Question-and-Answer Session
Operator
(Operator Instructions) The first question is from Bishop Cheen of Wachovia.
Bishop Cheen - Wachovia
Thank you for taking the question. Edgar, if I heard you right, I think you gave some very useful color on let’s call it ancillary economics or revenue streams or 360. You said in Asia, it’s already representing 5% to 15% of your total revenue, if I have that right. Can you give us some color on what you think overall you can grow the ancillary part of your business to as a percentage of revenue?
Edgar Bronfman
Bishop, just to clarify, the 5% to 15% in Asia is correct. It’s 5% to 15% just to say of recorded music as opposed to recorded music and music publishing.
While I can’t give guidance in a sense, I think what I would say is we no longer regard these revenue streams as ancillary. These are going to be core revenue streams and therefore they will grow both organically as we sign artists to 360 deals. They will grow as a result of infrastructure that we may acquire in order to service those deals, and they will grow as a result of acquisitions in businesses or joint ventures, such as the Frank Sinatra deal, to expand those streams.
So depending on the pace of acquisition and investment, obviously these revenue streams as a percentage of our total will grow more quickly or not, as I said, depending on the pace of investment.
But we are really changing our focus from being a recorded music company with a couple of extra revenue streams to being a broad-based music content company and I think you’ll see a significant increasing mix of revenues coming from Warner Music.
Bishop Cheen - Wachovia
Very good. Thank you, Edgar.
Operator
The next question is from Doug Mitchelson of Deutsche Bank. Mr. Mitchelson, your line is open. You may ask your question.
Doug Mitchelson - Deutsche Bank
Sorry, I had the mute on. Thanks. A couple of questions. I guess first for Michael, not an easy one but are you prepared from a cost structure standpoint for a worst-case scenario for domestic CD sales next year? Say CD sales continue to decline at this pace or worse, and you talked about negative operating leverage. What does your cost structure look like today in the recorded music side and how do you continue to adapt to that kind of environment?
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