April 7 (Bloomberg) -- Global recorded music sales fell to $32 billion last year, their fourth annual decline in a row, hurt by illegal copying and increased consumer spending on products such as video games and DVDs, an industry group said.

World music sales dropped 7.6 percent in 2003, said the International Federation of the Phonographic Industry, a London- based group representing companies including EMI Group Plc and Universal Music. The rate of decline slowed in 2003 as U.S. sales started to rise again in the second half.

``Global music sales had another difficult year in 2003, under the combined effects of digital and physical piracy and competition from other entertainment products,'' IFPI Chairman Jay Berman said in a statement. ``However there are some encouraging signs, particularly in the U.S. market where the increase in album sales of late 2003 has continued into this year, and in the U.K. and Australia.''

EMI, BMG, Sony Corp. and Warner Music Group, have plans to cut more than 2,500 jobs altogether and to reduce the number of artists on their roster to help face slumping demand. In the U.S., the world's largest music market, sales were boosted by the success of new albums from OutKast, Alicia Keys and Ludacris in the last three months of the year.

Overall, music sales in the U.S. fell 6 percent in 2003, IFPI said. The market represents 37 percent of the total.

In Japan, the second-largest recorded music market, sales declined 9.2 percent, marking their fifth consecutive annual drop. The U.K., the third-largest music market, was about unchanged.

European Slump

CD sales slumped all over Europe. Germany fell by 19 percent, its sixth consecutive annual decline, hit by illegally manufactured CDs and Internet file-swapping. Sweden, France and Denmark declined 14.7 percent, 14.4 percent and 12.5 percent respectively. In Belgium, Greece, Ireland, Portugal and Switzerland, the declines were more than 10 percent.

There were few bright spots in the music industry last year, IFPI said.

Australia was the only country of the top 10 music markets to rise last year, by 5.9 percent, boosted by local artists such as Delta Doodrem, Powderfinger and Guy Sebastian.

Sales of music DVDs jumped 67 percent, although they still represent only 6 percent of the total music market. Apple Computer Inc. said last month said iTunes, its online music store, has sold 50 million songs.

Lawsuits Worldwide

The music industry is stepping up its legal fight against unauthorized downloading of songs over the Web. Last month, IFPI said it started legal actions against 247 people in Denmark, Germany, Italy and Canada. They came after the Recording Industry Association of America, IFPI's U.S. counterpart, sued more than 1,000 people in the U.S.

Jean-Rene Fourtou, CEO of Universal Music's parent company, Vivendi Universal SA, last month said the signs of improvement in the U.S. music industry are partly due to the legal actions.

The record companies in 2003 increased the number of songs they make available for sale online, after years of resisting using the Internet as a sales tool. There are about 50 legitimate online music sites in Europe, offering 300,000 tracks, IFPI has said. In the U.S., 575,000 songs are available legally for download over the Web through services such as Apple Computer Inc.'s iTunes music store, RealNetworks Inc.'s Rhapsody, and Roxio Inc.'s Napster.

Sony, which agreed to merge Sony Music with Bertelsmann AG's BMG in December, last month said it will bring its Connect download service to the U.K., France and Germany in June. EMI now makes 175,000 tracks of its catalogue available online, including music from the Rolling Stones and Queen.

To contact the reporter on this story: Cecile Daurat in London at at cdaurat@bloomberg.net.

Last Updated: April 7, 2004 05:00 EDT