'SO are you . . .?" "Retired?" volunteers Paul Simon, with a grin. "Yes, basically. It's a big statement. But it feels right to say that."

The first time we met, almost a decade ago, he described himself as "a songwriter who happens to sing". Today, the last half of that characterisation has pretty much fallen away, along with most of his hair. Ever since the split with Garfunkel, journalists dispatched to interview Simon have always been required to return with a definitive judgment on his thatch. Is it a rug? Hair extensions?

Frankly, it's a relief to both of us that, along with his alleged retirement as a performer, Simon has abandoned the struggle to maintain the persona of a "rock star": the few wisps on top of his head are indisputably his. He looks his age - 56 - but that's a compliment, given that most of his big-time rocker contemporaries look 156. And, unlike them, he's heading into new territory: his first album in six years, Songs from The Capeman, is also a taster for his first musical, which begins previews on Broadway next month.

"It's not a cast album," the woman from Warner Brothers is at pains to point out. I understand, I say. After all, at the time of My Fair Lady, aside from the original cast, Andre Previn brought out a jazz album of the score; with Barnum, the composer, Cy Coleman, released an album of instrumental versions of the songs. The colour doesn't quite drain from her face, but it's clear these are not precedents the record company finds heartening. "We like to think of it as the new Paul Simon album," she says meaningly.

Show scores have barely registered on the major record companies' radar for 30 years, so, when one of the biggest stars on American pop culture's central thruway suddenly decides to meander down a dusty, forgotten backroad like the Great White Way, you can appreciate their concern. This is a much bigger gamble than Graceland.

Simon himself is more relaxed. "If The Capeman is a big hit," he says, "then you'd have someone who's had a long string of big hits in popular music who now also has a big hit in the theatre. That would be harkening back to the old days, when the Tin Pan Alley composers were writing the musicals and they were also writing the Top Ten."

To prepare for the show, he put himself through a dispiriting crash course in recent Broadway attractions. "I saw a couple of shows I liked a lot, but most I didn't. I really liked Tommy . . . I liked Guys and Dolls . . . er . . . I kinda liked Show Boat. But the rest of the stuff, I can't say I found interesting."

One wouldn't want to exaggerate the points of contact, but it's worth noting that The Capeman is the first musical since Show Boat in 1927 to use the word "niggers" in its opening number:

Afraid to leave the project, to
cross into another
neighbourhood
The blancos and the nigger gangs,
well, they'd kill you if they could

The singer is the Capeman himself, Sal Agran, a Puerto Rican teenager who killed two white boys in New York in 1959. It was a famous case that gripped the city, prompting, among other things, Bobby Darin's Mack the Knife to be banned from the radio. Any story involving rival gangs of Puerto Ricans and white boys on the West Side of Manhattan is bound to invite comparisons with a certain other musical - especially as, at the time, it was playing a mere four blocks from where the murders took place.

Simon is unperturbed by West Side Story. For one thing, he's more concerned with the theme of redemption, with what happened to Sal after the killings. But musically, too, he's tackling it from another direction, using authentic sounds of the Fifties - doo-wop and Latin - but extending them way beyond traditional song forms.

As it happens, the songwriter's only theatrical representation to date is on a Bernstein score. Mass, Lenny's "theatre piece", contains one quatrain by Simon:

"He just liked the lyrics," says Simon. "I said he could have them in return for opening-night tickets - which he never sent me."

They were originally written for a Zeffirelli film Bernstein and Simon were working on. Lenny fancied himself as pretty hip, but his young collaborator wasn't impressed by the older man's attempts at rock. "He played a melody and it was an awkward moment. He said, 'If we're going to collaborate, we have to be completely honest. So what do you think?' I said, 'Well, that's not very good. That's not rock'n'roll.' He was taken aback." The composer drew himself up and said huffily: "This is Leonard Bernstein music."

If you're a bona fide rock star, it's hard to take seriously the theatre's nervous tiptoeing into the territory: Hair, Godspell, the title song of Phantom, the current sensation Rent, the "rock opera" which so distracted Louise Woodward from her household duties, all are unconvincing hybrids - neither good rock nor good show tunes.

The conventional wisdom, argued by Stephen Sondheim among others, is that rock is difficult to use dramatically. "Well, I don't think it's difficult," retorts Simon. "But the people who were trying to write it weren't coming from rock'n'roll, they were doing an impression of rock'n'roll. And, since everyone knows what rock'n'roll sounds like, it wasn't fooling very many people."

In fairness, the theatre found it hard to attract genuine rockers. Alan Jay Lerner, for one, used to moan to me that Simon and his generation had never written for Broadway.

