‘We Can Dream, Can’t We?’

Elliott Smith’s wistful, melancholy songs in the film “Good Will Hunting” not only won him an Oscar nomination, but also contributed to the soundtrack selling more than 150,000 copies.

The question now is how much can Smith add to that total with his own new album, “XO,” which is due in stores Tuesday.

Likely to be one of the most acclaimed albums of the year, the collection--biting yet delicate--radiates with the classic pop-rock emotion and craft that is all too rare in today’s world of artless pop.

The interest in the new album, however, goes beyond whether cult hero Smith finally wins a bigger audience. “XO” will also be watched in the record industry because of who is releasing it: DreamWorks Records.

Smith’s album is one of three absorbing collections from DreamWorks--a run that suggests label chiefs Mo Ostin and Lenny Waronker are re-creating at DreamWorks the same kind of focus on quality artists and long-term career-building that they used in the ‘70s and ‘80s to make Warner Bros. the world’s most respected label.

The other standouts: the self-titled debut album by Rufus Wainwright (released in May), a singer-songwriter with a musical vision elegant enough to embrace Noel Coward and Cole Porter, and the Eels’ “Electro-Shock Blues,” the upcoming package from a Los Angeles rock band whose songs offer the kind of unflinching look at desolation and death that is at once harrowing and inspiring.

But will a focus on careful career development still pay off in a pop world that, from conglomerate board rooms to radio station programmers to consumers, seems interested only in the short term?

With competition from video games and countless cable channels vying for the consumer’s attention, loyalty to pop artists may be a thing of the past. The last three years have seen commercial disappointments by the most acclaimed acts in the industry, from Pearl Jam and U2 to R.E.M. and the Smashing Pumpkins.

Ostin and Waronker declined to discuss either their strategy at DreamWorks or their success so far, which is in keeping with their style at Warner Bros., where they tended to stay in the background and let the music speak for itself.

Because of these three releases, however, DreamWorks is speaking loudly to the music community. There are dozens of inviting albums each year, but only a handful that carry the kind of soulful yet smart music that leaves an impression long after the CD player is turned off. The fact that all three are coming from the same record company is remarkable.

But it’s no accident.

It has been nearly three years since DreamWorks was launched on the philosophy that the careful nurturing of substantial artists could still work at a time in the record industry when a bottom-line, conglomerate mentality has led to a growing belief that most artists are as disposable as plastic diapers.

Ostin and Waronker used that artist-friendly approach to build Warner Bros. into a powerhouse with such major talents as Neil Young, Joni Mitchell, Jimi Hendrix, Madonna, James Taylor, Randy Newman and Paul Simon. (Newman is about to reunite with Ostin and Waronker at DreamWorks.)

When Ostin and Waronker felt their long-range approach was being threatened by corporate intrusion from parent company Time Warner, they walked away in 1995. They ended up at DreamWorks, attracted by the commitment to quality of the Steven Spielberg, Jeffrey Katzenberg and David Geffen combine.

“I liked . . . the idea that we could focus on creating something that was about quality, not totally profit-driven,” Waronker said in

an interview at the time.

“Because in the music business, some of the most important signings and creative relationships you have don’t always pay great dividends in terms of bottom-line stuff. But in the long haul, they pay tremendous dividends in developing your reputation as a company. I don’t think R.E.M., for instance, would have signed with Warner Bros. if we hadn’t signed Randy Newman and Neil Young and given those artists such support over the years.”

What is clear is that DreamWorks has assembled an all-star A&R; team that includes Michael Goldstone (who signed Pearl Jam and Rage Against the Machine at Epic) and former “Morning Becomes Eclectic” host Chris Douridas.

Success, however, has been limited so far--just two platinum albums: George Michael’s “Older” and the “Rent” Broadway cast album. But the operative word at DreamWorks is patience.

Geffen has said it takes five years to fully launch a record label, and DreamWorks’ most ambitious series of releases--three albums tied to the holiday film “Prince of Egypt”--are due in the fall. The various albums include a Whitney Houston-Mariah Carey duet, as well as individual tracks from such artists as Kirk Franklin, Vince Gill and Boyz II Men.

Elliott Roberts, who manages Neil Young and now manages the Eels, has worked with Ostin and Waronker at Warner Bros. and now at DreamWorks. He notes a link between the two traditions, one that he believes should help lure other quality acts to the label.

“They are concerned with the artist, the record,” he said. “That has always been their focus. They encourage you to make the best record you can. That’s their top priority . . . and that’s what you love about them.”

Margaret Mittleman, who manages Smith, says the singer-songwriter was drawn to DreamWorks because of the Ostin-Waronker reputation--and that his experience there has lived up to his expectations.

“It wasn’t one of those things where you get roped in and someone changes his approach,” Mittleman says. “Lenny and Mo are real, through and through.”

The future of DreamWorks won’t be determined by Smith, Wainwright and the Eels, but the albums exhibit that the company is finding some of today’s most compelling music.

However, opinion in the industry is split over whether that is enough to make the label a winner.

Most rival executives are secretly rooting for Ostin and Waronker, in hopes that DreamWorks’ success might help convince some of their conglomerate bosses to back off from the bottom-line pressures that currently rule the industry.

“Of course, everyone is pulling for them,” an upper-level executive at a major L.A.-based record label said last week. “If we don’t start getting back to finding real artists, the record business in America is going to be like it is in Europe where you have compilations--12 tracks by one-hit wonders.”

Yet even some DreamWorks sympathizers worry that conditions have changed so drastically that the careful, artist-related model may no longer work.

Said another label executive: “You have to root for them, but you just wonder if it is still possible in an economic climate where you are constantly measured by corporate bosses, impatient stockholders and the media--all looking for immediate results.”

In an industry in confusion, only time will tell which of those voices is the realist.

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DreamWorks Records

Evidence of DreamWorks’ emphasis on quality over quick results is found in three new collections: Rufus Wainwright, Elliott Smith and the Eels.