Warner Music has reported a 74% fall in profits for the final three months of 2006, following weaker album sales than in the same period a year earlier.
Madonna is one of Warner's headline acts
The music group's net profits fell to $18m (£9.2m) for the quarter, compared with $69m for the same period in 2005.
While Warner's digital music sales jumped 45% to $100m, this still only accounted for 11% of total revenues.
Sales of physical music products such as CDs declined 13% to $800m following poor sales in the US and Europe.
Warner's overall revenues for the quarter - its fiscal first - fell 11% to $929m from $1.04bn a year earlier.
Both its profits and its revenues were below market expectations.
During the quarter, sales of albums by artists including My Chemical Romance failed to match those of hit albums a year earlier by artists such as Madonna, James Blunt and Green Day.
Warner, the world's fourth-largest record company, last year rejected a takeover approach from its UK rival EMI.