LONDON (The Hollywood Reporter) --- A 46% drop in the sale of record singles in the United States last year underlined the effects of Internet downloads as the International Federation of the Phonographic Industry on Thursday reported a 1.3% drop in global sales of recorded music to $36.9 billion.

This compares with a year-on-year worldwide rise of 1.5% in constant dollar value to $38.5 billion in 1999, the trade organization said in its annual compilation Recording Industry World Sales 2000. Global unit sales in 2000 dropped 1.2% to 3.5 billion from 1999.

Overall sales of CD albums in 2000 increased by 2.5% to 2.5 billion units, with Europe showing the strongest growth (5.1%). But worldwide sales of singles dropped 14.3% and cassettes 9.4% as fans turned to Napster-style Web sites for their music.

IFPI chairman and CEO Jay Berman said the year was a mixed picture for the global recording industry, with the downturn in the United States bringing down overall sales figures but with CD album sales continuing to rise. "We also saw the first evidence of the impact of free online music as well as the damage being done by unauthorized CD-R copying in some major markets," Berman said.

He pointed out that significant progress was made toward realizing the huge potential of the legitimate online music market. "This is becoming apparent with recent announcements, including ventures such as Duet and MusicNet, which signal our members' determination to develop this area of business," Berman said.

The U.S. remained the biggest music market with a 38% share (worth $14.04 billion in retail value) of the world picture, but total sales were down 1.5% in value and 4.7% in units. With Canada down 7.5% in value and 6.4% in units, the North American market saw a drop of 1.8% in value and 4.8% in units.

The situation was varied in Europe, with the United Kingdom experiencing a 3.8% increase in value and a 6.2% gain in units sold. But France and Germany were each down 1.2% in value, and Italy was down 4.1%, with all three countries blaming an increase in illegal CD-R copying and piracy.

Denmark and Sweden demonstrated healthy Scandinavian growth with respective increases of 6.5% and 6.6% in unit sales.

The IFPI reported that the Asian music market fell by 4.4% despite a 1.2% rise in unit sales. In Japan, the dichotomy was explained by a boom in low-cost compilation albums, while China, Taiwan and the Philippines all suffered high rates of piracy.

Latin America saw sales fall for the third straight year, though Brazil, its biggest market, was up 7.6% in units and 9.3% in value. The IFPI said this showed recovery from the terrible sales picture of 1999 but did not mean a healthier picture in terms of piracy.

Elsewhere, sales in Australasiacq were down by almost 2% in units and 4.2% in value. The Middle East was down 3.9% in units and 2.1% in value, though there were indications of growth in Turkey, Oman and Bahrain.

The IFPI represents the worldwide recording industry with a membership that includes some 1,400 record producers and distributors in more than 70 countries.