(FORTUNE Magazine) – SPOILED BY the rich sound of Mozart on your compact disk player? Frustrated that you can't use CDs to record live broadcasts of the opera or the kids' rock band? Fear not, music lovers: digital audio tape recorders could solve your problems. Unlike CD players, the new machines will both record music and play it back; like CDs, digital audio tapes -- DATs for short -- use computerized recording and playback technology that eliminates background noise and produces uncannily clear sound. Because digital cassettes promise better sound than the familiar analog cassettes and will be as easy to use, ( the new tapes may shrink demand for the analog variety much as CDs are skimming market share from LPs. DATs for home use should be available in Japan by October and may reach the U.S. by early 1987. Almost 50 Japanese companies -- Matsushita, Sansui, and Sony among them -- have agreed on a format for the cassettes to avoid repeating the problems the industry had with incompatible Beta and VHS videocassettes. The first DAT players in the U.S. should be priced between $500 and $1,000; blank cassettes will cost about $10 to $12 initially, vs. about $4 for a top-quality analog tape. As with CD players, prices are likely to come down drastically if the technology catches on with consumers. Digital audio tape machines work more like VCRs than standard cassette tape recorders. In a conventional analog deck, sound waves are recorded onto magnetic tape. During playback, the tape moves past a stationary head that reads the encoded information. The process creates extraneous noise, partly because oxides or metal particles built into the tape produce their own analog signals. The wave forms can also become distorted after several playbacks. By contrast, when a DAT cassette is loaded into the recorder, the tape surface engages a drum that contains one or more heads. As the drum spins, the rotating heads cram onto the tape billions of tiny digitized bits of information. Because the data are digitized, the head can record only two values, the binary digits 1 and 0. Analog sound waves are not picked up, so tape hiss is absent in playback, and even if the tape becomes worn the computer reading the data can interpolate any missing bits of sound. Besides their ability to record, DATs offer several advantages over CDs. The new cassettes can hold up to two hours of music; a CD has room for only 75 minutes. Since digital cassettes are smaller than disks -- 2.13 inches by 2.8 inches, about half the size of an analog cassette, vs. the 4.7-inch diameter of a CD -- portable players of the Walkman variety could be smaller, and car players would take less space than present cassette or CD players. Sony's portable Discman CD player, for example, is too big to fit in a shirt pocket. While DATs clearly represent a technological advance, ''there are a lot of questions about how big the market will be,'' says William Burton, technical editor of Stereo Review. Some audiophiles may conclude that DAT sound is not significantly better than that produced by a metal tape played on a top-of- the-line analog deck. (Nakamichi, the name to conjure with in high-end analog decks, says it has no immediate plans to make DAT players.) A few bugs still have to be worked out before digital cassettes can be duplicated from a master, so it may be a year before prerecorded digital cassettes start becoming available. Cautions Almon Clegg, general manager of the Matsushita Technology Center in Secaucus, New Jersey, ''If the digital tape recorder turns out to be strictly a recording enthusiast's toy, maybe the record companies won't get interested in them at all.'' Moreover, an audiophile with an investment in CDs may not rush to add still another expensive gadget to the turntable, analog tape deck, and CD player already plugged into the preamp. Not every innovation in audio technology is an enduring commercial success: Remember the eight-track cartridge and quadraphonic sound?