THANKS TO CD, CLASSICAL SALES ARE FORTISSIMO

For the industry responsible for bringing Vladimir Horowitz and Andre Previn into the living room, all of 1986--which marked some of the highest sales ever--has been one long Christmas-shopping season.

And it’s the technological breakthrough represented by the compact disc that’s responsible for all this good cheer.

So far as the $150-million classical records industry is concerned, the advent of the CD marked the renaissance of this once-moribund business: the format’s emergence is sparking renewed interest of consumers, energizing new activity on the part of comatose record labels and invigorating the artist-and-repertory departments of the largest companies.

In 1985-86, classical CDs accounted for fully 20% of the total CD market--a figure markedly different from classical’s 7% share of total record/tape/CD sales--and industry executives cite the technology’s arrival as the main spur behind a 15% sales jump in 1985.

Yet, in spite of the specter of newer technologies--such as digital audio taping (DAT)--threatening the instant dominance of the CD, no one in the industry seems concerned about the possible downside of the emphatically positive response given the new kid on the block: namely, being left holding the technological bag when something even newer (and more in demand) comes along. “(CDs) are here to stay,” said Thomas Z. Shepard, MCA Classics head. “Classical consumers have traditionally demanded quality, and finally we’re able to supply them with that in quantity. There’s no evidence that this demand will change anytime soon.”

At this stage, most industry executives believe the CD--with its convenience, capacity and flexibility, to say nothing of its sound--represents the cutting edge of retail technology, and almost every label which can afford to do so has swung behind the new format with a firm and uniform step.

This is especially true for classical records’ “Big Five”--Angel, CBS Masterworks, DGG, London and Philips--who together account for the overwhelming majority of the artists currently recording, the product itself and the impetus to adopt new technologies. And the label heads with whom Calendar spoke say their companies have cast their lots--and future profits--emphatically with the CD.

“Technology has always been a strong consideration for us,” said Nancy Zannini, vice president in charge of Philips Classics. “Therefore, the CD figures to be a very important aspect of our plans. We’re cutting down LP production pretty severely, although as long as people want them, we’ll make them. But CDs are replacing cassettes in cars and LPs at home, so we’re moving very strongly in that direction.”

Zannini added that CDs account for about 55% of Philips’ total dollar sales, and she predicted that that figure would rise to “right around 70%” within the next decade. Amsterdam-based Philips is now busily reissuing classic mono (but digitally re-mastered) recordings made in the 1940s by conductor Willem Mengelberg and the Concertgebouw Orchestra--and issuing them only in CD.

“These discs are pretty much for the specialist, and it’s our perception that the specialist has already committed to the CD format,” Zannini said.

Since Philips is one arm of the giant Polygram distribution system--DGG and London are the other two--that company’s production schedule is closely mirrored by those of the other two. Differences arise in terms of repertory, artists and size of catalogue, but all three labels, according to figures published in Billboard magazine, are heavily committed to the CD format: both DGG and London anticipate increasing the CD portion of their total output 65% or 70% by 1991.

Bonnie Barrett at CBS Masterworks said all of her label’s 1987 releases--some 70 titles in all--will be available simultaneously in CD, LP and cassette formats, and added executives at CBS “have the feeling that CDs will eventually eclipse LPs, but we insist on keeping the latter in the product mix. There are just too many consumers out there who haven’t switched over.” Right now the label’s CD stake stands at “around 50%” and will increase an unspecified amount over the next five years.

Barrett added that CBS is also scouring its sizable back catalogue for “historical” material to digitally re-master and issue on CDs, such as Leonard Bernstein’s initial Mahler symphony cycle with the New York Philharmonic and conductor Bruno Walter’s many recordings for the label. These, like Philips’ Mengelberg recordings, will be issued solely on CD.

But for all the plans of the major labels regarding CD, none of them seem to take DAT or any other looming technology into account. Most are flatly dismissive--”DAT is way in the future; it’s like a space station for us,” said a CBS executive who asked not to be identified--or are observing the situation very carefully, as Polygram president Guenther Hensler is doing.

