Digital music sales increased by 25 per cent in 2008, despite a rising number of illegal downloads.
A report by the trade body IFPI showed legal digital global sales grew to $3.7 billion (£2.4bn) in trade value, to account for about 20 per cent of the industry's global recorded music sales, up from 15 per cent in 2007.
However, the rapid rate of growth has inevitably slowed and the scale of the piracy has eaten into traditional revenues, meaning the overall music market for 2008 is expected to be down about seven per cent.
The report showed about 95 per cent of the music downloaded in 2008, or more than 40 billion files, was illegal and not paid for.
As part of its response, the music industry has launched a host of alternative ways to sell music, such as through subscription models on mobile phones and Internet service providers (ISPs), and on advertising-supported models.
It has also pushed ISPs to help curb mass copyright infringement on their networks and believes it has reached a "tipping point" in persuading governments that doing nothing is not an option.
Mobile companies and operators have shown an interest in packaging music with their core services in the last couple of years, as a way of growing loyalty and reducing the number of users who churn off the service.
Nokia has launched a phone model with an unlimited music bundle in Britain in 2008, in a bid to challenge the dominance of Apple and its popular iPhone.
Advertising-supported services are also taking off, with a joint venture between social network MySpace and the four major music labels known as MySpace Music one of the most exciting propositions to hit the market.
Single track downloads were up 24 per cent in 2008 to 1.4 billion units globally while digital albums were up 36 per cent.
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