Best Buy, one of the country's largest music retailers, announced its earnings for the first quarter of fiscal 2007. Revenues were up 14% to $7.0 billion.

Most relevant to the music industry is this sentence, on page 11 of the company's 8K filing:

"A low -- single -- digit gain in comparable store sales of gaming hardware and software was more than offset by expected declines from CDs and DVDs."

The broad category of "Entertainment Software" accounted for 18% of revenue, down from 20% last year. Fewer CDs are being sold -- even though advertisements tout below-cost prices -- but there was double-digit growth in the sale of MP3 products (including players and accessories).