“We feel it’s premature at this point to talk about DAT as a panic button,” said Hensler. “But the fact is that we need some protections in the line between the producers and the consumers. The duplication factor is what makes DAT so dangerous--you could see all sorts of cottage industries producing perfect duplicates all over the place. DAT will come--there is little doubt of that--but we have to make sure our artists, and our music, are protected.”

The CD phenomenon has also played a significant role in the re-emergence of both RCA Red Seal and MCA Classics--two once-vigorous labels that were, until recently, all but inactive.

New Red Seal president Michael Emmerson said CDs form “the backbone” of his company’s current offerings, adding that RCA’s extensive catalogue from the past--including performances by Toscanini, Reiner, Caruso and many others--will wander back to the market in the form of CDs.

“At this moment, CDs form 50% of our product, and that will rise to about 70% by the end of 1988,” Emmerson said. “In an increasing number of cases, we simply won’t put things out on LP. Cassette and CD only.” He added the company would be “foolish” not to exploit its position in the industry--RCA Victor was the industry leader from the 1910s through the 1950s--to seize the CD advantage.

“We see ourselves as a brand new enterprise,” Emmerson commented, “and that means a close alliance with those formats that are also new. And since CD represents the biggest jolt this business has gotten in a long time, we must be right in on it.”

Over at MCA Classics, label head Thomas Z. Shepard--a former vice president at Red Seal--admitted the timing for the label’s resuscitation was “fortuitous” but said the guiding philosophy chez MCA was “legitimacy” for the whole company.

“There was a feeling that (MCA executive) Irving Azoff had that MCA needed to be a full-line label, and all the plans we’d made just came together at the right time,” Shepard said. “MCA wanted the legitimacy that comes with selling classical product.”

As of now, Shepard continued, MCA Classics is wedded to CD, with all releases coming in all three formats. But the label has made an extra effort to entice first-time buyers into the MCA fold: a selling price several dollars lower than those of the competition.

“We’re dealing with artists whose selling power is something less than a Karajan or a Bernstein,” Shepard said, “so we have to be very competitive--at least at this stage--regarding price. The other elements will come along in time.

“The really exciting thing,” he continued, “is that the whole industry’s moved back to square one. No one company has the product advantage--it’s all too new. No one’s got the technological advantage--everyone’s at the same point. CD has been--and will be, even granting the emergence of DAT--the great equalizer in this business.”

There are other entrepreneurs in the record industry who are making alternative plans for staking their claim in the CD gold rush. Vox’s president, Ira Moss, has introduced a packaging method, which he calls the “CD wallet,” to combat CD’s sole remaining sore point--their high price, relative to LPs and cassettes.

(The “wallet” resembles its namesake. Imagine an unglued LP cover, fold it into three sections, cut it to fit a CD, creating a “wallet.”)

“We’re aware that the pill of 14 bucks a shot for CDs is a pretty bitter one,” commented Moss. “Since our label has always been geared as much toward the novice classical buyer as any other group, we thought we’d make it easier for these folks to get into the market.” Moss said his “wallets” were selling for around $10 in the stores, compared to up to $13.99 for other labels’ CDs. (Moss, too, dismisses the DAT threat: “I really don’t think it’ll amount to anything for years, if ever.”)

And then there are those companies for whom the CD phenomenon is a distant, even mythical noise. Except for those new labels (Denon, Nimbus and Chandos are examples) whose sole product are CDs, many “specialist” companies don’t have the financial clout--up to $2 million for a CD mastering facility--to get in on the bonanza.

The entire business of Composers Recordings Inc. revolves around contemporary American music, and CDs are just too costly for the company to consider. “We think of ourselves as an archive for American music, and we figure most of the people who buy our records will have a turntable,” said label spokesperson Rachel Siegel. “CD just isn’t an issue for us, economically or philosophically.”

Other classical labels are creeping cautiously toward CDs, testing the waters before leaping in. Nonesuch--in spite of its devil-take-the-hindmost attitude toward recording offbeat repertory--is such a case. A company executive who declined to be identified said Nonesuch “has yet to ship all three formats on any new release, and we’re still about a year away from that.” They added that CDs will figure more prominently in the future, but cautioned that they weren’t “all that convinced” that CD was the only way to go.