At the time, I questioned whether musical drama would suit his elliptical style. He once took me through his song Hearts and Bones, which begins: "One and one-half wandering Jews . . ." Simon explained that it was one and one-half because the song was about him, and he's Jewish, and his then wife Carrie Fisher, who's the daughter of Eddie Fisher, who's also Jewish, and Debbie Reynolds, who's not; hence, one and a half. So far, we'd spent 10 minutes decoding just five words, but I felt on top of them and ready to move on. Then Simon said: "But it's also a reference to the flower."

It seemed to me that, if Simon followed Lerner's advice and started writing musicals, we'd have to get to the theatre at 10.30 in the morning to read up on the textual footnotes. It's a surprise then to find that The Capeman's lyrics are more direct, less allusive - that, after years of writing more and more about himself, Simon has been able, with the help of his co-lyricist, the poet Derek Walcott, to write in the voice of characters far less articulate.

"It was a new area to me," he says. "But that was the attraction - not to write about my life."

Bob Crowley, who designed the National's revival of Carousel, is the only old show hand on the creative team. Otherwise, the view on Broadway is that Simon, with his reputation for "arrogance" and as a "control freak", has disdained their expertise.

"In the beginning they said to me there's about five or six people in the world who can do this, and here are their names. And I believed it - what did I know? That's why we've been through several directors. Derek and I didn't want an auteur director. We had taken years to write it, so why would we want someone who says, 'I think this part should go over here and that character is really a woman'?"

In the end, though, Simon understands that it's the essence of theatre that you can't be in control. "In my mind, I'm aiming for this small period of time - the week that goes up to the opening night - as the peak of the performances. After that, if the show's a hit, it goes on and on, and into other companies and other countries and other bands that are going to take the quality level out of my view and probably change it in a way that I would find frustrating - the same way Burt Bacharach did." In 1958, Bacharach wrote Promises, Promises for Broadway, but, as the run continued, he grew to hate it: he'd drop by, and half the musicians would be subs and half the principals would be understudies, and it would never sound perfect, the way it does on an album.

"But that's the theatrical experience," says Simon. "So I'm making my focus those first few nights, and, after that, the work takes on its own life. I can't even imagine a work like Cats that goes on for all these years. I don't even know that I would want my work to go on for 10 years of performances. After 10 years, you might say, 'No, I wouldn't write it that way today; I'd like it to stop.' "

That's one reason why the new album's out. When Simon began The Capeman, his starting point wasn't a libretto or a dramatic structure but some doo-wop tracks he began laying down in the studio (don't knock it; Verdi began Falstaff in much the same purely musical way). They're the basis for the new album. But you also feel he wants to get his versions of the songs down, just for the record, before they're left to the mercies of the Broadway cast. His voice sounds as young as it did on Homeward Bound, and you wonder if, deep down, he's really ready to be just a songwriter.

There's another theory about Simon's musical - that, for all the guff about repairing the great historical breach between show tunes and the hit parade, he's only turning to Broadway because there's nowhere else to go. He doesn't especially disagree.

"When they made radio into 'formats' and they tried to fit all the music into those 'formats', my music didn't fit any of them. So what does that say? The incredible freedom of that olio of music from the early days was because there was only one station and it played everything. So we grew up in an eclectic time, which was a tremendous advantage. These 'formats' have ghettoised everybody, so people are shocked to hear anything else."

He was himself a beneficiary of a shared culture. For all his antipathy to traditional Broadway, many of those middle-aged couples who adored Hello, Dolly! were listening to eight-tracks of Bridge Over Troubled Water on the way to the theatre.

Years ago, I did a TV special with Simon, partly filmed at his office in the Brill Building. The director spent the morning setting up a perfect shot for the interview, looking down Broadway, the picture framed by the Cats marquee at the Winter Garden and the 42nd Street billboard in Times Square. Simon peeked through the camera and said: "That's just a generic shot of Broadway. That's nothing to do with who I am." So everything was dismantled and the crew set up in the opposite corner of the room, away from the window.

It was a telling image: Simon was literally turning his back on Broadway. But not anymore. Clearly, it's still not an entirely comfortable fit. If the problem in the rock biz is that they're always looking for something new, the problem on Broadway is that, at heart, they prefer something old. But, caught between rock and a hard place, Paul Simon figures that sometimes, as with Graceland, the gamble pays off.

"Every few years, people decide they're bored and they want something fresh. So that's a good time to have something fresh." He shrugs fatalistically. "The rest of the time they say, 'Nyyyah, I don't get it.' "