Global music sales drop

Celine Dion's album was fitted with copyright protection

Global music sales fell by 5% last year because of the combined impact of piracy and the economic downturn, according to industry figures.

Only Britain and France bucked the downward trend, said the International Federation of Phonographic Industries (IFPI) in London on Tuesday.

You have an entire generation of people thinking content should be available for free

Hank Forsyth, media analyst

British music sales rose by 5% thanks to the success of artists such as Robbie Williams and Dido.

But in major markets like the US, Japan and Germany sales fell sharply, thanks to what IFPI chairman Jay Berman called "a perfect storm" of events.

Mr Berman said that a combination of the world economic downturn, a "massive increase" in domestic and commercial CD piracy, and the availability of uauthorised music on the internet all contributed to the fall.

The number of CD albums sold was down for the first time since the format was launched, said the IFPI.

'Devalued'

While the value of recorded music sales in 2001 fell to $33.7bn (£23.5bn), the total units sold also fell, by 6.5%.

"The industry's problems reflect no fall in popularity of recorded music: rather, they reflect the fact that the commercial value of music is being widely devalued by mass copying and piracy," said Mr Berman.

Mr Berman also noted that for the first time since 1966, the top selling album in the US in 2001 - Hybrid Theory by Linkin Park - had sold less than five million copies, while the IFPI estimated that some four million copies had been downloaded from the internet.

UK artist Dido has sold millions of albums

The organisation recently estimated one in three recordings sold throughout the world is an illegal copy, costing the industry $4.2bn ($2.9bn).

Free and unlicensed internet download services have became popular among some music listeners who did not want to pay money for favourite songs.

The popularity of the file-swapping service Napster, which has been shut down since last year, spawned a crop of copycat download companies across the internet.

"You have an entire generation of people thinking content should be available for free, and that's just not a sustainable long-term business model for the labels," said Hank Forsyth, media analyst at Dresdner Kleinwort Wasserstein.

We have the right to protect our exisitng business

Jorgen Larsen, Universal Music International

After launching a series of lawsuits against the likes of Napster for using unlicensed material, the big labels have realised they needed to get themselves in the download market.

Official subscription download services Musicnet and Pressplay have emerged but they are not expected to make money for at least five years.

Meanwhile, the battle to prevent music piracy continues, with new technology being seen as the way forward by some labels.

Downloading and CD copying have been blamed for reduced sales

At Tuesday's press conference Jorgen Larsen, chief executive of Universal Music International, announced that most major pop releases from Universal in the UK would now be released with copy protection devices.

Universal and Sony have already tested copyright protection formats for artists including Celine Dion and 'N Sync.

"We have the right to protect our exisitng business, and we have a moral duty to protect our artists and songwriters," said Mr Larsen.

But CD protection has received bad publicity after complaints from some fans the CDs could not be used on PCs or certain CD players.

The labels are also expected to get tougher on commercial piracy operations.

The US has already imposed $75m (£52m) in trade tariffs on the Ukraine after accusing it of being "weak" and "ineffective" against the pirates.

The Recording Industry of America (RIAA) recently fined a US company $1m (£696,297) for allowing its employees to use a corporate server to trade thousands of music files.