The surge in illegal downloads has continued to hit worldwide sales of recorded music although US market growth for the first time since 1999 indicates a corner may have been turned.
The figures, released yesterday, showed a drop in worldwide sales of 1.3 per cent to £17.7 billion with Britain recording a 1.6 per cent slump.
The study, released by trade group the International Federation for the Phonographic Industry, does not include digital downloads or mobile phone ringtones, which music companies say would have made 2004 sales flat against 2003.
Global compact disc sales, still one of the most closely watched numbers to discern the health of the industry, were down 0.9 per cent from a year ago compared with a 9.1 per cent drop in 2003.
Music sales around the world have been slammed by rampant CD piracy, illegal downloading, poor economic conditions and stiff competition from video games.
However it was the slowest rate of decline in five years, and the industry remains hopeful that some badly hurt countries have turned a corner and that legal efforts to stop piracy are finally working.
Recorded music sales in the US, which accounts for about 36 per cent of the world total, increased 2.3 per cent.
The rest of Europe struggled with France falling 14.8 per cent, Spain 12.5 per cent and Germany 4.2 per cent.
The IFPI said the number of tracks downloaded surged to more than 200 million in the four biggest markets - the United States, Britain, France and Germany - a tenfold increase from 2003. However, global data is still relatively inaccurate.
Andrew Jeffries, programme controller for Birmingham-based radio station Kerrang, said the rise in legal downloading could be a sign of regained faith in the music industry.
He said: "The discerning listener is willing to pay for quality that is often not there with illegal downloading.
"In the rock world, people pay for their music. They go to gigs and fans still value albums. I think that the manufactured pop bands may have more trouble than the likes of U2 in convincing fans to stop downloading illegally."
Mr Jeffries' comments were reflected in the best-selling albums list for 2004, which included acts such as Usher, Norah Jones, Eminem and Green Day.
The four music majors - Vivendi's, Universal Music, Sony BMG, EMI Group and Warner Music - dominated the market with only two of the top 50 albums coming from independent record companies.
Eight albums sold more than five million copies in 2004, including Usher's Confessions and U2's How to Dismantle an Atomic Bomb, compared with five in 2003.