In the first six months, the wholesale value of the French market decreased to €317.8 million ($438.37 million), down 17% from the corresponding period last year, according labels new figures issued by trade body SNEP. It follows a 14% year-on-year shortfall registered for the full-year 2006.

Christophe Lameignère, chairman and CEO of Sony BMG France and president of SNEP, says it is too early to predict results for the whole year of 2007, as "80% of the yearly sales are done in October, November and December".

The share of local repertoire in the first half reached a record level of 69.1%. But at the same time, the number of new local releases dropped 37%, after remaining flat in 2006. "This is certainly no good news," commented Lameignère, "but we need to wait and see if this trend is confirmed on a longer period of time."

Classical repertoire declined 33%, and now represents 7.7% of the market. SNEP stressed the classical sector was still healthy, with the shortfall attributable to the period being measured against the massive success of the Mozart complete works boxed set distributed by Abeille in 2006.

Digital sales for the period were up 13.7% to €23 million ($31.72 million), a figure somewhat encouraging given the 2.3% drop during Q1. Yet, SNEP director general Hervé Rony qualified the result as an overall disappointment.

Internet downloads rose 29.9% to €9.4 million ($12.96 million) while ringtone sales sank 8.1% to €6.4 million ($8.82 million). Revenue from streaming and subscription services represented 4% of digital sales. "This is the first time that they reach a significant level," commented Rony. "This shows that the industry is starting to diversify its revenue streams."

At retail, the recorded music market dropped 8% to €533.4 million ($735.77 million). The gap between the retail and wholesale decline is due to retailers reducing their stocks, said Lameignère. "A few years ago, a product would stay 25 weeks on a retail shelf on average; now, we are talking about four or even two weeks."

Praising the involvement of the French government and their understanding of the music industry concerns, both Rony and Lameignère were hopeful a recently-announced government mission - headed by Fnac CEO Denis Olivennes - would help stimulate the digital market.

The executives also called for immediate measures to help the industry sustain its investments in local repertoire. One such tactic is the extension of the tax credit scheme adopted in French law in 2006 to help labels invest in new talents. SNEP is asking that the scheme open-up to any local productions, and that it is not limited to €500,000 ($689.69 million) per company each year.

"We need a policy to support us for the three to five upcoming years," said Rony, "but we don't want to become a subsidized industry as French cinema can be."

The French government is supporting their request, he adds, but it has to be approved by the European Commission. Rony and Lameignère remain hopeful that the tax credit extension will be adopted by the end of 2007.