Until 1987, classical-music lovers knew Naxos from a Haydn cantata and an opera by Richard Strauss as the island where Theseus ditched Ariadne after she saved him from the Minotaur. Today, Naxos stands for a gigantic new force in classical recordings, uniquely in tune with the markets, technology and listening habits of our time. What's in a name? The German-born, Hong Kong-based maverick Klaus Heymann picked it more or less out of a hat. ("Universal" was already taken.)
Mr. Heymann's empire stands on three pillars. First: a budget-CD label—once belittled, now showered with prizes. Second: a distribution network—founded because existing distributors refused to do business with Naxos, now the go-to conduit for classical-indie-CD labels and producers of opera DVDs galore. And third: what bills itself as the world's first subscription streaming service, running to 85,000 CDs on some 250 labels, 1¼ million tracks in all, the lot available on demand for about 85 cents a day. Some 800 CDs' worth of music is added monthly.
"The Naxos Music Library is my favorite baby," says Mr. Heymann, who is 76 the way other people are 42. "It's really my brainchild. When we launched in 2002, the staff thought this time I'd really gone mad." At the time, the industry was buzzing about downloads. Mr. Heymann reckoned that what customers wanted, ultimately, was not ownership of tracks but access.
"And it was true," he said recently, speaking over Skype from historic Franklin, Tenn., home of Naxos of America, some 25 miles outside of Nashville. "Today more than 60% of music is consumed on mobile devices. I read a sci-fi novel years ago in which you could get your music from a socket in the wall. Now you don't even need the socket."
He guesses that he has listened to about 25% of the currently available 120,000 hours. "That's more than a lifetime," he notes. Closer to 14 solid years, in point of arithmetical fact, but perhaps I quibble. Figuring six hours of listening per day, we're talking 85 years, cradle to grave.
To his chagrin, Mr. Heymann never learned to read music. He plays no instrument. Call him a musical illiterate if you must but never an ignoramus. "My goal," he has said, "is to record every piece of classical music ever written at least once." In the Age of Klaus, the cosmos of recorded classics has become an exponentially more diversified place, with landmark series dedicated to American Classics as well as Western-style symphonic composers of Japan and China, with Arab Classics in the pipeline.
Published last year, "The Story of Naxos" (Piatkus), by the company insider Nicolas Soames, captures Mr. Heymann's empire-building in swift, crisp prose. It's all there. The suitcases stuffed with dollars. The lawsuits. The prophetic gambles. The projects only a madman would take on.
"I have a stupid habit of opening my mouth sometimes, and then I'm forced to do things," Mr. Heymann explains.
Naxos took wing as a vehicle for generic digital CDs of the 30 top-selling classical titles marketed to mass outlets like department stores. Today the label claims all classical music as its province, still at cut-rate prices. The deliberate, no-frills image persists. So does the fixed, pinch-penny, one-size-fits-all fee structure, in keeping with wafer-thin margins. Royalties to performers? None. But Mr. Heymann is loyal to his artists and demands loyalty in return.
At first, Naxos made rain with unknowns. Hired as workhorses, some emerged as the Naxos rock stars, building immense discographies block by monumental block, yet never promoted for their own sake. Take Jenő Jandó, a music professor in Budapest, represented on Naxos—just for starters—by Bach's "Goldberg Variations," the 32 Beethoven piano sonatas, the two Brahms piano concertos, and the complete piano music of Bartók.
And then there's Mrs. Heymann, a violinist known professionally as Takako Nishizaki. The original pupil of Shinichi Suzuki, founder of the Suzuki Method, and later the runner-up to Itzhak Perlman in the illustrious Leventritt Competition, she acted from the start as Mr. Heymann's kitchen cabinet of one, recommending musicians, vetting master tapes. As an artist in her own right, she has contributed more than 100 recordings to the Naxos catalog, including the core repertory of Beethoven, Brahms and Mozart; rarities by neglected masters (Joseph Boulogne, Chevalier de Saint-Georges; Johann Baptist Vaňhal); and cash cows like Vivaldi's "Four Seasons" (a record million and a half units sold) and Chen and He's "Butterfly Lovers Violin Concerto" (can 1.3 billion Chinese be wrong?).
True, remnants of the unsustainable, free-spending major labels of yesteryear survive to serve an elite of old-fashioned superstars. The canny mezzo soprano Cecilia Bartoli has been scoring bull's-eye after surprise bull's-eye for Decca as long as Naxos has existed. But artists at this level write their own rules.
"We wouldn't pay her kind of fees," Mr. Heymann says. "We wouldn't give the 'total artistic control' she requires over repertoire, cover design, image. But times are changing for us, too. In the past, it didn't matter whether our recording artists also had thriving concert careers. Today, unless they have concert careers, we can't sell their CDs. In the U.S., if artists actively tour, we sell more units at concerts than in shops, including Amazon.com."
Increasingly, busy artists who don't quite rank with Joshua Bell, Gustavo Dudamel, Yo-Yo Ma, Anna Netrebko or the Vienna Philharmonic cast their lot with Naxos, developing large-scale legacy projects, even if it means digging into their own pockets (or those of patrons) to do so.
"If we had to pay full costs for our sessions, we couldn't justify the orchestral recordings at all," Mr. Heymann says. "Once we could sell 30,000 to 50,000 copies of a CD. Now it's down to 6,000. But when the Nashville Symphony wins five Grammys for Naxos recordings, that's a big deal for them. The São Paulo Symphony Orchestra is subsidizing Marin Alsop's Prokofiev cycle. Artists who want to tour and have a presence online need to invest in image."
What kind of an offer might induce Mr. Heymann to cash out? "First of all, I wouldn't sell," Mr. Heymann said. "I wouldn't want to see my life's work subjected to the instability we're seeing in the business today. EMI Classics has changed hands four times over the last few years. The future of the Sony music business and Universal is in doubt because of shareholder pressures. As to value, we have the Naxos catalog. We have the Naxos Music Library, as well as parallel video and spoken-word platforms, which are not making a lot of money but are fully paid and profitable, unlike most online platforms, which are hemorrhaging. Building our distribution network cost me a fortune. And we have lots of intellectual property—liner notes, composer portraits, things like that. About $100 million would be fair. But it's no more than I've invested."