CDs are now selling in Britain for an average of less than £10, the music industry says.
The average price of a single CD for the year ending in September was £9.79, the lowest since detailed data was first compiled in 2000, says the British Phonographic Industry. That represents a 7.6 per cent fall in the price of a CD since 2000, and comes amid increasing pressures on profit margins as sales dwindle for both big and smaller artists.
The release of the report coincided with two rulings against the music industry this week.
A Dutch court ruled that KaZaA, one of the biggest file-sharing networks, was legal, and an American court found that methods used by the US industry to detect online piracy were illegal.
CD prices have been affected by the widespread use of "file-sharing" networks, beginning in 1999 with Napster. Although that network was closed, others have sprung up in its place, notably KaZaA, which is believed to have more than 17 million users swapping files across the world every day.
On Thursday, the Dutch Supreme Court rejected an appeal backed by IFPI, the international record industry association, for the closure of KaZaA and other "peer to peer" networks on the basis that they allow, and take no measures to prevent, unlicensed copying of music.
But the court ruled that the creators of the software were not responsible for the way that people chose to use it because it could be used for legal purposes such as sharing uncopyrighted data. The court suggested it would be wrong to ban such software because some people misused it.
IFPI said the ruling was "one-sided", and that it would continue the legal fight elsewhere - hinting that it may follow the lead of the US-based record labels association, the RIAA, which has started suing people it says have made tracks available for copying.
But the RIAA has been embarrassed by its action, after it found itself suing, among others, a 12-year-old girl who listened to nursery rhymes, and a 73-year-old who does not own a computer. It has, however. seen the number of files being shared fall.
The RIAA also suffered a setback yesterday, when an American court ruled that US copyright law did not require internet providers to hand over personal details of subscribers accused of breaking the law.
That may force the RIAA to pursue other tactics against those it suspects of sharing files. But without their personal details, it will be difficult to catch them through the courts.