Stack 'em high, sell 'em cheap

Richard Branson, Alan Sugar, Anita Roddick, Tim Waterstone - will we be adding Klaus Heymann to that list one day? You may not know the name, but you've almost certainly seen the product. Naxos CDs are just about everywhere: record shops, bookshops, department stores - there they are, prominently placed, offering a wide range of classical repertoire at just pounds 4.99 a disc. And Naxos isn't just another cheap label, evergreen classics for those who don't care too much about performance and recording quality. Quite a few of them have been picking up good reviews, top recommendations in the more up-market magazines and CD guides.

Mention Klaus Heymann's name in classical record industry circles and you're sure of a reaction: possibly admiring, more often edgy, sometimes downright hostile. Alison Wenham, managing director of BMG / Conifer, is firmly in the latter category. "There's a moral issue here," she says. "Don't you think that if we could have put out that quantity of discs at pounds 4.99 we'd have tried it? Klaus Heymann can because he exploits musicians. He records in Eastern European countries where you can buy musicians for 1 / 200th of what you pay here. We could do that if we were prepared to desert the UK scene. But if you value the cultural riches and diversity of the country, you don't put out new recordings at pounds 4.99."

But Heymann, a well-preserved, almost alarmingly fluent 60-year-old German businessman, smiles indulgently - he's heard it all before. "Yes, Eastern Europe is part of the history of our label. But in the last three or four years we've been recording more in the West than in the East. And this will surprise you - it's cheaper to record in the West than in the East now. In the East, you have to pay for everything: halls, the chap who carries the music stands... There are a lot of people there trying to supplement their incomes, and they've learnt very quickly. In the West, there's a lot of subsidised recording available. No, the real reason we started in the East was because at first nobody wanted to know about us here. The Scottish National Orchestra, the London Symphony Orchestra - they'd have laughed me out of the door. The Eastern orchestras were delighted - they were earning foreign currency for the first time. For the first two or three years, we made a big difference to the standard of living of the average orchestral musician in Slovakia or Hungary. Now it's changed. Things are more expensive and a lot of musicians have emigrated."

Things have changed for Heymann too. His first musical venture, in the mid-1980s, was a label called Marco Polo: wildly esoteric repertoire with far-Eastern orchestras - and a conductor called Hooey. Naxos, born not quite 10 years ago, started very differently: the classics, with those conveniently inexpensive Eastern European names, piled high and sold cheap. Now it's much harder to tell them apart, except that Naxos production values, booklet notes etc have been improving steadily. "At first we aimed at students, pensioners, people who didn't have much money but wanted a few classical CDs in a hurry. Now we're much more repertoire led. I'm aiming at the serious collectors. They're not buying artists any more; they want to hear new things. So we're doing the less well-known 18th- century symphonists, the complete Grieg piano music, a Lutoslawski cycle. At the same time, we're also doing the first complete Beethoven and Vivaldi cycles - amazing no one's done them before! This cycle-mania is a trend, maybe, but it's also protection in case the major companies ever seriously attack us." Is that likely? "I doubt it, but if they do, there are a lot of things we have complete and they don't. So, if it comes to a fight, I can say, well, good luck to you!"

Does Heymann relish the idea of a fight? I've heard him described as a "one-man Panzer division"; there have been dark hints that he may be out to teach the big labels a lesson. "I don't want a fight. But for me the most astonishing thing about the growth of Naxos is that the majors didn't wake up to the threat we were posing much earlier. One of them had a session on Naxos about two years after we started and it was agreed that we'd soon go away - this crazy German from Hong Kong with his cheap label. Someone called us the Lada of the record industry. We were an aberration. And now..."

Things have worked well for Heymann. It can hardly be a coincidence that Naxos's rise to about 20 per cent of the market share in this country happened since the government's well-flagged inquiry into CD prices. "That was a happy accident. But the price itself shouldn't have been an issue. Really CDs aren't too expensive. Consider what you paid for a full-price LP 15 years ago, and how much more music you get today. It's still a cheap product." So how does Heymann manage to sell his own so cheaply? "Basically I run the business like a business. I don't spend any more money than I can take in at the end of the day. And, since I make both the artistic and the financial decisions, when I look at a project I know what it will cost me, plus or minus 10 per cent, and I know how many discs I will sell, plus or minus 10 per cent. And I watch the costs. I don't send teams of producers and engineers halfway across the world. I don't make any artists live frugally, but I don't put them up in five-star hotels or send them business class. I get my equipment locally. There are no artists' handlers and hangers-on - no teams of executives and vice-presidents. I don't duplicate repertoire. I have fixed fees, no huge advances against royalties. And, of course, I sell lots of records, typically around 30,000 per disc. Spread the cost around that and I'm in the black."

