FOR THE past decade, the main obstacle to excellent sound reproduction has been the quality of records. While home reproduction equipment has improved radically with developing technology, the quality of the disc has declined.

In the last few years, however, a small but growing market has arisen for high-technology discs incorporating new recording and mastering techniques and the use of better plastic. Prices run as high as $20 each for these albums, but an increasing number of consumers are willing to pay the cost of quality.

The new companies are fighting a number of long-term trends in the recording business -- among them, the use of inferior vinyl and the decline in quality control. As the music industry grew during the '60s and '70s, from $400 million a year in 1960 to $4.2 billion in 1979, the cost of polyvinyl chloride rose dramatically. PVC is a petroleum derivative and by 1973, its price had quadrupled from 1968 levels. The vinyl for an album now costs around 30 cents -- still a smaller component of the overall price than packaging, distribution and combined promotion-overhead. t

The result was the virtual disappearance of virgin vinyl from American records. New vinyl melts and distributes itself evenly in the stampers that mold the records. The more even the distribution, the better the record.

In the last 10 years, however, the quality of the vinyl (and the reocrd) has deteriorated, for two reasons. The government found that some polymers emitted a toxic gas, and set up strict and expensive regulations governing their use. And new vinyl increasingly was mixed with reground vinyl from used or defective records (including the labels) and flash (the trimmed-off excess edge of records). In addition, the stamping process was speeded up, less frequent checks for defects were made and more records were made from each stamper (ensuring lower quality of those records made near the end of a run). It's little wonder that the home-taping phenomenon grew as the quality of records declined.

To counter these trends, a number of small companies recently began manufacturing records as carefully as the artists and producers record them. The first was Sheffield Laboratories, which went back to the earliest of recording techniques: recording directly into the record-cutting machines making the vinyl masters. The major problem with this "direct-to-disc" process -- aside from the fact that the master cuts wear out at around the 50,000 mark and cannot be replaced -- is that the music is live. There are no overdubs, no editing, no chance to correct mistakes. As a result, few direct-to-disc releases contain much musical excitement, as musicians play it safe or easy.

Two other major audiophile configurations -- half-speed mastering and digital recording -- developed concurrently as companies looked for ways to overcome the limitations of conventional discs.

In 1976, a young company called Mobile Fidelity -- after examining the studio-to-turntable process -- decided that the major flaw was in the manufacturing of the record. Using Japanese JVC, the finest quality virgin vinyl in the world, Mobile Fidelity (the achknowledged leader in the pop end of the field with over 50 recordsing available), Nautilus of California and Direct-Disc of Nashville developed the technique of half-speed mastering. "The demands on the cutting equipment under normal, fullspeed conditions are extraordinary," says Baxter Boyington, marketing direction of Nautilus. "Half-speed mastering cuts the velocity by half and the stylus acceleration to one fourth. The gains in dynamic range, particularly in the high end, are tremendous."

Additionally, these companies limited their stamper lives to 1,000 records per stamper, though the stampers are capable of producing up to 5,000 records before they must be replaced. The records contain more (and virgin) vinyl -- 148 grams versus 115 in normal releases. The records are individually inspected as they're packaged; every 50th record is play-tested. In fact, there is a constant and consistant concern with quality control. Returns on defective records are .05 percent, compared with 6-10 percent on average vinyl offerings.

The advent of digital recording represents a major innovation on conventional recording technique, which transforms sound waves into corresponding waveforms that are eventually turned back into sound with the aid of amplifiers and loudspeakers. The digital process, popularized by 3M and others, analyzes the waveform of music thousands of times in each second, and assigns each segment a numerical value. Those values are then precisely reassembled when the playback unit calls the numbers back -- at the rate of 50,000 a second, with each number made up of 16 binary digits (or bits). These are recorded as minute magnetic points on tape, with each square inch of tape capable of containing nearly 900,000 magnetic bits.

The digital process, which grew out of systems used to enhance satellite pictures from space, is particularly popular in new classical recordings, where the major small labels are Telarc, Delos, Chalfont, Sound 80, Varese/Sarabande and the Japanese Denon label, which has probably the most varied and interesting catalogue. One executive whose company issues direct-to-disc, half-speed masters, digital and hybrid albums points out that the gains in the recording end tend to be offset by the use (particularly by the major American labels) of average-quality vinyl. "Digital recording represents no advantage over what was recorded on a 24-track or 48-track board, unless it's carefully mastered, carefully pressed, carefully quality-controlled on virgin vinyl," he says. "Otherwise, all the goodies can be lost." The gains from digital recording -- greater dynamic range, better frequency response, loss of surface and mechanical noise -- can be quite extraorinary.

