Who needs Simon Cowell? Enrol at the school where fame and fortune are part of the curriculum

Kids, right here is where you start paying – in sweat. Just as soon as your business lecture is finished. Nick Duerden meets the students of the Academy of Contemporary Music, where the 'Fame' game has never been more serious

Eleven o'clock on a blustery late March morning, and 15 students of the bass guitar are hunched over their instruments in a small but well-appointed classroom. They are your typically teenage motley crew – over-styled hair, tattoos, lip rings – in all but one department: the attention they are affording their tutor is absolute. The tutor, Nik Preston, a professional bassist who once played with Sting, is earnestly leading them through the 1974 jazz-funk epic that is Herbie Hancock's "Chameleon". To a man (and they are all men, or at least young versions thereof), they have already perfected the hypnotically glazed look of professional bassists everywhere. Preston has clearly taught them well.

Further down the hall, in the Chad Smith Drum Room (named after, sponsored and frequently visited by, the Red Hot Chili Peppers' sticksman), a dozen young drummers are coming to the end of their masterclass with experienced drum technician Simon Mellish. They have reached the part of the class that Mellish, who is balding and fortyish, likes to call "fun stuff". Having led them through the ergonomics of playing and snare-drum techniques, he now gives them what every ordinary music fan fears most: an extended drum solo. Several students film his efforts on their mobile phones (some of which will later appear on YouTube), then afford him a round of applause afterwards. Mellish bows.

Hardly the kind of thing you'd expect of an establishment of higher learning – but then ACM is not your typical educational establishment, and this is no ordinary higher learning.

The Academy of Contemporary Music, recent recipient of a Queen's Award for Innovation in Education, is redefining the way music is taught in this country. It has, over the years, established such strong links with the industry it always hoped to serve that the two are now practically indivisible: new students enter, aged 18, through the door marked "College" and exit, two years later, through the revolving door and straight into the music biz.

Phil Brookes, ACM's director, is a former musician who first had the idea of starting up a guitar workshop – in his mother's garage – back in 1993. He applied for, and was granted, a Prince's Trust loan to the tune of £3,000 to teach disillusioned office workers a little fretwork one evening a week. The course proved so popular that, by 1995, he was seeking larger premises. ACM has grown steadily ever since, and now runs across three buildings in an unpretty part of Guildford, Surrey. It boasts 1,200 full-time students and 400 part-time.

"We are not a fame school," Brookes insists, perhaps keen to distance his degree-level college from the GCSE-friendly, and arguably more fame-oriented, Brit School, whose alumni include Amy Winehouse, Leona Lewis, Katie Melua, Adele and Kate Nash to ACM's comparatively paltry Newton Faulkner

and third Sugababe Amelle Berrabah. But ACM, Brookes says, isn't just about producing wannabe pop stars but instead serves all areas of the industry, from A&R (the talent-scouting and artistic development side) through to management. It does this rather effectively: last year, 76 per cent of its graduates went straight into gainful employment. Culture Secretary Andy Burnham is a vocal admirer, and now hopes its approach will be adopted across all other industries.

"We are in the midst of a major skills crisis in the UK, across every sector of the economy," explains Chris Wild, the college's education strategist. "Gordon Brown has often talked about there being a global skills race, and how we ' lag behind other countries. We have to be able to compete with the likes of India and China, and while we may not be able to on price or number of personnel, we can, and should, be competing on levels of skill."

Once, Wild continues, further education was often in and of itself; a degree in, say, medieval history hardly paving the way to a glittering career in your chosen field. ACM's entire focus is to pave that way. "This is a space," he says, "where industry and education operate as one; there is no division." So successful is its approach that the brand is going global. In addition to colleges in Italy, Japan and South Africa adopting its curriculum, ACM is about to open its first branch in the US, in Oklahoma City. The Flaming Lips' Wayne Coyne will be one of its patrons.

We should not, perhaps, be so surprised to learn in the 21st century that rock stardom is now something you can effectively learn. We are, after all, living in an age of reality television-produced pop stars, where we get to see the young, the gauche and the inexperienced often groomed for just that. But while so many of these programmes' contestants subsequently flail in the spotlight, often crushed by the weight of their own naïveté, graduates of ACM hope to arrive into the industry much more sussed.

"Our main aim here," confirms Mark Bound, the college's A&R consultant, "is not simply to teach them about the industry but also to be aware of all the possible pitfalls. We want to demystify its appeal to some extent, in the hope that they will be ready for whatever comes, both good and bad."

While the college is almost forcefully proud of its pop-star successes – Newton Faulkner's 2007 album Hand Built By Robots was a number-one record, and commemorative plaques adorn the walls – a far more educational tale is that of 2007 graduate Nick Harrison. Harrison was discovered here during one of the college's open days, in which industry types come down to view the, if you like, fresh meat. Harrison, then 21, was snapped up by Universal Records in the middle of his course, and the hope was to turn this young singer- songwriter into a post-Arctic Monkeys solo act. Almost two years after signing his deal, his debut album has yet to surface.

"I guess we're still trying to test the waters," he says, a little forlornly. Sitting in his London flat, and now sounding much older than his years, he is perhaps wary of saying anything that will offend his paymasters, but it is clear his experience has been frustrating. "Things are proceeding slowly, maybe, but it's worth it. We're writing new songs at the moment, and that's the important thing. We don't want to make any mistakes here."

He frequently returns to ACM, to say hello, and perhaps even to seek a little solace: "And that's the best thing about the college: the people there, the tutors. They still help me out in all sorts of ways. It's been invaluable."

