The French recorded music wholesale market went up 8% year-on-year in Q1 2010, generating €128.6 million ($165.8 million), according to labels trade body Snep.

The physical market grew 4.3% to €105.5 million ($136 million) and the digital market went up 28.7% to €23.1 million ($29.8 million).

Internet downloads were up 50% to €12.5 million ($16.1 million), while streaming revenue grew 100% to €2.6 million ($3.4 million) and subscription revenues went up 27% to €3.8 million ($4.9 million).

These good results come after two positive quarters in 2009, with a year-on-year rise of 14% in Q3 and of 7% in Q4.

However, separate figures unveiled by Observatoire de la musique/ GfK for the retail market show a decline of 7.1% in value for the retail CD market in Q1 2010.

"These figures are based on a non-exhaustive panel," Snep director general David El Sayegh told Billboard.biz.

Observatoire de la musique's director Andre Nicolas dismisses that comment, maintaining "the [retail] market is not recovering."

The Snep figures - if not the retail numbers - suggest that the Hadopi three-strikes law, finally voted through last year, has had a positive impact on the music market.

While expressing his satisfaction in the sales increase, El Sayegh stresses the market remains fragile.

"The most interesting point," he says, "is the growth of the digital market, supported by Internet downloads and streaming services, whereas the initial French digital market was mainly built on ringtones."

El Sayegh says people are discovering that legal offers provide a good user experience. While Hadopi has still not taken full effect, El Sayegh says the widely covered debates on the law have had a psychological impact on end-users, but he warns the impact won't last if the law is not actually implemented.

In order for Hadopi to send the first warnings to infringing filesharers, the government still has to file some decrees, which it reportedly committed to do by June.