Global CD sales fell sharply in 2006 and, though downloads of music are on the increase, overall music sales declined.
Figures from the IFBI, the global music industry association show that total music sales fell 5% from $20.7bn (£10.25bn) in 2005 to $19.6bn (£9.73bn) last year.
Sales of music downloads via mobiles and computers rose dramatically last year, growing by 85% to $2.1bn. Downloads accounted for 11% of global sales - up from only 2% in 2004.
Music downloads are predicted to continue this growth, though whether this will be enough to offset declining CD sales is uncertain.
There was better news for the recording industry with the closure of controversial Russian music download site AllOfMP3.com by the Kremlin after years of protests by artists and record labels.
The music industry has long complained that the Russian site undercut legimate rivals such as iTunes without properly compensating the artists and labels for sales.
The closure is said to have been a precondition for Russia joining the WTO, though a sister site, Mp3Sparks, produced by the same company has quickly appeared to take its place.