The company’s revenue climbed 7.4 percent in the 12 months ending March 31, the company disclosed (via PaidContent).

The rise is due to increases in both the sale of recorded music and publishing revenue; increases in the former are particularly rare these days. And these numbers ought to bump again in the coming year given that they’ll include dollars/pounds generated by the re-release of the Beatles albums.

Alas, since EMI owner Terra Firma is deep in the midst of negotiations with Citigroup (C), which lent it billions to buy the company, it’s not handing out any other details about the company’s performance, so hard to tell what’s really going on there.

Still, we do know that music has been in decline for a decade, and EMI’s bump up is the first, no matter how modest, in many moons (click on table below to enlarge).

That’s the obvious question in light of news that both Terra Firma, the private equity group that bought EMI in 2007, and Citigroup, which funded most of the transaction, have written down most of their investments in the music company.

This isn’t a surprise–the move has been a long time coming–but it does open the door for Warner, which restructured its debt with an eye toward making such a deal earlier this year.

Pali Research’s Rich Greenfield thinks that Citi (C) will push to break up EMI and sell Warner (WMG) the record music group, which tends to lose money, and keep the music publishing business, which has been a reliable money maker, even during the industry’s 10-year freefall.

But at this point, I don’t know why Warner couldn’t try to swallow the whole thing. In the past, that deal would have been scuttled due to antitrust issues (and in fact, it was), but the music industry is a different beast right now–a sick beast–and I think regulators would be a lot more forgiving this time around.

[Image credit: beggs]

The Citigroup (C) analyst spoke with PubMatic and the Rubicon Project, two “optimization” firms that help publishers manage inventory they hand over to ad networks. And both say they’re seeing continued upticks in sales and demand.

Pubmatic, for instance, says pricing has increased every month this year, and Rubicon says that they’re seeing demand from–believe it or not–travel and auto advertisers. Just as encouraging, buyers are actually making “longer-term” plans, which was unheard of in the darkest days of 2008 and 2009.

Both firms also reiterate the conventional wisdom that we’ve been hearing for the past 12 months: The money that is being spent is increasingly going to “performance-based” ads, which are paid for only when someone interacts with them. That’s another data point in favor of Google (GOOG), whose core product is performance-based.

Again: Things were so lousy a year ago and through the spring of 2009 that it’s prudent to take these kinds of data in stride.

And if you really want to be half-empty about it, you can note that the inventory Rubicon and Pubmatic sell is the cheapest real estate publishers have to offer. Which means it’s hard to say how various sites’ high-end real estate–the stuff they sell themselves–is doing.

We’ll get a better sense of that in about a month or so, during Q3 earnings season, when we get color from Web publishers like Time Warner’s (TWX) AOL and the New York Times (NYT).

But, as I said, this is supposed to be an optimistic post.

Anmuth says his research shows an increase in pricing for Google’s search ads over the past few months, particularly in the battered retail and auto sectors. His note comes a couple days after Citigroup’s Mark Mahaney raised his Google estimates, citing a dramatic improvement from mid-August to mid-September.

Other Google bulls: Investors, who have been pushing up the company’s shares since March (they’re now hovering near the $500 mark again), and CEO Eric Schmidt, who declared this week that “it’s clear that the worst is behind us.”

The tempered enthusiasm isn’t limited to Google’s chances, by the way. Mahaney also had good things to say about Yahoo’s (YHOO) chances as the economy recovers. While Yahoo is handing over its search business to Microsoft (MSFT), Carol Bartz and crew still dominate the display ad business, and that should be picking up as well, he said.

It is worth noting that Yahoo executives themselves were more cautious this week when asked to describe market trends: At an Advertising Week press conference, Bartz brought out her “still bumping along the bottom” line, while EVP Hilary Schneider said ad sales had stabilized but that she “wouldn’t go so far as to say as we’re seeing a full recovery.”

Parsons will be a part-time adviser says the New York Times and will keep his current job as Citigroup (C) chairman as well. Providence’s media bets include MGM and Univision, which haven’t worked out, and Hulu, which has.

Providence and Parsons have worked together at least once before: In 2004, Parsons sold Warner Music Group (WMG) to a consortium that included Providence, Thomas H. Lee Partners and Edgar Bronfman Jr.

Perhaps Providence will tap Parsons’s knowledge of his former employer for another deal: Time Warner executives keep murmuring about the need for magazine publisher Time Inc. to shed some of the 115 titles it operates.

