At Major Label, Downloads Beat CDs

Legit download music sales have passed a notable milestone at Warner's historic Atlantic Records. The label now sells more downloads than CDs. This is believed to be a major-label first.

In the fourth quarter of this year, downloads provided 51 percent of Atlantic's recorded-music revenue. That's significantly more than was reported by its parent company, Warner Music Group, which got 27 percent of its revenue from recorded music sales in the U.S. However, even for the parent, that represented a 39 percent rise, and formed 18 percent of the company's total revenue (from recorded music and other sources).

Atlantic's news surprised analysts in a few different ways. The label's reported CD sales didn't reflect as steep a decline as for other labels. And its "digital" (download) music sales are outpacing other labels.

Trying to make sense of all this, The New York Times suggested:

The question, then, is whether Atlantic’s performance is an outlier or a signal that the music industry is reaching a pivot point as it moves toward a new business model.

"I think we’ve figured it out," said Julie Greenwald, president of Atlantic Records. "It used to be that you could connect five dots and sell a million records. Now there are 20 dots you can connect to sell a million records."

The newspaper notes that Atlantic's revenue sources include ringtones, ringbacks, satellite radio, iTunes sales, and subscription services--though it's actually spending less on marketing costs for videos and tour promotion.

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