Digital Sales Surpass CDs at Atlantic

By TIM ARANGO
THE NEW YORK TIMES


Wednesday, November 26, 2008

Since MP3s first became popular a decade ago, music industry executives have obsessed over this question: when would digital music revenue finally surpass compact disc sales?

For Atlantic Records, the label that in years past has delivered artists like Ray Charles, John Coltrane and Led Zeppelin, that time, apparently, is now.

Atlantic, a unit of Warner Music Group, says it has reached a milestone that no other major record label has hit: more than half of its music sales in the United States are now from digital products, like downloads on iTunes and ring tones for cellphones.

“We’re like a college basketball team on an 18-2 run,” said Craig Kallman, Atlantic’s chairman and chief executive.

At the Warner Music Group, Atlantic’s parent company, digital represented 27 percent of its American recorded-music revenue during the fourth quarter. (Warner does not break out financial data for its labels, but Atlantic said that digital sales accounted for about 51 percent of its revenue.)

With the milestone comes a sobering reality already familiar to newspapers and television producers. While digital delivery is becoming a bigger slice of the pie, the overall pie is shrinking fast. Analysts at Forrester Research estimate that music sales in the United States will decline to $9.2 billion in 2013, from $10.1 billion this year. That compares with $14.6 billion in 1999, according to the Recording Industry Association of America.

As a result, the hope that digital revenue will eventually compensate for declining sales of CDs — and usher in overall growth — have largely been dashed.

Read the entire article HERE.

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