CROWDED HOUSE EMPTIES AS BAND MEMBERS MOVE ON.

Byline: Bill DeYoung The New York Times

Since its beginning 10 years ago, Crowded House has regularly received the highest praise from rock critics around the world. Singer, songwriter and band leader Neil Finn's lush melodies and smart, angular lyrics have been compared to the works of great popsmen like Lennon and McCartney.

Aside from the 1986 hit ``Don't Dream It's Over,'' however, Crowded House has never enjoyed commercial success on a par with its critical rating. For that and other reasons, Finn says, he has officially disbanded the group.

``Critics don't sell records,'' explains the 37-year-old native of Te Awamutu, New Zealand. ``There's part of me that's not altogether unhappy with our career path, in the sense that we've never got to the point where superstardom has dictated terms to us.''

The band's self-titled first album went gold in 1987, but its three successors fared poorly. ``I don't feel that they were failures in any form because of lack of commercial success,'' says Finn. ``It's easy to say that, but there's a few people around the world whose opinions mattered more to me than the mass.

``So it doesn't discourage me to the point where I feel like giving up or anything. Not even close.''

Finn has two new records on the shelves. Not surprisingly, one is ``Recurring Dream: The Very Best of Crowded House,'' which is out now in Europe, and is scheduled for an American release in late July.

He's more excited by the other project, an album of duets with his brother Tim. Just released in this country, ``The Finn Brothers'' is a moody, atmospheric set recorded in 1994 in Australia, where the brothers now are based.

The songs on ``The Finn Brothers'' are sonic hybrids of the Finns' work with the quirky '80s group Split Enz and the charmed folk/pop of ``Woodface,'' the 1991 Crowded House album that featured their close-as-kin harmonies. (Tim joined Crowded House just long enough to make the record, then left.)

As for the ``Finn Brothers'' project, ``It was something we'd talked about for a good 36 years, and in a way it was surprising that it's taken this long,'' Neil explains. ``The songs that we wrote for `Woodface' were intended to be for a Finn Brothers record way back then. It's been ticking away, and the time presented itself, and we jumped in.''

The death knell, he says, began to sound for Crowded House after ``Together Alone,'' the band's fourth album, was released to the usual critical huzzahs and commercial indifference in early 1994. Sheryl Crow was the opening act on what was destined to be Crowded House's final tour. ``We noticed the difference between what her record company was doing in every city, and what ours was,'' Finn recalls. ``We'd arrive in towns and there'd be big window displays of Sheryl's record, and we would struggle to find ours in the shops at all. That was discouraging, to say the least.

``I wouldn't overstate it and say that was the reason the band broke up, because although we're ambitious for our music - I love tapping into the ol' mass psyche - it wasn't the be-all and end-all for the existence of the band. We also had other places, like England was very successful for us, Australia and New Zealand were still good, and Canada to some extent.''

After a concert in Atlanta, in the middle of the tour, drummer Paul Hester told Finn he was going back home to Australia. ``It wasn't unexpected for us, because he had been getting progressively less enthused about being on stage,'' explains Finn. ``And the shows were suffering a little. So to some extent, when he left we were kind of relieved, because at least it was a way forward. Whereas we'd been struggling with this kind of weird darkness.''

Finn theorizes that Hester, the band's kinetic on-stage clown, was frustrated with the lack of a big breakthrough. Also, ``I think he was a little sick of himself as a jester figure. He lost his sense of humor about it a little.

``And I would say a degree of laziness, in Athat he's a man who loves to be in front of the television with a cup of tea, and have a nap in the afternoon. And it became quite harrowing, the touring. He was having a baby at the time, too, and I think he was feeling a conflict within himself.''

Finn and bassist Nick Seymour ``soldiered on'' with a fill-in drummer, and it took a year to sort through the ruins and decide what to do.

``I've been through enough in my life now to know that you can't just expect things like that to continue forever, that kind of chemistry,'' Finn says. ``And you should be willing to let them go, rather than hang on out of some kind of nostalgia, or loyalty to it.

``I'm proudest, really, of the fact that as a live band we were willing to go out on a limb. Every night was different. We jammed, and we involved the audience. That much, I think, is a rare thing, and I'll always be quite proud of that.

``But in the end, it wasn't difficult for me to let go of. Maybe it was partly because Paul wasn't there, and the chemistry wasn't the same, but we could've continued and made good records.

``I really got to a point where I craved a new context, and felt restricted by the band instead of it being an open thing.''

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Photo: In earlier, more fun-loving days, Crowded House incl uded Nick Seymour, left, brothers Tim and Neil Finn, and Paul Hester.