A slow release schedule helped Warner Music Group report a 15% drop in revenues in its fiscal third quarter. For the period ended June 30, revenue was $652 million and the operating loss was $1 million, a big drop from $25 million the year before. Net loss was $55 million, its worst in six quarters and second-lowest in the last five years. Warner’s stock was down about 1% in early trading. It closed at $4.69 on Wednesday.

While the release schedule was slow, said chairman and CEO Edgar Bronfman Jr., “the fundamental, underlying trends that we’ve seen for some time have not really changed.”

The earnings call was shorter than normal as analysts had relatively few questions. Given the continued disruption in the music industry, widespread doubts and recent developments in digital services, the call’s brevity was surprising. There is far more going on in the music business than a listener was led to believe. But there was little probing by analysts, and so little was offered by Warner’s executives.

Today’s story was the same told by all music companies: digital gains could not counter greater losses in physical sales.

The numbers:
- Domestic revenue was down 10.9% while international revenue dropped 19.2%.

- Warner’s digital revenues followed overall revenues’ sluggishness.

- Digital revenue grew a mere 2% year-over-year to $179 million.

- Digital revenues were down 10% from the previous quarter.

- Recorded music revenues were down 17.9%.

- Digital grew 3.7% year-over-year and accounted for 32.6% of recorded music revenue – 41.3% of domestic revenue.

- Music publishing revenue dropped 6.1% year-over-year.

- Domestic publishing revenue was flat.

- Digital revenue from music publishing fell 19%.

- Mechanical revenue grew 16% due to a change in accounting for a U.S. collection society.

Other items of note:
-- Warner is optimistic about the role its content will play in the future of digital products and services. When asked by Goldman Sach’s Ingrid Chung if there is an upcoming game-changer for digital music, Bronfman offered this carefully phrased and typically cryptic (given the forum) response: “In general, as the economic hierarchy in the wireless space has yet to be written, there are a number of companies jockeying for position…In that race to establish a position in the hierarchy in that much larger world than the computer world, we see a great deal of opportunity because, quite frankly, we think content and music specifically, is a critical enabler to those companies that seek to have a permanent and profitable position in that hierarchy.”

-- “We’re very pleased with what we’ve got from now through December,” Bronfman said of the company’s upcoming release schedule. This quarter, Warner has a sure hit in upcoming albums by Linkin Park and Zac Brown Band. Bronfman named two artists who have upcoming albums that will probably sell fairly well but will fall short of hit status: Phil Collins and Eric Clapton.

-- Non-traditional revenue was “about 10%” of recorded music revenue.

-- Warner sees continuing CD strength in Europe. Some countries in Europe have a “far more robust retail footprint for physical product” than in the U.S., said Bronfman. At the same time, he pointed out, digital adoption in those countries lags the U.S. This is true. The U.K.’s relatively healthy physical retail market was just cited in a paper by PRS for Music. But will the CD fall in those markets as it has in the U.S.? It’s a likely scenario, albeit on a different timetable. But Bronfman doesn’t think that will happen, saying those markets “will continue to perform pretty much as they have.”

-- Bronfman called the iPad a “game-changer.” He added that Warner is well-positioned to capitalize on the growth in video content the company believes iPad will drive.

-- Bronfman took the time to mention recent efforts by the U.S. government, especially comments by Vice President Biden, to combat piracy. He called for a “collaborative approach between content owners and ISPs” and mentioned record labels’ victory over LimeWire.