updated 3/5/2004 4:32:51 PM ET 2004-03-05T21:32:51

The music industry claimed a symbolic victory in its fight against internet piracy on Friday as full-year sales figures for the U.S., the world's largest music market, revealed a slowing rate of decline.

A crackdown on illegal on-line file sharing and the launch of new subscription services had curbed losses to piracy, according to the Recording Industry Association of America (RIAA). Services including Apple's iTunes music store have also helped reverse a three-year sales spiral, with artists such as Norah Jones setting new records for online sales with her latest single "Sunrise".

The value of U.S. music shipments from record companies to retail outlets declined 4.3 percent to $11.05 billion last year, compared with $11.6 billion in 2002.

In volume terms, wholesale shipments of CDs, music videos and other formats fell 2.7 per cent to 658.2m units, a significant improvement on the 7.8 percent fall in the previous year.

Mitch Bainwol, chairman of the RIAA, said the figures were encouraging.

"Record companies have taken a proactive approach to dealing with piracy, implementing educational efforts and enforcement programs that have dramatically increased awareness of the illegality of unauthorized file sharing," he said.

But industry executives warned that the trend was still moving in the wrong direction, forcing labels to cut costs.

Earlier this week Warner Music, one of the world's five "majors", said it was shedding more than 1,000 jobs in a bid to cut costs by $200 million. Sony Music and BMG, the music arm of Germany's Bertelsmann media group, are seeking $300 million of savings if their planned 50-50 joint venture is approved.

One executive said the industry did not expect total sales to rebound significantly before 2007.

Based on figures released on Friday for shipments to retail outlets, specialist markets and mail-order, the total value of industry sales was down 6 percent at $11.8 billion, compared with a peak of $14.3 billion in 2000.

Nevertheless, shipments of CD singles improved significantly in the US last year, up 85.5 percent from 2002 8.3 million units - worth $35.9 million at retail.

"While the music industry continues to face serious challenges, we are pleased that trends appear to be going in a more positive direction," said Mr. Bainwol.

Copyright The Financial Times Ltd. All rights reserved.


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