The International Federation of the Phonographic Industry (IFPI) issued a new report indicating global music sales dropped 89 percent last year, down to $18.42 billion, with declining sales in the United States cited as the primary cause.
A combination of a drop in CD sales and Internet piracy has caused record labels to try and embrace new music businesses -- mainly digital music -- though it has been a difficult battle. Digital music sales have increased dramatically, but CD sales have dropped 15 percent, with CD sales still serving as a cash cow for the industry.
CD and vinyl sales dropped 15 percent internationally and 31 percent in the U.S. MP3 and other digital music sales, including ringtones, increased 24 percent across the world but still don't make as much money as the record labels would like.
In the future, record labels will have to find methods to combat music listeners who purchase one or two tracks online, rather than purchase the entire album. For example, U.K. users downloaded 110.3 million individual tracks in 2008, but only 10.3 million entire albums were downloaded, according to the Official Charts Company.
Digital music sales increased 24 percent across the world, helping record labels net $3.78 billion.
Despite lower revenue from digital music sales, the amount of money record companies received from TV and radio royalties increased more than 16 percent up to $802 million. Most of the money was collected in Europe, with European copyright holders snapping up $576 million.
