Coldplay's Viva La Vida was the biggest-selling album of 2008 globally
Global music sales fell by more than 8% to $18.42bn (£12.67bn) in 2008, according to the body that represents the record industry worldwide.
Physical formats like CDs and vinyl performed particularly badly - dropping by 15% globally and 31% in the US.
Sales of digital formats like MP3s and ringtones grew by 24% worldwide but failed to make up the shortfall.
This is partly due to the lower price of downloads, but also because people tend not to buy entire albums online.
According to figures released by the Official Charts Company earlier this year, Only 10.3m albums were downloaded in the UK last year, compared to 110.3m singles, or individual tracks.
The prevalence of pirated music on the internet also plays a key role in the decline in music sales overall.
As well as physical and digital sales, the IFPI's figures cover performance rights money.
There was a global rise of 16.3% to $802m (£548m) in money received by record companies for music being used on radio and TV and being played in public.
Europe accounted for most of that money, with a total of $576m (£394m) collected by bodies like PRS for Music.
Separate IFPI figures released earlier this year showed that Coldplay's Viva La Vida or Death and All His Friends was the best-selling album of 2008 worldwide, selling 6.8 million copies.
It was followed by Black Ice, by veteran rockers AC/DC, and the soundtrack to Mamma Mia! The Movie.