That may seem like pure common sense, but it isn't that common, at least not among some of the big companies. Anyone who enters a big record shop can see that the market is being flooded: about 500 new releases each month, when it was never more than 50 some 20 or even 15 years ago. No wonder buyers go straight to the label they've come to know - and which they know won't hurt their wallets too much. The major companies are living in a dream world, says Heymann. It all began in the late Eighties. "First Sony entered the scene with the intention of becoming Number One in the classical market by the end of the century. Well, they've failed miserably. But in the process, there was a huge rise in competitive bidding for anything that looked like a talent. Fees soared and companies over-produced. Then came the Three Tenors, and classical music was going to be the new rock 'n' roll, and from that moment nobody could talk sensibly any more. They all wanted the next hit - the Monks, or Out Classics or Hildegard of Bingen with a beat - all those horrible things. So they got rid of the people with A & R [artists and repertoire] experience, and brought in people who marketed perfume and detergent, all trying to sell more and more compilations. Take all that together and you can see why they're in crisis."

Yes, and looking at it from the serious collector's point of view, it's easy to see why taking on big greedy labels and beating them with straight, gimickless releases could make Heymann popular. But the smaller, independent labels tend to arouse very different feelings: Hyperion, Chandos, BIS have loyal followings and consistently, interestingly repertoire-led catalogues. How does Heymann feel about threatening their business? "Look, in world terms, we still have only 12 per cent of the market - Polygram used to have 75 per cent. So we can't be causing all the grief - much as I'd like to take the credit for it. I know the people at EMI are saying that Heymann destroyed the classical record industry. That's utter rubbish. They destroyed themselves. The independents will survive - or at least some of them will - because people like Ted Perry of Hyperion and Robert von Bahr of BIS have a focus and a vision. The majors have lost their focus. In quality terms, it's hard to see what the labels stand for any more."

This sounds like another version of that famous observation by the defeated George Bush: that, in the end, there's no substitute for "the vision thing". Ted Perry of Hyperion Records - one of those singled out by Heymann for praise - admits there is "vision and passion" behind Naxos. "And I've learnt he's honest. But he cuts corners, and that can still show in the quality sometimes. There's a sharp operator there too. When we started our complete Liszt project, he jumped on the idea and did it cheaply. He's cornering our market. I know there have been covert meetings with distributors too." Yes, the distributors. "When you're high on a distributor's sales list, you can wield a lot of power," says Dougie Paterson, sales manager of Collins Classics (another enterprising small label) - and Heymann knows how to use it.

That's just being a real businessman says Heymann - and it may be that the secret of his success is simply that there have actually been very few real businessman in the classical record industry: deft, determined pragmatists who also believe in the product they're selling (for, whatever else he may be, Heymann isn't a cynic). "Basically I'm a record collector who loves music. I read the catalogues, watch the sales figures. I have friends in the industry; musicologists who suggest things. With the help of my wife [the violinist Takako Nishizaki, very much a Naxos star and soloist on the label's all-time bestselling disc of Vivaldi's Four Seasons], I've been able to turn my hobby into a successful business. But it is a business, with definite long-term goals." And his forecast for the future? "Assuming people will still be buying classical CDs, we'll be the main repertoire-provider. Some of the independents will still be doing interesting things, and the majors will be doing pop classics. We're getting more income now from broadcasting, from commercials, and we re-invest. People want our discs. We're here for good."

'Assuming people will still be buying classical CDs, we'll be the main repertoire provider... and the majors will be doing pop classics.'

A forecast already borne out by the following major label lists of Top 5 bestsellers

Naxos

1. Vivaldi: Four Seasons

2. Orff: Carmina Burana.

3. Hildegard von Bingen: Heavenly Revelations

4. Faure: Requiem

5. Mozart: Requiem

Decca

1. Carreras, Domingo, Pavarotti in Concert (The Three Tenors 1990)

2. Essential Pavarotti

3. Essential Opera

4. Essential Pavarotti II

5. Essential Mozart

Deutsche Grammophon

1. West Side Story

2. Adagio Karajan

3. Essential Classics

4. Dr Hilary Jones' Classic Relaxation

5. Beethoven: Missa Solemnis (cond John Eliot Gardiner)

Sony

1. South Pacific 2. Placido Domingo: Perhaps Love

3. Elgar: Cello Concerto

4. Placido Domingo: Love Songs

5. The Best of John Williams

EMI

1. The Three Tenors in Concert 1994

2. Gorecki Symphony No 3

3. Sensual classics

4. Jose Carreras: Passion

5. Classic Weepies

estimated figures