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At a time when worldwide music sales are suffering — they dropped 5% in 2001 — classical music is feeling the pinch. It now accounts for under 6% of the total audio market. But fans remember a golden age. From the 1960s through the '80s, the major labels regularly recorded the central repertoire with top conductors and orchestras. Vinyl and tapes wore out, so people bought new performances since at that time reissues were less common. When new recording techniques like digital came along, consumers acquired their favorite works with better sound quality. But the durability of CDs — and the emergence of top-selling crossover artists like Andrea Bocelli — has meant a falloff in new core classical releases. In 1987 the London Symphony Orchestra recorded 198 sessions for classical albums; in 2001, only 95.

Now the orchestras are fighting back. Cheaper recording technology plus new deals with musicians' unions have enabled several major ensembles to launch their own labels. The biggest success story so far is the LSO Live budget label. "All their titles get into our Top 20 classical-sales chart," says Tony Shaw, U.K. classical manager for retail chain HMV. "Most get into the Top 10. Recently, Shostakovich's 11th Symphony got to No. 3, beating [popular tenors] Bocelli and Russell Watson."

LSO Live is the brainchild of the orchestra's managing director, Clive Gillinson. Before the label launched in 2000, he had been in negotiations with the Musicians' Union for three years. "I knew the majors would have to record less and less core repertoire," he says, "and that they'd eventually be competing against their own back catalogs. The market had to change, and I had to get the LSO into a position to deal with that."

Since the LSO is run by its musicians, Gillinson had some persuading to do. Historically, musicians received a flat fee for recording sessions, and handed over copyright to the record company. Gillinson suggested a profit share. Instead of incurring studio costs of some €40,000 per session, he would record live concerts for which the LSO was already getting paid. The players would forgo any extra fee until a CD release started making money. Gillinson secured worldwide distribution through outlets like HMV, Tower Records and Amazon, and several of LSO Live's 13 releases have already broken even. As well as potentially making money for performers, Gillinson feels the CDs can maintain the orchestra's profile and document its work.

Among those following the LSO 's example is the San Francisco Symphony, whose new label SFS Media records live concerts and pays musicians 20% less than the standard U.S. hourly recording rate of $115. If SFS Media produces over 10,000 CDs of any recording, though, they get the missing 20%. The label has released the first two installments of its Mahler symphony cycle — the first issue sold around 9,800 of its 10,000 run. The orchestra's director of operations John Kieser originally saw the scheme as a sponsorship-dependent, nonprofit venture, but in the light of sales is now "looking to push beyond the 10,000" to see if SFS Media can pay for itself.

For him, though, the label is mainly a marketing and delivery tool. "We were traditionally content providers," Kieser says. "TV channels, radio stations and recording companies were always there to push us out to the public." But because mainstream channels aren't interested in arts programs anymore and the new digital channels still lack funds and viewers, these outlets are drying up. "It's now up to us to take over that role," he says, so SFS Media plans to produce its own TV programs and webcasts.

The major labels seem unsure whether to regard these orchestral maneuvers as a threat or an opportunity. Bill Holland, divisional director of Universal Classics and Jazz, talks of possible future joint ventures, while BMG executives mutter about the "ripple effect" of the new royalties agreements. They'd better make up their minds soon. With new labels imminent from other ensembles, the bandwagon is rolling — and the upstarts are beginning to call their own tune.

• JAMES INVERNE/London
• Orchestras are launching their own record labels