The sales decline in Japan, the world's biggest market for physical product, is steeper than initial reports suggested: latest figures say values dropped 27% during 2009.

A new report published by Soft Information Planning (SIP), which operates the Soundscan Japan music charts/market research firm, says physical music sales in Japan were worth 236.4 billion yen ($2.6 billion) in 2009, compared to 325.6 billion yen ($3.6 billion) in 2008.

Earlier this month, The Record Industry Association of Japan (RIAJ) reported that the total production of physical audio units in 2009 was down 16% in terms of trade value (, Jan. 19). Last year, IFPI figures showed Japan had overtaken the United States as the largest music market for physical product in the world.

SIP also reported that Sony Music Entertainment Japan (SMEJ) rose to claim the highest market share with 18.6%, a 4.7% jump from 2008. This leap-frogged SMEJ over its two closest rivals, Universal Music Japan and Avex Group Holdings, the latter of which had had the No. 1 spot for the last two years.

SMEJ's dramatic rise can be mainly attributed to the company incorporating the operations and sales of BMG Japan into the overall Sony Music Entertainment Japan structure during the year. Japan had been the last territory with an independent BMG.

According to the report, Universal Music Japan came in at No. 2 with 14.6%, up from 15.3% in 2008. Third-placed Avex Group Holdings' market share fell from 16.1% to 13.7%. EMI Music Japan placed fourth, rising a full point to 7% and Warner was fifth with 5.9%, down from 6.2% in 2008.