Universal is the "is the next surprise for our investors," said the head of Universal Music Group's parent company. And he meant a good surprise.

Jean Bernard Lévy, the chief executive of Vivendi, gave the Financial Times an optimistic prediction for the fortunes of Universal Music Group and recorded music in general.

“I think [in] the music business, there is a strong likelihood that we are getting close to the lowest part of the cycle and we are extremely active in developing new business models, new sources of revenues.

"We are working with all the big names in the field of internet, in the field of telecom equipment companies, big media companies and this is a big opportunity."

He said Universal had emerged from the downside of the market as a clear leader of an industry that would soon be able to claim it had “reinvented a new era for the music business".

"I really believe we are at the turning point for the music industry and I didn’t say that two years ago."

Here's what Levy said in January of this year at Midem: "I think altogether today there is an exaggeration in the industry. Of course it is not doing that well, but look at us, we have flat revenues, a good two digit margins and it's not as dark as what many people describe." He even sounded fairly optimistic in October of last year.

Of course, in the last few years UMG has acquired not only additional publishing assets but management and merchandise interests. I sense his comments to the Financial Times were mostly about recorded music since it is the segment most associated with "the lowest part of the cycle."

These new business models are all racing against declining CD revenues. If they are successful, the combined growth of these new models have a chance to lead recorded music sales to a bottom and, not a moment too soon, an upward trajectory.

When I've modeled US recorded music sales, I see the bottom in 2010 or 2011 if some necessary -- and achievable -- outcomes take place. Ad-supported revenues need to really take off, subscriptions (as in bundled services like Comes With Music) needs to show very strong results by 2009, CD sales declines need to be in the very low double digits and digital downloads need to continue to grow at or above 20% per year (growth is good now, but it's been slipping). Mobile is a bigger question mark in my book. I'm more conservative there. I see ringtones being fairly flat and over-the-air downloads not playing much of a part in the market's growth. Subscriptions (such as Rhapsody and Napster) will lend little to no growth. Lots of 'ifs' there, but that is what is needed.

Unlike some optimism executives have offered over the years, Lévy's outlook is founded in actual progress rather than wishful thinking. Labels and publishers have been working toward new business models as if they recently found religion. They're not even close to being out of the woods yet, but I do agree with Lévy that their outlook today is better than it was two years ago.