Music label EMI signalled a further sharp decline in the popularity of the traditional CD today as it said revenues from the format had dropped by nearly a fifth.
The group’s recorded music arm, home to stars such as Robbie Williams and Lily Allen, reported a 19.8% revenues drop from CD-based sales in the three months to the end of June, as digital downloading continued to steal market share.
But EMI offered hope that it was beginning to take advantage of the switch to digital as it posted a 26% leap in digital revenues.
The group, which is currently being taken over by financier Guy Hands in a £2.4bn (€3.5bn) deal, said the continued tough conditions in the recorded music market meant overall revenues for the division fell by 13.4%.
It also blamed the drop on a poor release schedule during the period.
A stronger performance in its music publishing arm, which saw revenues rise by 11.9%, failed to lift overall figures, down 5.1% over the past four months.
CD sales have been falling steadily in recent years as music downloading has taken off.
EMI reported that CD-based sales fell by 12% in the UK and Ireland in the year to March 31 against an industry-wide drop of 8%.
Music labels have been battling against both digital piracy and the drop in demand for physical formats, hoping to instead capitalise on the boom in downloading by launching online download services.
EMI launched a venture with iTunes in May that offers music to be downloaded without digital locks, known as digital rights management-free products.
The group said today that “early revenue indications for this initiative are encouraging”.
EMI’s music publishing arm is also “holding up well”, according to the group.
Digital revenues for the music publishing division increased by 13.2% while physical sales saw a 11.9% hike.
Music publishing assets are becoming highly prized in the industry with a number of private equity investors keen to secure a slice of the market.
EMI’s music publishing arm was said to be the main attraction in the deal with Mr Hands and reports have speculated that he may now try and strike a deal with Warner Music, which lost out in the battle to secure EMI, to offload the ailing recorded music division.
Fellow British music label Chrysalis is also thought to be receiving significant attention from bidders interested in snapping up its publishing business.
Universal Music, Warner Music and a raft of private equity firms are believed to be in the frame.
Music publishing businesses are highly sought after as they own the rights to songs, which generate cash from royalties every time the music is used in, for example, films or commercials.
Recorded music, however, is based on sales of music releases – an area which has come under increasing pressure amid the rise of internet piracy.