"We've encountered a lot of cynicism over the past few years," says Bound, "because people are under the impression that we are simply here to manufacture pop stars. That is not the case. We are here simply to aid the development of musicians and give them room to develop before a record company starts breathing down their neck, demanding a quick return on their advance." He chuckles. "I think it's amusing when people suggest we are some kind of pop star- producing machine. If only it were that easy..."

ACM doesn't look like a college so much as a shiny new record company. Its main headquarters is located inside a former fire engine-making factory, with high, beamed ceilings, exposed brickwork and metal flooring. The lighting is low, the walls lined with gold and silver discs donated by supportive rock stars. There is no litter, no graffiti, and all the lecture rooms are full. Alongside each classroom is a smaller, cubicle-sized room in which students gather to write together, rehearse and jam. This is, in fact, one of the overriding principles of the college: to introduce every student to every other student, in the hope that bands will be formed, partnerships cemented. All the students appear preternaturally enthusiastic, and the level of support they get from a curiously philanthropic staff is clearly so affecting that even graduates find themselves coming back for more.

Rokhsan Heydari graduated two years ago, but remains a regular visitor. A budding singer-songwriter with a slowly growing reputation, hers is typical of the mentality around here. In her dream world, she would be number one tomorrow but, perhaps mindful of Harrison's experiences (her boyfriend, also at ACM, is Harrison's drummer), she is reluctant to seek a deal until she feels good and ready. "What ACM gives you is the luxury of time," says the 22-year-old. "I was studying music at Reading University before I came here. In the entire time I was there, I got to perform live twice. Here we perform live twice a day at least. I had no idea what I was doing before; here, I've been allowed to find myself."

Heydari, Bound says, is effectively a walking advert for the college's services. "She arrived here fresh-faced and a little unsure of herself, but now she's played more than 400 shows, she made the bill at last year's Glastonbury, and has just come back from [the influential music industry conference] SXSW in Texas. She knows exactly what she wants. I'm pretty sure she's going to get it, as well."

Bound works in the college's business-development centre where, each term, he and his team produce a compilation CD of some of their students' best work, which is then sent out to the industry. Several times a year, the college is visited by A&Rs, label bosses and representatives from Radio 1.

"The level of talent there is amazing," says Jason Carter, Radio 1's editor of live music. "We've invited lots of students in for work experience as a result, but many of them already know a lot more than we do..."

In doing the work traditionally done by record companies – the discovery of an artist, the subsequent grooming – ACM might be in danger of churning out a brace of overly precocious young folk, each harbouring dreams of dominance by the age of 25; pop stars were once easily lampooned for their lack of naïveté, an inability to differentiate between net and gross. But if ACM has anything to do with it, they might be a dying breed. "I realise I have only one chance at this, so I'm going to do it properly," Heydari says. "I've seen other people sign contracts too quickly, and things have gone wrong. If I can help it, that won't happen to me."

Adam Karayiannis, another recent graduate, may well have once fallen into the easily lampooned camp. A striking east Londoner of Greek origin, he showed up at ACM a couple of years ago harbouring serious delusions of grandeur. "When you first get into a place like this," the 25-year-old says in a booming voice that has a lot to do with his previous theatrical training, "it's difficult not to be cocky. I was convinced I was going to be a star, but by year two, my ego fell back into place."

Drawn here ostensibly by the idea of a rock'n'roll existence, Karayiannis, who fronts a five-man funk-pop extravaganza called The Dead Disco, rarely turned up to 9am lectures, as 9am was habitually his bedtime: "It's all very well being attracted by the lifestyle," he says, "but you get nothing done if you spend your time twatted. I wanted to get things done, so I soon knocked that on the head. If you come here thinking you are going to get a deal like that [snaps fingers], you are delusional. It's a graft, and you have to work your arse off, because no one else is going to [do it] for you."

Linda Harrison, an 18-year-old singer-songwriter with leanings towards pop punk, arrived here from Scotland last year under strict instructions from her parents not to fall under nefarious influences. "I was off to 'rock school' and they were convinced the place would be full of drugs," she says. "I had to explain that there were just as many drugs back home in Edinburgh as I would ever find here." Harrison also had to explain to her parents why the trip down south was necessary. "I didn't just want to learn how to get into the industry, I wanted to learn how to stay in it."

This is a common sentiment within these halls. Kirsty Trice, a 24-year-old from Maidenhead, originally enrolled in the one-year vocal diploma course before opting to stay on for a second year to study for a music-business degree. "If you're not up on the business side of things, you'll just be mercilessly taken advantage of," she says. And so Trice is studying everything from publishing and contract law to management and entrepreneurship, the idea being that she will not only be able to record her own music, but also potentially release it herself and manage her career, thereby doing without the industry in a traditional sense altogether.

"I want longevity here," she says, her nose-ring glinting in the overhead lighting, "and no one is going to look out for my career with as much care and attention as I will."

ACM and its ilk will always have its detractors, of course – can rock stardom ever truly be taught? – but while The X Factor continues to show us the crude machinations of the industry and the tabloids have so much fun picking up the pieces of its many failures, tomorrow's crop of hopefuls plan never to have to rely upon the likes of Simon Cowell again."Ideally, I would like the college to open its doors to those young musicians who perhaps can't afford to attend," says Radio 1's Carter (ACM's annual fees are comparable to any university's in the country), "but I still think its very existence is a brilliant thing. Think about it. If you are really genuine about music and you want something that rocket-boosts you in the right direction, then this place is heaven, right?"