Services like iTunes could take 5% of global sales

Research group Informa says sales will fall from a predicted �16.6bn this year to �16.1bn in 2004.

But sales would begin to recover the following year, before reaching �18.8bn in 2008 - thanks to success predicted in fighting file-sharing.

"The fall in the value of music sales is certainly not irreversible," said report author Simon Dyson.

"The success of the new download services proves there is a viable market for legitimate digital sales, but the music companies must act decisively to stop the growth of the illegal services and the widespread copying of CDs."

However, by 2008 digital sales of music would only account for 5.7% of the global total, with online sales in all formats taking 12.1% of the market, he added.

The report also suggests singles sales will almost halve over the next five years, from �136.6m this year to �70m in 2008.

Vinyl album sales are also set to plummet over the same period, according to the report, from �4.3m to �1.8m.