It is the first time in five years that international stars, particularly the Irish and Canadians, have sold more records than domestic acts.
The report, by the International Federation of the Phonographic Industry (IFPI), was released as Ronan Keating, the Irish lead singer of Boyzone, reached number one in the charts with his first solo single and his band went to number one in the albums chart.
Last year, The Corrs sold more albums than anyone else in the UK, while Boyzone were ranked at number three, just below George Michael.
The report, "The Recording Industry in Numbers 99", said that domestic acts saw their proportion of sales drop in 1998 by 6 per cent to below 50 per cent for the first time since 1993. They made up just 48 per cent of the market while international artists represented 45 per cent of sales. The remaining 7 per cent came from the classical music market, which is listed separately.
A spokeswoman for the IFPI said: "1997 was a very strong year because of "Candle in the Wind" by Elton John, and also the Spice Girls and Oasis were very active that year so that made a huge difference to the figures."
In 1997, UK stars accounted for 54 per cent of the market - the highest since the IFPI started counting in 1991. But last year, only one UK song, the Spice Girls' "Goodbye" at number eight, featured in the top 10 best- selling singles. The list was headed by Cher, with "Believe", the Canadian Celine Dion was at number two. The biggest-selling album of 1998 was Talk on Corners by The Corrs, according to the report.
John McKie, the editor of pop magazine Smash Hits, said: "Last year Oasis and the Spice Girls were having a rest but they will be back next year and they are still the biggest pop act in the world and their new album will be huge.
"But the Irish bands have been doing very well and will continue to do so. There is a new boy band called Westlife which is going to be huge. These things go in phases and maybe the Irish have just kissed the musical equivalent of the Blarney Stone."
Alex Jones-Donelly, of Radio 1, said the music industry moved in cycles. "The domestic market is doing very well but there is no doubt that the Irish are selling well at the moment. But it will all change next year because Latin American is the new thing and Ricky Martin and Jennifer Lopez, who are both new this year, will definitely have an effect on overall sales."
Top-selling Albums In 1998
1 The Corrs Talk on Corners
2 George Michael
Ladies and Gentlemen
Where We Belong
4 Robbie Williams
Life Thru a Lens
5 Robbie Williams
I've Been Expecting You
6 The Verve
7 Various Artists
Now That's What I Call Music! 41
Ray of Light
9 Celine Dion
Let's Talk about Love
10 All Saints
All SaintsReuse content