Top line for Google’s Q2 earnings: Net revenue of $4.07 billion and earnings of $5.36. The Street was looking for net revenue of $4.05 billion and earnings of $5.05.

CEO Eric Schmidt isn’t overly effusive: “Google had a very good quarter, especially given the continued macro-economic downturn. While most of the world’s largest economies shrank, Google’s year-over-year revenues were up 3%. These results highlight the enduring strength of our business model and our responsible efforts to manage expenses in a way that puts us in a good position for the economic upturn, when it occurs.”

Meanwhile paid-click growth was up 15 percent, and the company continues to clamp down on expenses: Google’s headcount actually shrank in the last three months, from 20,164 to 19,786 full-time employees.

I’ll be listening in on the call and occasionally updating here.

• Schmidt: “Youtube is now on a trajectory we’re very pleased with.”
• “Too early to tell when the recovery will materialize.”
• CFO Patrick Pichette: Still hiring, but decrease in headcount came from previously announced layoffs.
• Product SVP Jonathan Rosenberg: We’re focusing more than ever on power users.
• Mobile monetization picked up, driven by smart phones. YouTube’s monetized views have tripled in the last year.
• Sales boss Nikesh Arora: Small advertisers have stayed consistent during downturn, and larger advertisers who have been on sidelines are coming back.
• Schmidt on Chrome OS: We’re talking to manufacturers about designing “products that are very, very exciting.” Will Chrome run on existing hardware? Available for download? Still to be worked out.
• Was June soft? Schmidt: We generally don’t parse interquarter trends. On YouTube: Monetizing “billions of views” per months. [Nothing approaching real numbers or real context].
• Arora: “Significant sellthrough” in markets where Google has YouTube homepage for sale. Next phase of YouTube sales emphasis will be preroll ads on short-form videos.
• Arora on YouTube “trajectory” comment: We’re excited about getting pieces in place to drive this forward [i.e., not talking about numbers]. Customers accepting YouTube ads: “It’s becoming accepted user behavior where they’re going to watch premium content that people have invested in, they’re going to watch pre-roll ads.”
• Is YouTube profitable? Pichette: We don’t give out economics. But in the not-too-distant future, we see it being very profitable.

Here again, per Citigroup’s Mark Mahaney, is a crib sheet for interpreting the results (click to enlarge):

And here are the slides from Google’s investor presentation:

2009Q2_google_earnings_slides –

As per Google’s last report card, Wall Street is expecting the company’s revenue to decline from the previous quarter–unthinkable for Google (GOOG) in prior years, but now no longer a shock. But Wall Street will be looking for both numerical and qualitative hints that things are getting better, or at least have bottomed out.

The ever-helpful Mark Mahaney from Citigroup (C) has provided his usual “cheat sheet” to help interpret Google’s results (click to enlarge):

Marketers can buy Google ads instantaneously, without the haggling and lead time that traditional ads require. So conventional wisdom is that the company’s results will work as an early indicator for the general ad market and the greater economy.

But I talked to a search market exec last night who cautioned about reading too much into this afternoon’s results unless there’s a really big upside surprise. This is traditionally a slow quarter for search ads, he argues, so it will be hard to learn much from the results. The real key, he adds, will be the company’s Q3 numbers–if things are coming back, then Google’s September numbers will reflect that.

In the meantime, we can always hope that interrogators are able to get Google executives to provide them with meaningful answers on a wide range of topics, from the performance of Microsoft’s (MSFT) Bing search engine to the never-ending will-they-won’t-they talks with Yahoo (YHOO).

I’ll be covering the call live after the market close this afternoon; check back then for a link to a new post.

UPDATE: Results are in, and they’re okay. If you’re looking for a big vote of confidence in the ad market or the economy, this isn’t it. But it’s not bad, either.

That’s the conclusion Citigroup’s (C) Mark Mahaney reached after taking Microsoft’s (MSFT) new search engine for a spin and comparing it to Google’s (GOOG) and Yahoo’s (YHOO). The result: Google still delivers better results most of the time. In 71 percent of searches, Google either supplied the most relevant answer or tied with other engines. Bing did that 46 percent of the time.

But it’s worth checking out the results of Mahaney’s test to see exactly how the search engines stack up. For one thing, as he notes, Bing’s results are getting better as it matures–it’s only been live for about a month–and as it adds bells and whistles (for instance, it is catering to vanities of certain bloggers by including their Twitter stream in search results).

