Klaus Heymann: The secret of my success

We hear nothing but forecasts of doom these days from the world of classical recording. All the "majors" – the labels run interchangeably by the handful of conglomerates that control the entertainment business – are retrenching, cutting back on their new releases, fudging the stats by blurring definitions ("If it's got an orchestra, it must be classical"), shedding household names from their artists' rosters. But if this is an industry in crisis, no one has told Klaus Heymann, owner of Naxos, the budget-price label he founded in 1987. "We're up 20 per cent on last year," he says, with a grin you can hardly begrudge him after making a profit of £3.5m.

His ascent has been startlingly swift. Based in Hong Kong in the 1970s (as he still is, though he now also has a house in New Zealand), the Frankfurt-born Heymann established a distribution network for hi-fi equipment and Chinese classical music that covered most of south-east Asia.

In 1982, he set up the Marco Polo label, aptly named since it was dedicated to exploring rare repertoire, often by under-rated late-Romantic composers such as Schreker and Schmidt. "It was my hobby," he explains. "And in a way it was the only thing we could do with the orchestras we had out there. We started with Chinese music, then the Singapore Symphony and the Hong Kong Philharmonic wanted to record Western repertoire. Obviously we couldn't sell Brahms and Beethoven with the Singapore Symphony Orchestra, so we had to do something else."

It was again the quality of the orchestras Heymann was using – not top-whack, unionised Western ones, but ensembles in Central and Eastern Europe grateful for whatever hard currency the sessions might bring – that suggested the idea for Naxos, launched in 1987. "We started recording standard repertoire, and obviously standard repertoire with the Slovak Philharmonic you couldn't sell at full price, so that really made us go for the concept of selling a CD for the price of an LP." In the intervening 16 years the price of a Naxos CD has hardly risen at all. "It was £3.99, but when VAT came in we couldn't do it at £3.99 and it went to £4.99, but it's been there for 12 years."

So is the Naxos "secret" just price, the fact that you can pick up new recordings for a fiver that would cost you £16 from another label? "No, it's a combination of price, quality, distribution and marketing. Of course, at the beginning it was only the price, but now it's the breadth and depth of repertoire we release, the damn good marketing, the promotion and, of course, the fact that we self-distribute, so we don't depend on other people; indeed, we distribute other labels."

"Breadth and depth of repertoire" is fair comment: Naxos has a staggering 2,400 CDs in its catalogue, with another 300 already in the can, with music ranging from a complete edition of the lute sonatas by Bach's contemporary Sylvius Leopold Weiss to contemporary works in its series 21st Century Classics.

Weiss, you might think, verges on the obscure, however lovely the music. But Heymann's catholicism is paying off: "They're doing extremely well, and modern music is doing well, too – the market is shifting in that direction. Cage, Morton Feldman, Reich – it's selling well; it's not just that we think we have to do something for contemporary music. The first in the Cage series has sold 30,000 copies; the Glass Violin Concerto has sold 33,000. We'll soon be recording Adams – Nixon in China and The Death of Klinghoffer. We wouldn't record it if it didn't sell."

Heymann also mentions sales of 32,000 for the Gramophone award-winning CD of Vaughan Williams string quartets and 30,000 for a new version of Holst's The Planets, with Colin Matthews' new "Pluto" as an added attraction. Statistics such as these, unimaginable anywhere else in the classical market, have radically changed the way the label is perceived.

"People started respecting us from the early Nineties," says Heymann. "We slowly started to get some critical acclaim, and it started being easier to get non-Eastern European orchestras to record for us. Today we can have almost anybody. We pay market rates, and market rates keep going down, to the stage where orchestras charge nothing any more: they want to be recorded and they're happy if you pay the production costs and the conductor and the soloists, because many other labels don't do even that."

Another thing that most other labels don't do is cultivate the consumers of tomorrow. But Naxos devotes consider- able energy to educational and outreach programmes. Heymann's logic is faultless. "It's a perfect business model: you do good, and you make money, and you build your future audiences.

"The educational work so far isn't really aimed at the education market; it's aimed at the existing customer, to make him understand what he's hearing, the background, the composer's biography, and so on. Where we invest in the future generations is with online music courses. That's been very successful in the United States where you might be studying chemistry but you can still get credits if you take a music-appreciation course. So we cater to that market."

Heymann sees this approach as something that is more widely applicable. "We can adapt these courses to England and the National Curriculum and into other languages. We've talked to orchestras who want to teach music history – and this is a godsend: the music is already there, we don't have to scrounge around for the rights."

Naxos is also finding new ways of reaching out to millions of potential consumers. Sven-Goran Eriksson Classical Collection – a three-CD box of, apparently, Eriksson's favourite pieces, has been sold in supermarkets and other mass-market outlets during the height of World Cup fever. "It's a market totally outside the usual scene – the soccer fan. We did it with a very interesting repertoire: we had Swedish music, English music, and a CD of favourites. We've sold over 40,000 here and 20,000 in Sweden, and sales continue.

"We look to find role models. Ideally, we'd like to get a rap star to say, 'Hey, when I listen at home, it's classical music, and here are my favourite tracks' – and someone who means what he says, not just a hype thing." But how do you get new listeners beyond The Four Seasons? "I'm happy to sell them The Four Seasons as a start! Then you have to work on them. We have 600,000 visitors to our website [www.naxos.com] every month and 40,000 subscribers. They get email newsletters which are tailored to their musical tastes. People can listen to examples on the website: they can listen to every recording, other than those that are in copyright.

"There are 32 million Chinese kids learning to play the piano; there are 10 million learning to play the violin. So if you could sell one CD to each of those 42 million kids... There's a huge potential. Last year, we sold 1.5 million CDs in China – at a ridiculously low price, because we have to compete with the pirates, but that's a growing market. There's also a huge existing market in Europe and in North America, which we don't reach because of problems of distribution and retail. Where you make it available in a place when people want to buy, people buy."

Heymann is 65, but retirement is plainly not an option, though he does foresee a shift in emphasis: "I will continue to focus on the A&R and the education. We have very competent people running the big countries; they'll take over the day-to-day and distribution business, and I'll just try to build a licensing business, to build education, figure out new product ranges and so on, so I can step back from the daily running of the business." I mention that my oldest email correspondent is 93 and a very busy man. "I hope to be around and still active at that age and, with luck, mentally sound."