The economics of LP reissues

If an out-of-print LP is selling for $150 or more when it (rarely) shows up for sale on an auction site, shouldn't this be indication of sufficient demand for a reissue? I won't claim to know how much it would cost to reissue a record, but I should think that someone who does know (and who holds the license) would be taking note of these sales and then putting things out at something like normal prices.
Phrased another way: If a couple dozen people show that they are willing to pay $150 for a particular album, does this mean that a few hundred (or more, one hopes) would be willing to fork over $25 for a new pressing of that same album? There is no easy way to answer that question, of course, but I'd bet it's often a yes.
no. The demand is not enough for a reissue.
The famous stuff being reissued is because a demand is there because it is a truely great performance/album. The money is not an issue. Many of the high dollar LPs are rare because nobody bought them in the first place. AND because speculators drive up the price. Folks that want stuff BECAUSE it is rare, or because they think it is an 'investment'. A lot of the stuff selling for big bucks would be a total flop if it were reissued.
Much of the stuff that is big dollars had reissues. Like Blue Note LPs. They are some of the highest value Lps and have been reissued many many times.
Those obscure items.. no way. Also, the original tapes may be gone. The owners nearly untracable for a lot of the classical stuff on obscure labels. So a reissue would be a transcription from another LP.
Anyway, if a buck was to be made reissuing something, it would be done.
So do not look for those rare Lps to be made anytime soon.
Though for the jazz collector, some of the finest stuff is being reissued. Ditto Rock, not a lot, but at least some.
I somewhat disagree with Elizabeth, at least partially. I think that the record companies are indeed keeping an eye on this.

This has proved to be true based upon recent re-issues of Porcupine Tree's "In Absentia", Nine Inch Nails' "Downward Spiral", Tool's "Aenima", and Wilco's "Summerteeth", all of which were going for between $100 and $200 each on Ebay, prior to them being reissued. (I will be picking up the "In Absentia" reissue myself shortly, so "Thanks Record Company for noticing!" The rest of these I already own as original pressings.)

There are several records that would sell very quickly, and probably in fairly large numbers, were they to be re-issued. Records such as:

1. Dave Matthews Band- "Before These Crowded Streets", (currently running about $200+ on Ebay, used)

2. Smashing Pumpkins - "Mellon Colie and the Infinite Sadness", (also running about $200+ on Ebay, used)

(Now personally, I am not sure I want them to re-issue them, since I have original issue copies, and re-issues, especially if well done, would probably drive the price down of my original issue copy, at least I think they would. (However, if they cause the record to become even more popular, maybe it would drive the prices upward. I am not sure.)

However, I do agree with Elizabeth that there are a lot of rare records that would not be worth re-issuing, especially those that are not currently popular enough to actually get played, but merely produced for a very few collectors to stash away.

My two cents worth.
Having a knowledge of the business model of LP reissues, it would take 3000 sales of a single title to break-even. That assumes typical royalties, mastering, stamping, packaging and distribution to retailing. Few titles would get that demand.

3000 in sales - I have heard something to that effect as well. But 3000 at what price (wholesale to retailers)?

What are "typical royalties, mastering, stamping, packaging and distribution to retailing" costs?

Putting aside for a moment the non-artist costs you mention (mastering, stamping, packaging and distribution to retailing) and focusing on royalties, if, for example, we're talking about a 1955 performance of a Mozart piece, whereby Mozart's musical score was never subject to copyright (because copyright protection or moral rights were not available back then, and even if they were, such rights would have expired and the score fallen into the public domain many years ago), and with regard to the performance, no more copyright renewals can be filed with respect to it and it, too, is now in the public domain, the reissue label would simply have to either purchase the master tapes outright or purchase a license to use the tapes in a limited fashion (for example, for the unfettered manufacture and sale of a run of 500 LP's, with perhaps, but not necessarily, a small royalty paid to the owner of the tapes for each LP sold). Does this not occur? Of course, my hypothetical assumes that the reissue label doesn't simply copy the performance from a CD or other source, it now being in the public domain and thus freely copyable, but in fact does pay for access to the master tapes.

When I see a performance of 1) some piece of music that was never subject to copyright 2) by some orchestra that can no longer copyright its performance because the maximum copyright protection period has expired, and 3) that never was a hit when it was released, which seems to be a large percentage of the reissued classical LP's, I ask whether whoever ended up owning the master tapes sold them for peanuts to reissue houses like Classic Records just to take them off their hands. Classic obviously also incurs the non-artist costs you mention to turn the tapes into a finished LP, but are those costs really high enough to justify retail prices of $25 to $50 per LP? No doubt some titles are very sought after and that they are still subject to copyright, and for both reasons, the reissue label would have to pay a lot to get rights, but I would also imagine that some titles are just as I describe - they cost next to nothing to gain access to and the only real costs are non-artist costs. Presumably, the labels buy packages of titles in bunches, for example, groups of 40 or 75 at a time, with some being high value and others worth next to nothing - I've seen movie reissue houses do the same with movie titles - and that total sales of all such titles, the good with the bad, will hopefully make the entire enterprise worthwhile.

Please help me understand the economics of this - I know that selling old performances on LP is just part of their business activities, but Acoustic Sounds just bought Classic Records and moved into an 80,000 sq ft. facility that takes up part of three buildings, and seems to be doing quite well selling this stuff at retail at $25 to $50 a pop.