Are profits UP in the music industry?

That is a distinct possibility – and it flies in the face of the RIAA’s complaints about declining sales.

As Wired’s Chris Anderson notes:

“Although CD sales have fallen off a cliff, digital sales appear to be making up most of the difference….In revenue terms the industry did about as well last year as it did before, and it’s worth noting that the margins on digital distribution are considerably higher because there are no physical goods to manufacture and ship. So 2005 may have been more profitable than 2004 (it certainly was for Warner Music Group).”