Atlantic Records's digital revenue has overtaken earnings from physical sales for the first time, the company has said.
The record label, part of the Warner Music Group, achieved the feat in America, where digital downloads are continuing to grow in popularity.
Atlantic's chairman and chief executive, Craig Kallman, told the Guardian: "It was really important to educate artists about how we had to change the thinking on the release cycle and the type of products we were releasing."
Kallman also said it had become crucial to ensure that the record label accommodated for every customer with all-encompassing deals, which include other revenue sources such as tickets and act merchandise.
Despite Atlantic's success in America, digital download sales in the UK still only equate to 10% of total sales.
CD sales are continuing to fall as fans explore other avenues to get hold of music, including illegal downloading.