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Music-Industry Changes

New York — Separate announcements by Warner Music and Internet music service Slacker underscore the music industry’s shift away from physical media.

In reporting its first-quarter financial performance, Warner Music said its worldwide digital revenues grew 20 percent to $171 million for the quarter ending Dec. 31, compared with the year-ago period, and were up 2.4 percent sequentially from fourth-quarter 2008’s $167 million. Digital growth was driven by online downloads to the PC as well as by downloads of songs and ringtones to cellphones, the company said.

With the increase, digital music revenues accounted for 19 percent of total revenues in the first quarter, but total revenues were down 11.2 percent in the quarter to $878 million compared to the year-ago quarter.

“This performance reflected the ongoing transition in the recorded music industry characterized by a shift in consumption patterns from physical sales to new forms of digital music as well as the impact of the turbulent global economy on retailers,” the company said.

Warner attributed the overall decline mainly to “continued contracting demand for physical product by retailers primarily in the U.S.” Digital’s growth kept sales from slipping further, as did increased revenue from Warner’s artist services business. The company said it is continuing “to broaden our revenue mix into growing areas of the music business, including sponsorship, fan club, Web sites, merchandising, touring, ticketing and artist management.”

Warner’s digital revenue include revenues from Internet music service Slacker, which announced that its customizable Internet music service can be streamed to the new BlackBerry Storm PDA phone via Wi-Fi and cellular.

Compatibility with the touchscreen Storm is one of the upgrades included in a free Slacker application downloadable over the air to all U.S. BlackBerry phones that run the BlackBerry 4.3 or higher operating system. The announcement follows the January launch of a free Slacker app for the iPhone, iPhone 3G and iPod Touch on the Apple iTunes App Store.

With the Slacker Mobile app, users stream music from Slacker’s free ad-supported service or subscription-based commercial-free services to their portable device. All Slacker services stream more than 100 Slacker-programmed stations, more than 10,000 artist stations and an almost unlimited number of a user’s custom-created stations.

 On BlackBerrys, the application also stores Slacker music streamed at a faster-than-real-time rate for local storage and playback, reducing battery consumption by up to five times that of streaming playback, Slacker said. To store Slacker music on a BlackBerry, consumers connect it to a PC via USB cable. The BlackBerry then automatically fills itself with music at a faster-than-real-time rate from stations marked by the user to be cached.