One in three music CDs sold worldwide is an illegal copy, a conference in Madrid has heard.
An estimated 1.2 billion pirate CDs were sold in 2004
The International Federation of Phonographic Industries (IFPI) said music piracy was helping to fund organised crime.
It asked governments to co-operate with the music industry to wipe out the global illegal music market, worth an estimated $4.6bn (£2.5bn) in 2004.
Brazil, China and India were named as the worst offenders for music piracy.
"We need a comprehensive government offensive - we need a more concerted effort," said IFPI chairman John Kennedy.
The IFPI, which represents the global recording industry, named and shamed the top 10 worst countries for the sale of illegal music, with Indonesia, Mexico and Spain also included.
It estimated that the illegal music market in 2004 had increased in value by $100m (£55m) since 2003.
A total of 1.2 billion pirate CDs were sold in 2004, which represents 34% of the total sold.
But the IFPI said the growth in the underground market had slowed to its lowest level in five years.
The Chinese music market has the worst reputation for illegal music, with Mr Kennedy suggesting 85% of all music sold there was on the black market.
"China has promised to close down many of the illegal factories so it's now less of an export problem but more of a domestic problem," said Mr Kennedy.
He added that Chinese authorities were "engaging in serious discussions" on the issue, particularly with the US government.
Taiwan has gone to great lengths to curb illegal trade and had been involved in serious talks on the issue, in conjunction with the UK, Japan and Germany.
On the subject of internet music piracy, Mr Kennedy said internet service providers had to crack down on downloaders, issuing stern warnings before disconnecting offenders.
The IFPI conference was switched from its usual London location to Spain to highlight the countries growing problem, the worst in western Europe.
Although the Spanish Government has launched a campaign to prosecute offenders, a quarter of all CDs sold were illegal copies.
"We are very concerned at what piracy is doing to Spanish music. It is destroying it," said Mr Kennedy.
"The music industry fights piracy. If we did not, the music industry quite simply would not exist. Spain should not be on the list."
Jorgen Larsen, president of music producer Universal Music International, said the livelihood of the artists and music industry workers was at risk if piracy continued to rise.
"If fake pharmaceuticals were sold on street corners it would be stopped immediately," he said.