CD sales damaged by illegal internet downloads

Global sales of recorded music fell by 7 per cent last year in the face of "mass downloading" of free material from the internet, large-scale counterfeiting of CDs and competition from other entertainment sectors.

Official figures released yesterday showed that despite the success of artists such as Eminem, the Red Hot Chili Peppers, 50 Cent and Norah Jones, worldwide sales of CD albums fell by 6 per cent and singles by 16 per cent.

The International Federation of the Phonographic Industry (IFPI) said sales had dropped by $32bn (£20bn) in 2002 – 7 per cent in value and 8 per cent in units.

In an acknowledgement of the changing habits of record buyers, the British music industry gave its backing yesterday to a new top 40 chart based on the number of times tunes are downloaded from legitimate internet sites.

The chart, backed by Kim Howells, the minister for Culture, and the British Phonographic Industry was launched on what was labelled "digital download day", an initiative designed to encourage legal digital music and tackle internet piracy.

But yesterday's global figures provided further evidence of an industry in crisis.

Jay Berman, chairman of the IFPI, said: "Widespread use of illegal sites, made easier with the growth of broadband access in the major markets, is affecting an industry that is also having to compete with increased sales of other entertainment formats such as DVD films and new video game consoles."

The value of UK music shipments fell by 3.7 per cent in 2002, bringing to an end five years of growth. Singles sales fell to 52.5 million units, down nearly 12 per cent on 2001.

Album sales were steady at 226 million, down 0.1 per cent, although discounted prices meant that the value of sales fell by 3 per cent. Domestic artists were responsible for half of the UK's 40 best-selling albums in 2002. In Japan, one of the biggest markets for music, about 235 million CDs were "burnt" unlawfully in 2002. About 229 million CDs were sold legitimately.

France bucked the trend in 2002, as government support of Francophone music contributed to a 4 per cent growth in unit sales across the country.

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Music industry executives are hoping that the continued success of the DVD will come to their aid. Sales of DVD music videos rose by 58 per cent last year and record companies released 1,300 new DVD titles.