Peter Kafka, 09.13.05, 10:40 PM ET

Maybe the music business isn`t so dire, after all: the world`s largest music label reported Tuesday that a combination of increased revenue and lower costs had pushed its profits up 178% in the first half of 2005.

Vivendi Universal (nyse: V - news - people )`s Universal Music Group reported that its earnings from operations totaled 142 million euros through the first half of this year, up from 52 million euros in the comparable period. The bottom line was helped by big hits from artists such as the Black Eyed Peas and Mariah Carey, said Vivendi Chief Executive Jean-Bernard Levy. But so did lower costs: Universal is finishing up a two-year restructuring that included moves like parceling off its distribution unit.

Levy also noted that digital sales totaled about 5% of Universal`s sales, which puts it in line with reports from competitors such as EMI Group PLC and Warner Music Group (nyse: WMG - news - people ). Levy didn`t break out the mix of digital product between ringtone sales and actual songs, but its likely that ringtones made up the majority of the revenue. He also noted that Vivendi`s game unit swung from a loss of 168 million euros to a 13 million euro profit, generated primarily by the success of the unit`s World of Warcraft game.