Global growth in digital sales from stars such as Lady Gaga slowed during 2011. Photograph: Rex FeaturesPunishment on sites participation distribution of pirated content, such as LimeWire and Pirate Bay failed to stem the decline in music sales last year, according to industry figures, which show that global growth in digital music be halved by 2010.
Record companies are struggling to replace the revenues from tumbling CD sale gently hailed a shift in government positions to take action against illegal downloads – led by France, Ireland and South Korea – and the potential growth in revenue from music consumption via smartphones and tablets.
Online piracy is still the greatest challenge for the music industry with total global sales estimated to be between 8% and 9% in 2010 and the growth of digital revenue halving to 6% globally, at $ 4.6bn (£ 2.88bn).
"As an industry, we remain very challenged," said Frances Moore, chief executive of international music industry body in IFPI. "Around 95% of downloads are still unlicensed, 19 out of 20 is illegal ... This has a knock-on effect on jobs, investment in artists and a dwindling pool of choice for consumers.
IFPI report found that digital music subscriptions for 29% of music companies ' total revenue last year, up from 25% in 2009.
In the United States a little digital sales accounted for almost half of the total music company revenue as CD sales "sharp decline".
However, there were only "single digit" percentage growth in the sector more mature U.S. digital music, a worrying signs, other developing countries markets can be next to experience dramatic slowdown.
Thomas Hesse, President of global digital business at Sony Music, shrugged off these fears are quarrelling, mobile music consumption had only "scratched the surface" in the United States, and to download services like iTunes and Amazon have plenty more growth potential. "There is reason to believe growth will continue and accelerate again," said Hesse.
IFPI report said that the European digital music sales grew almost 20% year on year in 2010. BPI said earlier this year, UK digital growth was up 30% year on year.
Moore said that 2010 was the year in digital music subscriptions took off, insert Spotifys 750 .000-strong paying customers as an exciting example with enormous potential to extend the current a la carte service is provided by iTunes.
Digital sales have grown by more than 1000% from 2004 to 2010, but global recorded music revenue fell by 31% over the same period as piracy remains a critical issue.
Last year, LimeWire, the largest source of online piracy in the United States, was declared illegal and action was taken against the Pirate Bay.
"Governments are beginning to realize that this is a question about unemployment and that it is also a matter of industries, including film and books come behind," said Max Hole, chief operating officer of Universal Music Group International. "The ball has started to scroll; It has been a heavy ball difficult to move in the first place, but it definitely moving. "
Despite this, said Moore, that industry is unsustainable sat "in a time of grave danger", with a patchy approach of Governments worldwide. Spain and Brazil topped the list of countries with the highest number of Internet users access to illegal services.
"The Spanish market is such a warning," said Moore, who criticised the attitude of the Government and the telecoms companies in Spain. "If other European markets road Spain we can shut down and go home. If we fail where next Beatles, Amy Winehouse or Luciano Pavarotti tomorrow come from? "
IFPI pointed out that more than 400 legal digital music services exist globally, with more than 200 available across Europe, and expressed little concern about the failure of Bskybs sky songs and the protracted negotiations for Virgin Media to get a service from the ground in the United Kingdom.
Hole said that skies service is facing a number of issues, including the billing system, the company is "not quite get it, you must have something kids like".
In Virgin Media deal, Hesse said that an agreement has to be achieved on "conditions, which are ultimately acceptable to us, you cannot put a gun to someone's head".
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