Even though CD and DVD sales continue to fall at Best Buy, the music industry had reason to be happy with Best Buy's Q4 and fiscal 2008 earnings release earlier today. The health of the company and its engagement of the mobile sector will provide opportunities for the future.

Entertainment software sales for the quarter ending February 28, 2009 accounted for 21% of Best Buy's Q4 revenue but fell 11% on a comp basis. CD and DVD sales experienced a "low double-digit decline," according to the earnings release. This is a familiar refrain. CD and DVD sales were the main drivers behind a 12.4% comp store decline in Q3 entertainment software sales. Physical media formats have had similar declines in previous quarters. Not only is consumer interest in the format waning, the retailer has reduced shelf space for both CDs and DVDs.

Unlike Circuit City, the bankrupt-and-liquidated electronic retailer that accounted for about 2% of U.S. recorded music purchases, Best Buy is financially stable. Music companies can count on it being a going concern for the foreseeable future.

Best Buy's mobile strategy began in earnest with its $2.1 billion acquisition of half of UK mobile retail giant Carphone Warehouse's retail business. During the earnings call, Best Buy emphasized the value of knowledge it gained about the mobile segment in Europe. In Q4, the company had nearly triple-digit comp store sales growth for mobile phones and accessories.

The company's Carphone Warehouse experience should suit it well for a greater mobile in the U.S. In September 2008, Best Buy acquired Napster for $121 million. Just how Best Buy will leverage its retail power to exploit Napster is still a question mark. Gaining subscribers and improving the Napster service are two big challenges in the face of mobile music plays by Apple, Sony Ericsson and Nokia.

Regardless, music companies should look to Best Buy to put next-generation mobile music devices into the hands of mainstream consumers.