The recording industry and two parents' organizations, after months of wrangling over labeling of "explicit" song lyrics, yesterday announced a two-pronged compromise to settle the issue. Everyone claimed to be satisfied.

The parents' groups -- the Washington-based Parents Music Resource Center (PMRC) and the national Parent-Teacher Association (PTA) -- praised the agreement as a significant victory for consumers, even though they appeared to have gained few concessions from the Recording Industry Association of America (RIAA).

In dealing with lyrics involving sex, violence or substance abuse, record companies will choose between two options: They can print a four-word warning ("Explicit Lyrics -- Parental Advisory") boxed and lined on the lower quarter of back covers. Or they can print the potentially offensive lyrics (on back covers or on lyric sheets under the plastic wrap) so that consumers can judge for themselves.

"We feel this is a win situation for everyone who is involved," Ann Kahn, president of the 5.6 million-member PTA, told a news conference at the National Press Club. Calling the clean-lyric controversy "a consumer issue from the beginning, one in which consumers have the right to have full information before they purchase any product," Kahn hailed the agreement as "a major step forward in giving parents more information on which they and their families can make responsible decisions."

"We welcome all aids to parenting," said Pam Howar, president of PMRC, the group founded earlier this year by the wives of several congressmen, Reagan administration officials and other members of Washington's political establishment.

"This constructive policy is intended to respond sensitively to the concerns of parents of younger children and to achieve a fair balance with the essential rights and freedoms of creators, performers, and adult purchasers of recorded music," the RIAA policy statement says.

In return for the voluntary labeling effort by the recording industry, the parents groups agreed to continue urging Congress not to get the government involved in formulating standards. Both the PTA and PMRC insisted they had not been seeking a legislative solution, though that possibility had been raised by several senators during a mid-September hearing of the Senate Committee on Commerce, Science and Transportation.

The main thing parents' groups seem to have given up is the right to define the word "explicit." Stickers or lyric sheets would appear only on records containing "explicit" material -- yet no specific definition was adopted, and all decisions will rest with the record companies themselves. "There are no guidelines -- explicit is explicit," said RIAA head Stanley Gortikov.

Tipper Gore, wife of Sen. Albert Gore Jr. (D-Tenn.), said that PMRC's members "have faith" that the record companies "will make those judgments with the concern of the parents with younger children in mind."

Another apparent loophole is that artists whose contracts give them control over the design of their album covers are free to ignore the understanding. But Howar said her group would monitor the record industry's compliance with the agreement, adding that letter-writing campaigns and other consumer pressures would be put on artists and companies that do not go along with it.

Gortikov, whose 44 RIAA member companies account for 85 percent of record releases in the United States, said that 22 companies, including all the majors, had already agreed to the new policy, and other record companies, including those not aligned with the RIAA, were being urged to follow the guidelines. The procedures are expected to take effect in 60 to 90 days.

There is still some dissension within the industry, however. Danny Goldberg, president of Gold Mountain Records and head of the Musical Majority, an industry group lobbying against lyric censorship, said "we remain adamantly opposed to labeling because it raises the same question as any rating system," including interpretation of lyrics. Nevertheless, Goldberg added, "We are urging record companies to follow the second option." While many Musical Majority members "feel it was probably a mistake to make any concessions to what I consider to be a right-wing pressure group hiding behind concerned parents," he said, "we don't have any objection to people reading lyrics, and welcome the opportunity for the rhetoric to be lowered and for us to be able to go back to American music business as usual."

Gortikov pointed out that "the number of records that might be considered objectionable is minute" and insisted that the agreement didn't "jeopardize or dilute the rights and freedoms of creators and recording artists, who must be assured protection against censorship." Kahn noted that the PTA has, in its 90-year history, always been opposed to censorship. All three organizations indicated that they would object to any pressure against stores carrying stickered products.

Since there is no room for lyrics on cassettes, companies that decide on the lyric-printing option will substitute the statement, "See LP for Lyrics." Ironically, that creates another major loophole in the agreement, because 60 percent of all music sold today is on cassette, and for rock music, that percentage is even higher.

Asked if the two parents' groups had not gotten far less than they wanted, PMRC cofounder Susan Baker, wife of Treasury Secretary James Baker, replied, "We had to give some. They had to give some. This is a start."

In response to a question about Frank Zappa's upcoming "Porn Wars" record, which uses snippets of testimony from the Sept. 19 hearings, Baker said, "we think Frank Zappa ought to give us some royalties."