July 15, 2008 4:37 PM PDT

Disney bucks music industry downturn

Posted by Stefanie Olsen

SAN FRANCISCO--While many music industry executives are crying in their soup, Walt Disney Music Group's Damon Whiteside is singing "Zip-a-Dee-Doo-Dah."

Whiteside, senior vice president of marketing of Walt Disney Records, saw a whopping 60 percent rise in music sales from 2006 to 2007 because of the tween and young-teen music craze led by Disney star Miley Cyrus. Meanwhile, overall music industry sales were down 17 percent in the same period because of digital downloads and pirated music online.

"It's thanks to the tween and younger teens that the music business is staying alive," Whiteside said here at the YPulse 2008 National Mashup, a two-day conference about teens and technology.

He said that only few years ago, tweens and young teens wouldn't touch Disney. But the recent popularity of teen music from the likes of Cyrius and the Jonas Brothers has buoyed the company's business via concerts, album sales, and digital downloads. It also doesn't hurt that Disney casts a wide net online and off to promote these stars and related merchandise. Disney Online, for example, attracts as many as 30 million monthly visitors of largely tweens and young teens.

As far as music goes, digital sales still represent only 5 percent of Disney's revenue--the other 95 percent results from physical album sales. But the virtual side of the business is growing fast. Digital album sales were up 52 percent last year; and digital tracks were up 122 percent, according to Whiteside.

Mobile sales are also growing fast--a market that didn't exist for Disney even a year ago. Disney estimates 40 percent of tweens own cell phones; and more than half of those kids use the phone to buy music, ring tons, and other content. The company's ring tone sales were up 722 percent last year, thanks to the tween market.

Tweens also get music from Disney singers from social networks MySpace, Facebook, and YouTube. But that all ultimately services to promote Disney's brand. "It's exciting to be in this position," he said.