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LONDON (Reuters) - Global recorded music sales fell around 10 percent in 2009, and are down a huge 30 percent since 2004, after rampant piracy ate in to traditional and legitimate digital sales, the industry's trade body said.
The IFPI said in its annual report that the industry had seen positive developments in 2009, with more than a quarter of all recorded music revenues now coming from digital sales after the industry embraced new ways to sell tracks.
But the rate of growth has slowed in recent years, and sales from the likes of Apple's iTunes and Spotify failed to counter the damage wrought by illegal downloading.
The report showed legal digital sales grew by an estimated 12 percent in the year to $4.2 billion, compared to the 25 percent growth recorded in 2008 and 30 percent growth in 2007.
Overall recorded music sales were estimated to be down around 10 percent, if not higher, compared with a fall of around 7 percent in 2008 and an 8 percent fall in 2007.
"Overall, global music sales in the first half of 2009 were down by 12 percent (physical and digital sales) and full-year figures are likely to see a similar trend," the report said.
The IFPI said the growth of legitimate digital sales was being held back by piracy, which it said was choking revenues, new services and investment.
The IFPI said the worst-affected markets were countries where legitimate digital services had yet to take off. Sales fell around 17 percent in 2009 in Spain for instance, and the market is now about a third of its 2001 level.
Japan, traditionally a strong market for digital sales, reported flat digital revenues in the first half of 2009, with CD sales falling more than 20 percent, due to mobile piracy and the economic downturn.
The report said the legitimate digital market had been boosted by an array of new offerings, including subscription services on mobile phones and via Internet service providers, download offerings and advertising-funded models such as Spotify.
In total, more than 400 licensed music services are now available around the world, offering 11 million tracks.
Free, advertising-funded services have also shown signs of attracting users who had previously used illegal sites, but the IFPI still believes that around 95 percent of the music downloaded in 2009 was illegal and not paid for.
Sales of music downloads, the dominant revenue stream within digital music, continued to see steady growth, with single track downloads up by around 10 percent on 2008 and digital albums up by around 20 percent.
Reporting by Kate Holton, editing by Will Waterman