How Warner Music and Its Musicians Are Combating Declining Album Sales

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Rise and Shine Shinedown -- from left, Zach Myers, Eric Bass, Brent Smith, and Barry Kerch -- has thrived under a WMG 360 deal. | Photograph by Jim Wright

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Smile for Me: Lyor Cohen, in his Manhattan town house, is turning WMG's frown upside down. | Photograph by Nino Munoz

Up-and-coming bands like Shinedown are helping Warner Music Group pull off the hardest trick in the music biz: redefining the record label for the digital age.

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On a chilly night in Manhattan, Julie Greenwald is steamed. "I...