Global music revenue fell 3% to $21 billion in 2005 as surging digital sales failed to make up for a continued decline in physical formats like CDs, according to data from the industry's trade association.

Digital music sales nearly tripled to $1.1 billion from $400m the year before, split evenly between online services and mobile phone downloads, the International Federation of the Phonographic Industry (IFPI) said in a report today.

The music industry, damaged by illegal downloading since the creation of Napster in the late 1990s, has fought back by aggressively targeting file-trading and offering legal alternatives such as Apple's market-leading iTunes Music Store.

Coldplay's 'X&Y' was the top-selling album of the year with more than 8 million copies sold, followed by Mariah Carey's 'The Emancipation of Mimi' and rapper 50 Cent's 'The Massacre'.

The IFPA said it had shifted to reporting the wholesale revenue received by music companies, rather than the retail price of music sold to consumers, because it more accurately reflects the shifting trend to digital music.

On a retail basis, 2005 music sales fell 2.4% to $33 billion. Physical formats such as CDs and music DVDs fell 6.7% by revenue and 8% in the number of units sold.

Music revenue in the US, the world's top market, declined 3% - in line with the broader market - while Japan, the second-largest market, was flat.

Official figures on the market shares of individual music companies are not due to be released until later this year.

Vivendi's Universal Music Group, home to U2 and Carey, is the world's biggest music company, followed by Sony BMG, with artists such as Kelly Clarkson and Bruce Springsteen; EMI, home to Coldplay and Gorillaz; and Warner Music, which has Madonna and James Blunt. Together, the four majors account for about three-quarters of global music sales.