While digital revenues are growing at Warner Music Group (NYSE: WMG), the gains in that area were not enough to completely offset the FY07 2Q net loss of $27 million, or 19 cents a share, compared with a loss of $7 million, or 5 cents a share, a year earlier. Meanwhile, the quarter’s total revenue of $784 million decreased 2 percent from the prior-year quarter, or 5 percent on a constant-currency basis. A day after the company said it would layoff about 400 staffers as it shifts resources to digital efforts, WMG also said:

-- Digital revenue was up 23 percent to $111 million, or 14 percent of total revenue in the quarter.

-- Recorded music revenue in general fell 4 percent from the prior-year quarter to $648 million.

-- Recorded music digital revenue came in at $105 million, a gain of 22 percent compared to the prior-year quarter and represented 16 percent of total recorded music revenue. Domestic recorded music digital revenue was $77 million, or 22 percent of total domestic Recorded Music revenue.

-- Operating income for the quarter dropped to $19 million from $45 million in the prior-year quarter. Operating margin was down 3.2 percentage points to 2.4 percent. Earnings release | Webcast