The proportion of music sales being made online via digital downloads has been increasing for the past few years, but it has never exceeded physical media sales, until now. Atlantic Records, home to artists such as AC/DC, Estelle, and Kid Rock, has now announced that 51 percent of its revenue comes from digital sales.

Digital music downloads are becoming more and more important to the music industry. As traditional album sales continue downwards due to piracy and a change in consumers listeners habits, even the record labels are realizing where the future of their business lies.

Record labels, especially the big four of Warner, Sony, EMI, and Universal, were, and still are to a certain degree, unsure of digital downloads. Most of this negativity stems from online piracy, with Napster setting up a battle between the music industry and its consumers which is still ongoing to this day.

Today, according to The New York Times, Atlantic Records has hit an important milestone, making 51 percent of its fourth quarter revenue in the U.S. from digital sales. This includes album and single sales on services such as iTunes, as well as licensing income from cellphone ring tones.

Atlantic is part of Warner Music, which as a whole, sees around a quarter of its profits come from digital sales. Atlantic is outdoing all its rivals by managing to make such a high proportion of its profits from digital products. But the question remains as to whether these sales can ultimately compensate for the rapidly declining sales of physical media such as the humble CD.

Atlantic is clearly doing something right, having figured out that it can no longer rely solely on album sales to bring in the cash. Instead, it is managing to draw in smaller amounts of revenue from a more diverse product range, including the aforementioned iTunes sales, cellphone ring tones, satellite radio licensing, and subscription models.

If Atlantic Records can manage this feat then so can the other record labels that are still spending most of their time complaining of the hard time they’re having due to music piracy. Less time moaning and more figuring out how to offer consumers what they want would seem to pay dividends.

Related:

Entry was posted on Wednesday, November 26th, 2008 at 3:25 pm under Music, Opinion, Technology.

Read more entries by Dave Parrack.
Stumble It!