The Australian recorded music industry shrunk by almost 10% last year.

In wholesale value, the market declined by 9.68% to A$462.2 million ($428.5 million), according to figures released today by the Australian Recording Industry Association (ARIA). The Aussie market was valued at A$511.7 million ($474.3 million) in 2006.

Unit sales rose by 23.43% to 99.1 million between January to December 2007, up from 80.3 million in the previous calendar year.

Physical formats, which made up 90% of sales, saw a drop of more than 12% both in value and volume to $422.2 million ($391 million) and 51.8 million, respectively. "The key contributor to the decline was a slowing of CD sales in both value and volume," ARIA said, noting that CD albums again took the lions' share of sales, shifting more than 32 million copies, vs more than 36 million in 2006.

During the same period, 790,000 digital albums were sold -- an 88% rise from the previous year. The format now accounts for just over 2% of the albums market.

Digital wholesale sales rose 126% in unit sales and 43% in dollar value to approximately A$40 million ($37.08 million), compared to $28 million ($25.9 million) in 2006.

Sales of digital track downloads continue their substantial rise, more than making up for the decrease in sales of physical CD singles, which were down in value by 44.08% to $6.7 million ($6.2 million) and 42.33% in unit sales to almost 2.5 million.

Compared to 2006, digital track sales increased in both value and units by 60% with sales of $18.7 million ($17.3 million) on 17.6 million digital tracks. The numbers back a global trend which saw the single track download market grow by 53% around the world to 1.7 billion, according to the IFPI's Digital Music Report 2008.

The biggest growth in Australia was seen in sales of digital music videos, mobile ringback tunes, streams and subscriptions, bundled together as "digital other". These rose by 500% in unit sales to 23 million, for a value of A$4.5 million ($4.17 million).

More than 5 million music DVDs were sold, accounted for $53 million ($49.1 million) in value, an increase of 7.8% in value, ARIA claims.

Another positive note for the local recorded music industry was the continued strong support for domestic acts. During 2007, 36 Aussie albums made it into the Top 100 sales. Four of the top 10 best-sellers were by local artists, with Missy Higgins' "On a Clear Night" (Eleven/EMI) at No. 4, Powderfinger's "Dream Days at the Hotel Existence" (Dew Process/Universal) at No. 6, John Butler Trio's "Grand National" (Jarrah/MGM) at No. 7, and Silverchair's "Young Modern" (Eleven/EMI) at No. 9.

In addition, 10 Australian hits made the 50 top-selling digital tracks chart for 2007, including releases by Silverchair, Thirsty Merc (Warner), Sneaky Sound System (Whack/MGM), the Veronicas (Warner), Delta Goodrem (Sony BMG), Ricki-Lee (Shock), Evermore (Warner) and TV Rock (Sony BMG).