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Warner Music Group's Woes: No Sound of Money For Industry?

Tuesday, 7 Aug 2007 | 12:17 PM ET

Warner Music Group --as one of the world's largest recording companies--is a pretty good leading indicator for the embattled music industry.With its fiscal third quarter loss growing to 17 million from 14 million last year, let's just say, there's not much hope for the CD business--new releases aren't selling as well as they used to, and sales are dropping off much faster in following weeks than they ever did before.

The company's digital revenue increased nearly 29% from the year-ago quarter to comprise 15% of total revenue. This is still behind the music industry average, of digital music making up 17% of total music revenue.

What's interesting is that Warner Music Group's Chairman and CEO Edgar Bronfman said the industry needs a new platform that delivers more than the CD. While many people would say the digital format provides sufficient options, Bronfman is trying to figure out how to get people to continue buying albums, which may be futile. Disney recently launched the CDVU+, a new CD format that holds a ton more information, but it's really targeted at the tweens who buy Disney's albums, the demographic who cares about getting extras like music videos and dozens of photos.

Warner's best selling albums were from Linkin Par,Michael Buble, and The White Stripes, among others. I don't know if those music listeners care enough about putting their photo into a poster of their favorite rocker (which you can do on CDVU+) to bother going to a store instead of clicking over to iTunes. Perhaps the music industry needs to focus its attention not on bolstering physical music sales, but mastering the digital realm.

Questions? Comments? MediaMoney@cnbc.com

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.