The decline in music sales is set to continue for another two years according to new research.

A report by industry researchers Jupiter MMXI forecasts a rocky couple of years for the music industry with the internet as one of the major problems it faces.

There are several reasons why the industry is suffering, one being that young people no longer see music as such as central part of their lives because there are so many other distractions for them such as computer games.

CDs are no longer considered something to build up as a collection to keep for the future, because there is the option of free or cheap music, such as disc copying.

Record companies, websites and internet providers were questioned for the study.

Lack of content

Senior analyst Mark Mulligan conducted the research and discovered the industry was very concerned about the future, with the main worry being the impact of piracy.

Although there are legitimate music download services to be found the problem is they do not have access to the catalogues of the major labels.

As a consequence people are more likely to use an illegal service which can offer a wide selection of music from established artists.

Despite the launches of download services backed by the major labels there has actually been a drop across Europe of people visiting the legal sites but an increase in those clicking on "grey" services.

Minimal effect

Mr Mulligan suggests that the big music labels need to be more flexible in licensing their music and that a central pan-European system of licensing for the internet needs to be set up.

Despite the rise in illegal music downloads, he believes the 11.3 million using such a service each month is such a small proportion of the European population that it is only having a minimal effect on sales.

Another major reason for the fall in CDs sales is that the cycle of people upgrading from old formats such as tapes and vinyl to CDs is almost complete.

Jupiter MMIX predicts that CD sales in 2002 will show another decrease, while 2003 figures will remain flat.

It will not be until 2004 that sales will start to pick up again.

"The music industry must tackle offline piracy and by 2004 there should be the introduction of more advanced formats such as super audio CDs or audio DVDs which should lead to a pick-up in sales.

"Record companies have been caught off guard by the change in the nature of music buying and now is the time for them to start to start adjusting."