Vivendi released its Q3 earnings yesterday. Here is the 11-page press release (PDF). The results show how a successful modern music company is taking shape. Universal Music Group's acquisitions in music publishing and merchandise are being integrated, digital is growing and all three are helping to offset the decline in both album sales and CD sales. It is optimistic but cautious about new revenue models (e.g., MySpace Music, Comes With Music). Just as important is UMG's market share gains as some of its major competitors have allowed themselves to lapse.

UMG revenue dropped 6.2% in Q3 (a 1.1% increase at constant currency) and dropped 3.8% to €3.142 billion in the first nine months of 2008 (a 3.5% increase at constant currency). Big gains were made in EBITDA, which rose 21.8% to €408 million in Q3 and 29.6% through September. Revenue for the first nine months of 2007 was €3.265 billion and EBITDA was €335 million. Revenue for the first nine months of 2006 was €3,298 and EBITDA was €433 million.

Through nine months, digital revenue increased 33% at constant currency (digital revenue was up 47% for the same period in 2007). CFO Phillippe Capron called it a "good performance" that was "very sound," and he underlined cost constraints and gain in market share. Emphasis has been on digital growth and cost reductions (which will continue into the future). BMG Publishing assets have been brought to UMG Publishing's higher level of performance. Global margin for publishing is above 30% for the period under review.

Vivendi expects slight growth in revenue and EBITDA in Q4.

Capron mentioned MySpace Music ("it may be one of the ways of the future") and Nokia's Comes With Music only briefly and mainly to point out how the company is seeking ways to replace lost revenue from physical format sales. Analysts were interested in Vivendi's outlook, but no hint of expected revenue from these new models was given.