After having $10 billion wiped off its collective worldwide revenues this decade, the four major music labels haven't had much to crow about. Indie labels, which have banded together to negotiate as Merlin, together are as large as EMI, the smallest of the majors. And even though digital sales are way up across the board, the dramatic declines in more-lucrative CD revenues have led industry observers into Sartre-like levels of existential despair.

So why is Jean-Bernard Lévy, CEO of Vivendi and owner of largest label Universal, so upbeat?

In an interview with the Financial Times, Levy claimed that his label had already hit bottom and was now slogging uphill (its revenues increased by 5 percent on a constant currency basis in the first half of the year). He pointed out that Universal's revenues were now increasing at a decent clip, and he was bullish on new music outlets such as Nokia's Comes With Music plan.

"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," he told the paper.

Our chart below shows the year-over-year change in revenue for the quarter ending June 30, 2008. EMI, the only private major label, is not included on the list. While revenues don't look so hot for Universal, the revenue change is misleading; when currency fluctuations are removed from the equation, the company actually increased its revenues by 3 percent in the quarter from the same period in 2007.

As for Warner, once the same calculation is applied, it actually lost 1 percent on a constant currency basis. (Sony does not report its Sony BMG numbers this way.)

Digital, of course, is the big driver of better economic performance. At Warner, for instance, it made up 20 percent of total revenues in the second quarter and generated 39 percent more income that it had a year before. Universal notes that its growth is fueled, in part, by "the momentum of digital sales growth."

The growth of digital isn't always enough to offset CD sales (and it doesn't help when your company's CDs were implicated in a major rootkit PR disaster a few years back). Sony BMG said that its decline in revenues was "primarily due to the continued decline in the physical music market worldwide not being fully offset by growth in digital product sales."

Such talk has fueled speculation that the wild hookers-and-blow days of the 1980s may never come again for an industry that could have to content itself with a much smaller global revenue pie. But as Universal's experience shows, growth is still possible for the majors.

One consumer benefit to the music industry's tribulations has been an increase in opportunities to acquire music. The industry had to loosen the reins as is looked like the horses might bolt and leave the stagecoach stranded in the ditch. First came the industry's own pathetic efforts like Pressplay, then the DRMed world of iTunes, then the DRM-free goodness of Amazon, then the Nokia Comes With Music model, then the Last.fm free music streaming model, and now the birth of MySpace Music (which has apparently had its launch pushed back from this week).

And, in another sign that music DRM is dying everywhere but on iTunes, 7 Digital just became the first music store in the UK to offer DRM-free access to the catalog of all four majors.

If the industry in general can recover as Universal has done so far this year, though, the question remains: will the major labels start taking up the slack on those reins, or will they decide that the wild, out-of-control ride they've been on for the past few years has actually produced new opportunities worth following up on as revenues ramp back up?

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