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Album Sales Drop; Digital Music Cushions Fall

Global sales of digital music are continuing to rise, generating revenues of $1.1 billion for record companies last year and softening an overall slump in music sales, the industry said Friday.

The International Federation of the Phonographic Industry, or IFPI, said that revenues from digital sales almost tripled from $400 million in 2004. The total number of digital single tracks downloaded online or to mobile phones rose to 470 million units, up from 160 million.

However, overall music sales continued their decline of recent years, dropping another 3 percent in 2005, largely due to a 6.7 percent drop in the value of CD purchases.

IFPI Chairman and Chief Executive John Kennedy attributed the decline to piracy, competition from other entertainment outlets and a shift in the way listeners get their music.

Single-song downloads dominated global online sales, accounting for 86 percent of purchases. Apple Computer Inc.'s iTunes Music Store remains the market leader.

"When you can buy just the songs you like in a digital format, you don't have to buy the album," said Phil Leigh of Inside Digital Media, a U.S. market research firm.

The IFPI said that 618.9 million CDs were sold during 2005, down 19 percent from the 762.8 million sold in 2001.

Kennedy said it was encouraging that the markets with the strongest digital sales — United States, Japan, Britain, Germany and France — were also generally the best performing markets overall.

"In Japan digital has already made up for the decline in physical sales, and other markets should go this way," he added.

Japan was also noted for the strength of mobile downloads, which dominate the digital music market there. Only 9 percent of consumers in Japan downloaded their music to computers, compared to around 65 percent in the United States, Britain and Germany.

Coldplay's album "X&Y" was the biggest-selling album of the year globally, with over 8 million copies flying off the shelves. It was also the biggest-selling digital record of the year in the United States.

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