And Bing also performs better for at least two kinds of searches: Health and travel. So if you need to book a trip, or if you pick up a rash on that trip, you might want to think about Binging before you Google.

First, Mahaney’s methodology:

Over the past two weeks, we conducted 200 queries across the three major Search engines–Google, Yahoo! and Bing. Most of the queries we picked came from Google Zeitgeist, Microsoft’s xRank and Yahoo! Buzz, along with some personal queries. These queries spanned multiple categories, including Entertainment, Health, Local, News, Retail, Sports, Travel and Other. After conducting the same query across all three Search sites, we picked a winner based on: 1) relevancy of the organic search results; and 2) robustness of the search experience, which included factors such as image and video inclusion, Search Assist, and Site Breakout.

And his results. Overall relevancy (click to enlarge):

Relevancy by topic (click to enlarge):

Mahaney’s argument is simple: 1) Media sales represent half of Amazon’s North American business and 2) They have been slowing consistently for a while. Here’s what the numbers look like (click to enlarge):

Why are media sales slowing down? Mahaney, an Amazon (AMZN) bull, throws out some ideas:

This may well be the most discretionary/recession-sensitive segment of Amazon. That surely explains part of the slowdown. But three other factors may be material. First, this segment includes Books, Music, and Videos (in addition to Video Game Software)–products that have had inherently slow overall retail growth over the last few years. Second, this segment includes products that are over-indexed in terms of Internet penetration. And third, this segment contains products that are being rapidly digitized–even the plain old book, thanks in part to the Kindle.

The last point is the most interesting one to chew on because Amazon bulls usually argue that the company is the best-positioned player to adapt to the digitization of media. And they’re probably right. But it sure does increase the pressure on the company to get it right, which will probably involve charging more for the digital music and books than it does now.

I’m pecking this out from the bowels of the New World Stage, where Day Two of the Twitter-centric 140 Character Conference is meandering along. But the most interesting Twitter-related news is coming from outside the conference: Data from comScore (SCOR) showing that Twitter-related search has become both measurable and meaningful.

Well, measurable, at least.

From Citigroup (C) analyst Mark Mahaney:

Twitter Becoming Meaningful–Search volume on Twitter in May was 30.1MM, (.001 percent U.S. market share), with 4.2MM searchers, and 39.4MM Result Pages, exceeding the 22.2MM searches conducted on Time Warner Cable.

Normally, we don’t even bother to dismiss companies that have less than one percent of U.S. search market. We never write about them, period. But given that Twitter boosters continually try to position the company as a real-time search engine–one that theoretically can threaten Google’s (GOOG) search monopoly, if you listen to some pitchmen, this may be the single most important metric to watch for the next few years.

It’s certainly more important than the number of Twitter followers of Oprah or even Twitter’s overall growth rate, which is going to spike up and down over the next few months as the media hop on-and-off the story (it’s back on again this week, with the Tehran protests, but we’re entering the dog days of summer, and us media folks have twitchy attention spans).

And it’s probably more important than any revenue Twitter generates over the next couple of years–the Twitter dudes have raised $55 million and have spent little of it, so they have time to create a business.

But if Twitter really is going to become an important player in search–or at least an attractive acquisition candidate for the likes of Google or Microsoft (MSFT)–it’s going to have to show a steady increase in search share.

And the nice thing about owning .001 percent of the market is that it gives you plenty of room to move up.

So who’s going to emerge as the winner? Easy, says analyst Mark Mahaney: It’s Google (GOOG).

But Mahaney, Citigroup’s (C) longtime Internet guy, isn’t talking about Google’s smartphone platform. He’s talking about Google’s core search business, which he thinks is finally about to see significant lift from mobile users.

It’s a straightforward thesis: As more people use smartphones, which are essentially portable computers that happen to make phone calls, they’ll start using them to do the things that people do with conventional computers — like search.

Our simple point here is that Mobile Internet usage, Mobile Search usage, and Mobile Google Search usage are all likely to be derivative beneficiaries of the “Smartphone Summer.” The So-What here is that Mobile Internet is beginning to emerge as a material Secular Growth driver for GOOG.  And getting back to the basic Core drivers of Google’s financial model, we believe this will show up in the form of consistently robust Paid Click growth in 2010 and beyond.

