would be crazy business practice -- sheer, barking lunacy -- and all involved would lose their shirts. Still, something similar actually goes on in the classical record industry. Last time I checked, BMG had no fewer than three versions of the German conductor Gunter Wand leading Anton Bruckner's Symphony No. 9. Nothing against either Wand or Bruckner, mind you, but was this really necessary?

Risk-Takers Are Rare

As a passionate adherent of that much derided canon of Western Art Music, I believe that most classical music is more substantial, and more likely to endure, than most popular music. But the pop world has one characteristic the classical world does not: It changes constantly, renewing itself every generation or two. Still, the fact remains that the classical music business has been hidebound for a long time -- more so than it needed to be -- and it is now paying the price. After all, we simply haven't generated much new repertory in the past half century and that is only partially the fault of our composers (there are some fine creators out there, if our orchestras, opera companies and presenting organizations would only let us hear them). What was the last major work to really enter the repertory big time -- "Carmina Burana" (1937)? "Appalachian Spring" (1944)?

And so the industry mavens were completely taken aback when an obscure Polish composer named Henryk Mikolaj Gorecki's Symphony No. 3 became a smash international hit in 1993, actually rising not only to the top of the classical charts but, for a time, to the top of the British popular charts as well. But why shouldn't the Gorecki have become a hit? It was stately, consonant, deeply felt, unfamiliar but both accessible and attractive; it spoke for our time, a few prescient radio hosts put it on the air, it was used in a couple of movies, and the record sold and sold. This was a healthy sign; Gorecki proved there was an audience out there and that it was hungry. Perhaps new repertory -- and the occasional fresh take on the standard repertory -- might just save the classical record industry.

If it can be saved, that is. I have my doubts. For the immediate future, at least, we can expect increased reliance on reissues of back catalogue, the occasional corporation- or foundation-subsidized new recording, some solo and chamber music discs (easier and cheaper to record than orchestras), a couple of stars for whom the general rules do not apply, an occasional foolproof circus item like "The Three Tenors" -- and a continuing diminution of releases across the board.

Much of what is brought out will likely be marketing department-driven novelties, such as the recent "Opera's Loudest Hits" (the "Anvil Chorus," the "Ride of the Valkyries" and so on), "Out Classics" (famous works by composers who, according to the publicity, "just happen to be gay") and the forthcoming "Exile on Classical Street" from Decca/London, which will feature the favorite classical works of some celebrated pop stars. (For the benefit of inquiring minds: Elton John likes three of the "Enigma" Variations, Brian Wilson is a fan of the "Rhapsody in Blue" while Elvis Costello reveals himself as a closet Vivaldi freak.) And -- surprise! -- Decca/London just happens to have some old recordings of all of these pieces in its vaults. Think about the business appeal of this project: no studio costs whatsoever, no additional payment to artists, just a cute idea, a few long-distance phone calls, and a lot of money coming into the coffers.)

It wouldn't surprise me if the classical divisions of multinational record companies were ultimately folded into their pop divisions. After all, pop has helped pay for classical at least since the 1950s, when the late producer and executive Goddard Lieberson of Columbia Records used the funds from bestsellers such as "My Fair Lady" to bankroll his great, visionary -- and defiantly unprofitable -- Modern American Music Series. But there is no Goddard Lieberson within our major companies today, and many -- if not most -- of the folks who make decisions about what classical music we will hear have little or no musical training.

There are exceptions, of course, notably over at the nonpareil Nonesuch, under the direction of Robert Hurwitz, which continues to explore unfamiliar and rewarding corners of the repertory. But Nonesuch very deliberately breaks the rules; it has never given us a complete set of Beethoven symphonies, nor does it seem likely it ever will. (This does not represent any subversive prejudice against Beethoven, merely a recognition that the other companies have covered him pretty thoroughly.) Instead, Nonesuch gives us the Kronos Quartet playing African music, song recitals by Dawn Upshaw, the collected works of Adams, Reich and Glass, recordings for tape loops and electric guitar. Nonesuch is a smart company -- it is often a visionary company -- but, by its own design, it cannot be judged by the same standards as BMG/RCA, Sony Classical, EMI, Deutsche Grammophon, Decca/London and the other traditional major labels.

Meanwhile, there are some lively "boutique" companies, usually run by one or two people, that continue to bring out interesting discs (notable among these are ECM, Mode, Conifer, HatArt, Ondine, CRI, New World, New Albion, Albany, Bridge, Eagle and several others). And, recently, on other small labels, some orchestral discs have begun to emerge from Eastern Europe, where costs are a fraction of what they would be here (one hears it said that Chinese orchestras will be next). Still, with all due respect, the impoverished ensembles from Bratislava or Shanghai cannot yet rival the standards set by orchestras in Berlin or Cleveland.

When the late Glenn Gould renounced live performance in favor of recordings in 1964, he stated unequivocably that the concert was "finished." On one level he was right: Records, radio and other media have long provided us with most of the music we listen to, and concerts -- however we may love them and however many we may attend -- are now a supplement to our musical understanding, rather than its core.