Global music revenues fell 3.9 percent to $15 billion in 2013, pulled down by a sharp decline in compact disc sales in Japan, according to the International Federation of the Phonographic Industry.
Japan, which accounts for more than a fifth of worldwide sales, saw revenue fall 16.7 percent as sales of CDs and ringtones declined while streaming services had yet to catch on, the trade group said Tuesday.
Outside of Japan, the growing popularity of free and paid streaming music services such as Pandora and Spotify are helping offset the decline of CD sales. Excluding Japan, global music revenue fell just 0.1 percent.
Global digital music revenue grew 4.3 percent to $5.9 billion in 2013. Physical revenue declined 11.7 percent to $7.7 million, performance rights revenue grew 19 percent to $1.1 billion, while synchronization revenue from use of songs in movies and TV shows fell 3.4 percent to $322 million.
The IFPI says rising demand for subscription services contributed to a shift away from piracy. The number of paying subscribers rose 40 percent last year to 28 million.
The federation's chief executive, Frances Moore, said in a statement that the music industry "is in a positive phase of its development," adding that most major markets are growing.
In the U.S., total revenue was $7 billion in 2013, the fourth consecutive year of relatively unchanged revenue, according to the Recording Industry Association of America.
The number of people in the U.S. paying for music subscriptions jumped 79 percent to 6.1 million and streaming revenue grew 39 percent to $1.4 billion. Revenue from downloads of songs from places like iTunes fell 1 percent to $2.8 billion. Sales of CDs and vinyl albums fell 12 percent to $2.4 billion.