New York Times says Digital Sales Surpass CDs at Atlantic

Atlantic Records says digital sales have finally surpassed CD sales. Most of their musics sales in the US are now from digital products – ala digital music downloads and ringtones.

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

The future still looks clouded even though a milestone has been achieved – “While digital delivery is becoming a bigger slice of the pie, the overall pie is shrinking fast.” The hope has been lost that digital sales would make up for declining sales of CD’s. The music industry is now hoping to profit from other businesses including concert tickets and artist merchandise, but the live business is shrinking too. Unfortunately, only a few legendary artists can fill arenas and they are usually unwilling to share the slice of the pie.

The transition of moving to a digital business has made things more complicated. Of course others believe they found somewhat of a solution. “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.”

“Replacing compact disc sales are small bits of revenue from many sources: Atlantic Records’ digital sales include ring tones, ringbacks, satellite radio, iTunes sales and subscription services”. At the same time, record labels — Atlantic included — are spending less money to market artists. In the pre-Internet days, said Ms. Greenwald, “we were so flush, we did everything in the name of promotion.” Among the cutbacks are less spending to produce videos and to support publicity tours when a new album is released.”