The major drawback to audiophile records is their price, which intially frightens many customers away. But many consumers have become accustomed to the $10 to $20 price tags, and now most record stores feature audiophile bins for pop music -- and more numberous classical offerings are found mixed in with non-audiophile product.

The continued growth of companies like Nautilus and Mobile Fidelity apparently has convinced the major record companies that the audiophile market could eventually become significant. The sales figures are still relatively small in terms of the hugh national record market: Despite licensing arrangements that provide a maximum of 250,000 copies of a half-speed master reissue, Boyington doubts "that, of all the audiophile records released, any of them have sold over 50,000. In terms of records sold, the numbers are really quite small."

But they are an increasing shore of the marketplace. CBS has entered the market with its Mastersound series. London, Angel RCA, even DGG and Phillips (who originally claimed they would sit out the intermediate digital process, waiting for laser technology to develop) have all entered the digital market, though their offerings represent only a small percentage of what is being produced. And there are industry skeptics who feel the record companies are using the digital process as an excuse not only to make new recordings of just about every classical piece, but as an excuse to raise prices one more time. (That extra star -- indicating a high-tech disc -- in the Schwann catalogue is another sales bonus.)

Consequently, audiophile records, once the province of audio stores and the finer record shops, can be found now at most record outlets."It's a new profit center that didn't exist before," says one store manager. "It draws people into the stores and offers them an alternative to consumer concerns with high prices and poor quality."

Meanwhile, the industry is awaiting the advent of the advanced digital-laser technology exemplified by Philips' Compact Disc System, which could eliminate many problems that still afflict even the finest audiophile discs.

No matter how carefully mastered a record is, "You still have the problems of all discs," says Fleetwood Mac's producer/engineer Ken Caillat. There are still "pops and scratches, oil from people's fingers, and so on." Only new technology can eliminate that. "Fleetwood Mac/Fleetwood Mac" has been available as an audiophile disc for several years and a half-speed mastered "Rumours" is expected out soon after a year of re-mixing, re-equalizing and re-mastering. "We spent so much time on 'Rumours' and 'Tusk,'" Caillat says, "yet when you put the needle down and run the master tape side by side, there's no comparison to what it really sounds like. You can lose as much as half of what we've recorded."

The Philips system, still in the development stage, features digital playback equipment in which a disc smaller than a 45 (but containing up to an hour of music on a side) is scanned by a diode laser on a pickup arm that never makes contact with the disc. The laser system will both extend the life of the disc and virtually eliminate the stylus and tone-arm configuration. The problem is whether these discs can somehow be adapted to conventional systems, and vice versa.

Whatever the future of laser technology, the consumer can expect major changes in sound quality in the years to come.

Some of the more popular audiophile discs: Pink Floyd: Dark Side of the Moon (Mobile Fidelity) The Beatles: Abbey Road (Mobile Fidelity) Boston: Boston (CBS Mastersound) Heart: Mushroom Annie (Nautilus) John Klemmer: John Klemmer (Nautilus) Steely Dan: Aja (Mobile Fidelity) Fleetwood Mac: Fleetwood Mac (Mobile Fidelity) Tim Weisberg: Tip of the Weisberg (Nautilus) Little Feat: Waiting for Columbus (Mobile Fidelity)

Some notable digital recordings in the classical field: Prokofiev: Symphony No.5. -- Israel Philharmonic under Bernstein (CBS IM 35879). Beethoven: Symphony No. 3, "Eroica" -- New York Philharmonic under Mehta (CBS IM 35883) Strauss: Also sprach Zaralhustra -- Philadelphia Orchestra under Ormandy (Angel Es 37744) Beethoven: Fidelio -- Chicago Sumphony under Solti, with Behrens, Hoffman, Adam, Ridderbusch. (London LDR 10017) Stravinski: Firebird Suite -- Atlanta Symphony under Shaw (Telarc DG 10039) Saint-Saens: Symphony No. 3, "Organ" -- Philadelphia Orchestra under Ormandy (Telarc 10051) Bach, Organ music: G Minor Fantasy and Fugue, Passacaglia and Fugue -- Michael Murray on organ at Methuen, Mass. (Telarc 10049)