Who's to blame may be open to argument. But there's no debating that classical music has failed to deliver profits. The London Symphony Orchestra's 2001 Grammy-winning CD of the Berlioz opera Les Troyens is the best-selling opera recording in recent memory -- and it sold a mere 20,000-or-so copies. That's a pittance compared with the "disappointing" sales of Michael Jackson's latest CD, which caused a public flap with his record label Sony. And Jackson's "disappointing" Invincible sold two million copies.
The grim state of the classical music biz could lead to its salvation, however. While pop musicians and labels regard digital music as a development as ominous as the opening bars of Beethoven's Fifth, classical artists are singing The Hallelujah Chorus. The more classical artists are marginalized, the more open they are to exploring the digital realm as a way of catering to their underserved, disenfranchised fans.
ONLINE AFICIONADOS. Analysts estimate that 70% of classical music is now sold through online retailers such as Amazon.com. On Listen.com's digital subscription service, Rhapsody, 10% of the top-50 tracks are classical recordings. Moreover, Rhapsody's classical listeners make up 5% of its admittedly small subscriber base. (Rhapsody does not release subscriber figures.) With classical music sales making up just 2% to 3% retail sales, that's nearly double what you would expect from an online audience.
Classical.com, a rival service, says its average download order is $7 -- not bad for a brand-new offering. Classical.com customers, who pay $4.99 per month for streaming privileges, listen to their selections for an average of a whopping three hours to four hours per week, according to the site's tracking software.
Why did the classical audience become so disenfranchised? Retail stores have deserted the genre because it doesn't sell well enough. Many stores refuse to stock recordings that sell fewer than 30,000 copies. Most classical CDs sell 1,000 to 2,000 copies worldwide.
THE BIG SQUEEZE. At the same time, orchestras and solo artists are releasing fewer albums for the simple reason that they're not being paid. From the 1960s through the 1980s, the labels would pay orchestras and ensembles a recording fee plus a royalty of around 10%. The Philadelphia Orchestra, one of the country's top five ensembles, made between five records and seven records each year throughout the 1960s. Those disks generated enough revenue to cover as much as 15% of the orchestra's operating budget.
In the 1980s, as recording companies became part of larger outfits, the labels came under pressure to increase earnings. Every division was expected to be profitable on its own -- meaning that pop sales could no longer be counted on to compensate for prestigious but money-losing classical recordings. As a result, the labels began to offer orchestras less generous recording deals. Although they continued to pay recording fees, the labels only forked out royalties after recouping their production and marketing costs -- a rare occurrence.
The other shoe dropped in the 1990s, when the labels stopped paying recording fees at all. "What gradually happened was that the labels shifted all the risk to the artist," says Philadelphia Orchestra President Joseph Kluger. "Our response is 'We're not going to take it anymore.'" So now, "we're looking to [cut out the] labels -- to find ways to electronically distribute our music."
ORCHESTRATING A NEW DEAL. To that end, the Philadelphia Orchestra has signed a deal with online upstart Andante.com, a music portal that caters to the classical aficionado. Andante.com offers criticism, news, and event listings (there are 38,000 events on this season's calendar) as well as its own digital streaming service. In addition to the Philadelphia Orchestra, Andante has signed up the Vienna Philharmonic, the London Symphony Orchestra, and the Royal Concertgebouw Orchestra in Amsterdam. None of the orchestras receive up-front money for recordings or streaming, but they do get two-thirds of the royalties while Andante keeps one-third. "It's the world upside down. The orchestras feel empowered as they never have before," says Alain Coblence, Andante's CEO.
For the more casual listener, there are services such as Classical.com, which offers 10,000 online recordings that users can stream or download without limit for $9.95 per month. Subscribers can also burn up to 10 tracks per month onto their personal CDs. If that arrangement sounds familiar, it's because it's almost identical to what the music industry-backed Web service that pressplay began offering its subscribers on Aug. 1. Classical.com has offered its service for more than a year.
So far, London-based Classical.com has signed distribution agreements with two large British Internet service providers, BT OpenWorld and FreeServe. It's also negotiating with Deutsche Telekom (Germany has the largest classical audience in Europe), France Telecom, and several American ISPs. Classical.com also is running a pilot program in London libraries, where its entire catalog is available for free to patrons. Within a year, Classical.com hopes to offer the service to every U.K. library.
BARGAINS ON BEETHOVEN. How can services such as Andante and Classical.com make online music work? For one thing, classical music doesn't face rampant piracy. In part, that's because classical tracks are, on average, twice as long as pop tunes. Entire symphonies run between 30 minutes and an hour, a length that would deter even the most avid music pirate from amassing a collection. Moreover, most people who want to hear Beethoven's Fifth Symphony don't really care if it's played by the London Symphony or the New York Philharmonic, so the services can offer whatever recordings happen to be available. That's not true in pop, where if you want to hear the Beatles, the Rolling Stones simply won't do.
"We're doing what everyone in the music industry is trying to do: We make it easier to pay for music than steal it," says Classical.com CEO Roger Press.
On the whole, classical music fans also aren't adverse, to paying for music. Most listeners are older, wealthier, and have less time to spend looking for high quality music, which isn't always available on peer-to-peer file trading networks. The trend is clear on Listen.com's Rhapsody. There's almost no "churn," or turnover, among its classical music subscribers. And nearly double the number of classical listeners who try Rhapsody subscribe to the service vs. listeners of pop, jazz, or other music genres.
A DIFFERENT DRUMMER. That said, the outlook for Web-based classical music isn't all dolce. The top labels and artists face the same steep learning curve about the benefits of digital music as do rockers, popsters, and jazz musicians -- and not all of them like it. The San Francisco Symphony, for example, is steering clear of digital sales, trying instead to forge its own path by recording and distributing its music on CD. "There are still many orchestras that don't want to share risk and reward. It's still a rather revolutionary business model," says Andante's Coblence.
That's as things stand now. But as the model starts to prove itself, more artists will likely come on board. And classical, once thought of as all but dead, may be the music that conducts the music industry into the digital future. By Jane Black in New York