Recorded music sales in the U.K. were down 1.9% in volume and 6.9% in value in 2008, according to figures compiled by the Official Charts Company and published by the Entertainment Retailers' Association.

The ERA annual yearbook states that the rate of fall in sales has slowed compared to 2007, where there was an 11% decline by volume and a 15% decline by value. A strong Q4 performance, including the release of albums by Take That and the Killers, helped the U.K. biz, while the distribution problems at ailing retailers Woolworths and Zavvi did not have the disastrous impact that had been feared. Both retail chains shut down earlier this year.

"After years of bad news about music sales, these figures give hope that the downward trend is beginning to flatten out," said Kim Bayley, director general of ERA, in a statement. "The collapse of Woolworths was potentially disastrous, but retailers worked around the clock to secure alternative supplies."

Surging download sales helped overall music sales last year. Sales of single track downloads increased 41.5% to 110.3 million units in 2008 compared with 2007. Album downloads increased sales by 65% to 10.3 million units. By the end of 2008, downloads accounted for 96% of singles sales and 7% of albums sales.

"The increasing move towards DRM-free formats has helped drive download sales to this unprecedented high," added Bayley.

Year-to-date figures for 2009 show sales of single track downloads up 44% on the same period of 2008 and album downloads up 67%.

However, cost cutting from new services, such as the Amazon download store which offered new albums for £3 ($4.41), meant that unit prices were driven down to their lowest ever value in 2008. The average price of an album CD was £8.10 ($11.92).

The U.K. retail value of recorded music in 2008 was £1.29 billion ($1.9 billion), according to ERA.

The overall business for entertainment retailers was up 3.8% by volume and 5.1% in value in 2008, thanks to strong sales of video games. Games software accounted for 36.7% of the entertainment retailing market in 2008, just behind video - mainly DVDs - at 40.5% and music at 22.8%.