(Reuters) (11/19/03)

Edited By Michael Bennett

LONDON, UK - The music industry is in for at least two more years of pain, with a sales recovery not expected until 2005 at the earliest, a report said on Tuesday.

According to London-based research firm Informa Media Group, the retail value of global music sales will drop to $28.2 billion this year from $30.9 billion in 2002 and to $28 billion in 2004 before returning to growth in 2005 as new Internet music services take off.

"The music industry is in a bad way at the moment but the continued fall in the value of music sales is certainly not irreversible. The success of the new download services proves there is a viable market for legitimate digital sales," said Simon Dyson, an Informa analyst.

Dyson said the major music labels Universal Music, Sony Music, Warner Music, EMI and Bertelsmann's BMG have not acted decisively enough to stem the rise of digital piracy, which is blamed for sinking sales for three straight years.

A host of industry-backed subscription download services have emerged to address the practice of consumers making copies of their CDs and downloading songs from the Internet for free, but consumer uptake has been slow.

One rare early success, the Apple Computer Inc. iTunes service, shows consumers are willing to buy individual songs online, but Dyson warned digital music sales will always be a niche sector, accounting for a low double-digit share of overall sales.

Informa predicted global Internet music sales, which includes sales of CDs from retail Web sites such as Amazon.com and song downloads for iTunes, will reach 3.9 billion by 2008, up from $1.1 billion in 2002.

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