As growth in digital music sales slashed in half, the record industry is pointing to piracy as the biggest threat to its survival.
The International Federation of the Phonographic Industry, which represents the global recording industry, said on Thursday that revenues from digital music grew 6 per cent to $4.6bn in 2010, down from growth of 12 percent in 2009.
Record companies have struggled to offset the decline in compact disc sales for nearly a decade. The emergence of the MP3 format, and its ease of proliferation across the Internet has also taken a toll on sales.
As we enter 2011, digital piracy, and the lack of adequate legal tools to fight it, remains the biggest threat to the future of creative industries, Frances Moore, chief executive of IFPI, said.
The figures represent an overall decline in music sales for an 11th successive year. In 2008, the rate of digital growth was 25 per cent.
Digital growth has halved year-on-year since 2008 in spite of the emergence of licensed online music services and an increasing global legislation to protect copyright.
Digital music accounted for 29 per cent of record companies' total revenue in 2010, up from 25 per cent in 2009. Between 2004 and 2010 there has been a 31 per cent decline in the value of the global recorded music industry.
Fewer debut artists are now breaking through globally, according to as well.
Last year, total sales by debut artists in the global top 50 album chart were only one quarter of the level they achieved in 2003.
In Spain, music sales fell by an estimated 22 per cent last year with no new home-grown artist featured in the country's top 50 album chart.
The best selling global digital sales of 2010 include Bad Romance by Lady Gaga and Love the Way You Lie by Eminem featuring Rhianna.
Spain and Brazil are among the markets most hit by piracy, with 45 per cent and 44 per cent of active internet users using unlicensed services. This compares with an average across the EU top five markets of 23 per cent.