Global music sales fell around 10 pct in 2007

By Kate Holton

LONDON (Reuters) - Sales of music fell at a faster rate in 2007 than 2006 despite digital sales soaring, and the gatekeepers of the Web must act if the industry is to beat piracy, the international trade body said on Thursday.

Global digital sales grew by around 40 percent in 2007, the IFPI group said, but this was not enough to offset the sharp fall in CD sales, meaning the overall market is expected to be down around 10 percent for 2007.

As part of its response, the industry is calling on Internet service providers to take more responsibility for illegal file sharing by either disconnecting those who repeatedly upload music or preventing illegal tracks from being downloaded.

Many ISPs have so far proved reluctant to engage on the matter, but the music industry is hoping this could change following a move by French President Nicolas Sarkozy to block Web access to those frequently downloading music or films illegally.

"It is hard to persuade anyone to be a pioneer but what we have with the French government is a very energetic government understanding how important the French music industry is to French business and culture," IFPI Chief Executive John Kennedy told Reuters.

"That leadership shows that it's not as dreadful or as problematic as people think," he said in an interview.

The industry has also been boosted by a landmark ruling in Belgium which ordered a service provider to block illegal file-sharing -- although the company is appealing -- while in Britain, the government has said it could impose legislation if an agreed settlement between both sides cannot be found.

A year-long negotiation period expired at the end of 2007.

The music industry says it has been forced to turn to legal remedies after rampant Internet piracy rocked its traditional revenue model.

LEGAL DOWNLOADS GROWING

Physical sales of music have dropped, with total album sales plunging 15 percent in 2007 in the United States, the world's biggest music market, and falling over 10 percent in Britain.

The IFPI said tens of billions of illegal files were swapped in 2007, with the ratio of unlicensed tracks downloaded to legal tracks sold at about 20 to 1.

"If the ISPs played their role it would have a dramatic effect," Kennedy said, explaining that research shows people fear having their Internet service disconnected.

A spokesman for the UK body which represents providers of Internet services said his members preferred self regulation and warned that legislation could often be too rigid, but he said they were still holding negotiations on the matter.

Away from the legal disputes, the industry has seen encouraging signs from the growth of legal sales.