Want to see actual numbers before you buy into this? Fair enough: Google, like a lot of its peers, has been making a lot of noise about mobile with little to show for it so far. But if it is able to deliver, then the company may finally have that second business it’s always pined for.

Big winners so far include Blue Nile (NILE), up 73 percent; Expedia (EXPE) up 68 percent; and Amazon (AMZN) up 44 percent. Moderate winners, comparatively speaking, include Google (GOOG) up 27 percent; eBAY (EBAY) up 21 percent; and Yahoo (YHOO) up 22 percdent.

Here’s the full breakdown of the 16 Internet stocks Mahaney covers (click table below to enlarge):

I usually steer well clear of opining/guessing about stock prices and the like, but I think it’s worth considering Mahaney’s note, both for his explanation and for the potential impact of the stocks’ run.

The explanation: Part of this is basic what-goes-down-must-go-up market yo-yoing–Internet stocks got pummeled worse than the rest of the market last year so it’s easier for them to bounce back. But Mahaney also thinks that most of the stocks he follows are going to turn in the worst performance, earnings-wise, in the quarter we’re in now. Investors like that because it means that things can only get better.

The impact: Remember the old days when public companies could use their shares as currency to acquire smaller companies? Well, we’re not headed back there quite yet. But a sustained rally sure could kick-start the M&A market, which will make things more interesting for the likes of me, at the very least.

[Image credit: joshmadison]

So that’s a big deal. But it has also been expected for some time now. So what should you be looking for?

As Barron’s Eric Savitz notes, Wall Street analysts have been furiously tweaking their estimates–generally downward–in advance of this afternoon’s report. Citigroup’s (C) ever-helpful Mark Mahaney provides the following “cheat sheet” that lays out the key metrics, along with a range of possible results (click to enlarge):

I’ll also be interested in what, if any, color Google (GOOG) offers about its nascent move into display advertising and if it can clarify exactly what is going on at YouTube–is the video site bleeding $500 million a year, as Credit Suisse has recently suggested, or is it “nearing break-even,” as Bernstein’s Jeffrey Lindsay argued in a note yesterday?

And given that Google is the first big Internet company to report this quarter–and, aside from Gannett (GCI), the first big media company to report–I’ll also be interested in whatever Eric Schmidt and company have to say about the advertising market in general. The Google earnings call is scheduled to start at 4:30 p.m. Eastern; you can find live coverage here.

In the old days, this might have qualified as news. But for the past year or so, Zenith Optimedia, along with just about every other ad forecaster, has been revising its forecasts downward every couple of months as the reality of the financial meltdown sinks in. So it’s hard to get worked up about this stuff.

More stuff you pretty much knew already: Online advertising is doing better than traditional ads.

Citigroup (C) analyst Mark Mahaney summarizes his chat with the CEOs of PubMatic and the Rubicon Project, which help online publishers sell inventory through ad networks. Their takeaway is that while pricing for online display ads has dropped dramatically in the past couple quarters–by as much as 50 percent in some cases–overall spending should remain flat this year. And as we all know, that’s the new up.

If you’d like to see concrete numbers from the ad market, hang tight until Thursday, when we’ll get earnings reports from two companies at the opposite end of the media spectrum: Gannett (GCI) and Google (GOOG).

Fresh off the heels of two search industry conventions (ugh), Mahaney synthesizes a couple different industry reports with his own interviews. Key takeaway: Search advertising spending will be flat at best in the first quarter of 2009, but will rebound for the rest of the year:

As one very experienced Search agency executive put it to us, ‘Flat is the new Up.’ Not surprisingly, specific verticals that were singled out as weak were Retail & Travel. And surprisingly, one vertical that was singled out as stabilizing was Financials. We also picked up signs that February Search spend may be picking back up from depressed January levels. Two leading Search marketing firms separately told us that while January saw client spend cutbacks, indications are firming for a January and March recovery.”

Translation for Google: Mahaney thinks net revenue will decline seven percent for the search leader in this quarter compared to net revenue three months earlier. That will be mind-blowing for the go-go growth company but in line with the seven percent and 10 percent decreases that Yahoo (YHOO) and IAC’s (IACI) Ask have suggested. But Mahaney, a Google bull, thinks the company will end the year up four percent.

Perhaps that should be our definition of a recession going forward–a year when Google (GOOG) posts low single-digit growth–and that’s seen as a good thing.