Net downloading cuts music sales by further 11%

Global sales of recorded music dropped another 10.9 per cent in the first half of the year as internet downloading and illegal copying of CDs continued to take its toll on the industry.

Official figures released yesterday showed that despite the success of big hits from Christina Aguilera and the rapper 50 Cent, worldwide sales dropped to $12.7bn in the first half of the year from $14.2bn last time. Last year they dropped 7 per cent overall.

But the International Federation of the Phonographic Industry signalled that the second half of this year might pick up as it forecast a drop of 7 to 8 per cent for the year as a whole.

Shares in EMI, the music company behind Robbie Williams that is in talks to take over the Warner Music division of AOL Time Warner, closed up 3.5 per cent at 153p on hopes that it might be getting on top of the piracy problem.

The second half of the year, which usually makes up something like 60 per cent of the year's total sales, will see releases from artists including Kylie Minogue, David Bowie, Dido, REM and Sting.

In the first half, the IFPI said internet piracy, in particular, had hurt the world's major music markets with the US, Japan, Germany and France all suffering "significant" declines.

It pointed out, however, that there had been a marked increase in the availability of legitimate online music, with 300,000 tracks now on offer on the internet. Meanwhile, DVD music videos also proved more popular with consumers, it said, with sales up 55 per cent in the half-year period - which means they now make up more than 5 per cent of global music sales.

Jay Berman, the IFPI's chairman and chief executive, said: "Despite some healthy signs that a legitimate online music business is now taking hold, the music industry continues to suffer from the unauthorised file-sharing and commercial piracy." He pointed out, however, that progress was being made on the physical piracy front, with seizures of copied discs up fourfold.

Analysts at Investec took heart from the data. They said: "While piracy is still hurting sales, evidence of progress continues while, encouragingly, certain countries are still showing growth suggesting that improving the quality of music and clamping down on piracy can restore the industry growth back to positive territory, helped by online sales and new formats such as music DVDs."