After the earnings call Tuesday morning, a deeper numbers dive is revealing a few positive wrinkles.  International recording sales gained 2.5 percent on constant currencies to $498 million, a nice counterweight to a 9.5 percent drop in US-based recording revenues (to $285 million).  Additionally, Atlantic Records finished as the top-ranked label in the US, according to WMG chief Edgar Bronfman, Jr.

The digital component has positive elements, though the broader picture is subject to debate.  Digital sales – at $185 million – now account for 20 percent of broader revenues, though year-over-year gains are slowing.  Specifically, Warner pointed to a 5 percent gain (at constant currencies) compared to the previous quarter in 2009.  But sales were flat when compared to the third quarter, reaffirming theories that a digital plateau has arrived.  On top of that, digital percentages are gaining against a sinking top-line revenue level, instead of boosting the broader total.

Meanwhile, diversification remains a serious challenge.  Warner is clearly suffering from the rapid erosion in CD sales, though other revenue sources are not ramping fast enough. On a revenue total of $918 million, itself rather steady from last year, recordings account for $783 million.  Suddenly, the more stable publishing component – a mere 14.3 percent at $141 million – seems less important, and even publishing is facing its own downward demons.

Researchers at Carnegie Mellon, Stanford, and Berkeley Lab recently delved into the environmental impacts of digital music delivery, and produced some interesting findings for sponsors Microsoft and Intel.  At a top level, the transition towards digital was deemed positive for the environment, often by a huge margin.  A straight-ahead download consumes far less energy, emits less carbon emissions, and results in less plastic trash.

But the comparisons are usually less clean-cut.  In one example, the research team found that buying a CD can consume the same amount of resources as a download that is burned to a CD-R – that is, if the buyer walks to the brick-and-mortar retailer. 

Then again, CD-Rs are also past their prime, and getting pushed aside by portability solutions like iPods, iPhones, and other mobile devices.  Additionally, CD-Rs are capable of carrying enormous amounts of MP3s, and automobile dashboard players are increasingly able to read MP3-carrying discs.  “Based on our assumptions, online delivery is clearly superior from an energy and carbon-dioxide perspective when compared to traditional CD distribution,” the group concluded.

But the issue gets far more complicated when hardware enters the picture, an area that largely fell outside the research focus.  What about the iPods that break, the batteries that get drained, the computers that crash into obsolescence, the phones that get replaced?  What about all of that toxic landfill garbage, thrown away because it was so 2008?  And, what about the sweatshops and environmental abuses in countries like China, so delicately marginalized by offenders like Apple?

That broadens the debate considerably, and the researchers involved (Christopher L. Weber, Jonathan G. Koomey, and H. Scott Matthews) acknowledged that a great deal of future research need to be conducted.  Incidentally, that includes other forms of music delivery, including subscription-based and ad-supported models, as well as emerging cloud-based delivery systems.

Review by publisher Paul Resnikoff.