Coolfer isn't sure why people are so convinced Warner Music Group is heads and shoulders above its competitors when it comes to digital music. Because Edgar Bronfman rarely misses an opportunity to say so? The Motley Fool believes it, too, and thinks Ryko is smart to "be part of the one music company that is at the forefront of the digital-music revolution." The Fool's Rick Aristotle Munarriz points out that WMG "broke" a new band using a viral video, active online marketing, and no physical CD release" and adds, "Yes, Warner gets it."

That deserves a retraction: Munarriz is talking about Blame It On The Youth by The Sun, a DVD-only album that ranks among the biggest stiffs in recent memory. The DVD format obviously confused consumers and retailers alike, and although the album got some good press (and some bad press, too) and songs could be ripped from the DVD, it has failed to connect ... just as Coolfer predicted it would.

Munarriz wrote about the release in September of 2005 and lauded WMG for its "bold move." That bold move, as he pointed out, had netted The Sun 16,000 MySpace friends and 472,000 video streams. Here's the bad news, WMG investors: That online buzz, which at the time was hailed by the press as the marketing strategy of the future, resulted in only a few thousand sales, or about as much as it would have sold on a tiny indie label on a shoestring budget and with meager distribution. It would take around 100,000 to qualify as a band that had "broke," and The Sun not even a tenth of the way there, Fools.

As for digital music, Munarriz recaps a long list of WGM's press releases on its digital initiatives and treats them as something special. The fact is that every major has its special mobile promotions, every major has special iTunes releases and bundles, and every major thinks its more innovative than the others. WMG isn't a step ahead of anybody else. They're all in the same boat -- a boat with a faulty compass and barely enough size to keep from overturning in the shifting seas. WMG came to a deal with Sirius over the S50, but so did Universal Music Group. WMG has a digital label, but so does Universal.

Munarriz had a crush on WMG after the IPO, when he marveled at how it was "destined to gush through so many digital revenue streams." But digital was only 7% of WMG's total sales last quarter -- the same as its competitors -- and the reason its most recent earnings are in such good shape is because of lower cost of sales and SG&A, aka belt-tightening. Publishing was down last quarter, and overall revenues were down 4%. That's not growth, that's growth by attrition.