Gus Dudgeon, who has produced records by Elton John and a number of other top names, told an industry conference in Liverpool this week that the studio network around Britain was "suffering" and that many of the studios, which have cost millions of pounds to build, are "hanging on by doing just anything to get people in".
In the past three years a number of studios have closed. Even the famous Abbey Road studios in London, where the Beatles recorded many of their best-known albums, can see some of its four studios going empty for days at a time - though Dave Flower, its bookings manager, said yesterday that "we're fine".
"We do all sorts of music and anything else, and we have huge rooms which orchestras and so on need. It's the mid-range rock'n'roll studios who are getting burnt. That's because the music industry is flat, the CD business is flat and nobody wants to pay the money. Most mid-range studios are probably empty for weeks," he said.
But the slump is not reflected by a fall in the amount of music being made. Instead, it is the consequence of a startling shift in technology.
"Studios are finding it really hard," said John Harris, editor of the music magazine Select. "The first thing the record industry said when digital technology came along was that people would still need top-flight studios. But it's just not true. The record which won last year's Mercury music prize, Bring It On by Gomez, was recorded by them at home. "You can buy the equivalent of a 20-track digital recording studio set-up to put in your house for pounds 2,000 now."
While home recording has been a staple of the record industry for years, it has recently begun to bite into its economics. Even a few years ago top-flight bands looked on months spent in an expensive recording studio as one of the perks of success. The Manchester band Happy Mondays in effect bankrupted their record company by spending months in the Caribbean recording their second album.
But now, record companies tend to subtract the cost of recording from bands' payments - which means that artists are choosing cheaper venues where they have more control. Fat Boy Slim's first album was made on home equipment, and he intends to make his second at home too.
Radiohead, the Oxford band whose third album OK Computer has sold millions of copies, have a studio in the back of their tour bus where they record additional tracks for CD singles. They have also just set up their own studio near Oxford. "They're paying about one-tenth of the rates that the Rolling Stones and the Beatles used to," said Mr Harris.
The arrival of digital equipment and the Internet means that bands do not even have to be in the same place to record a song, said James Mackie, director of Juice Studios near Lancaster.
"You can have the bass player in Australia laying down one track, and the singer in Los Angeles doing another. Then, because it's still all digital, it can be sent to yet another studio to all be mixed down. The artists might never come together ever, and no single studio might be the venue."