U.S. album sales decline 17%

U.S. album sales fell 17% in the first quarter as rising online piracy and fewer new hits accelerated the music industry’s decline.

Retailers sold 117.1 million albums in the three months that ended April 1, researcher Nielsen SoundScan said Thursday. Nielsen said Universal Music Group retained its lead with 32% of U.S. new-album sales.

Although online purchases rose, they failed to make up for rising piracy and declining demand for compact discs. Album sales fell 4.9% last year after a 7.3% drop in 2005. Researcher NPD Group Inc. said last month that illegal downloads of music surged 47% in 2006.

“Sales have declined in nearly all the major markets year to date, with the decline in the U.S. particularly precipitous,” said Jessica Reif Cohen, an analyst with Merrill Lynch & Co.

Companies such as Warner Music Group Corp. previously warned investors that first-quarter sales would be worse than a year earlier because new releases were stronger in 2006.

To combat piracy, the industry has stepped up a campus crackdown, alerting colleges to students and employees who use school computer networks to illegally swap songs.

Among the U.S. market leaders, New York-based Sony BMG Music Entertainment was second behind Universal, with 26% of new albums sold. Last year Universal had a 34% share and Sony BMG was at 27%.

The two major record companies with rising market share were New York-based Warner, which increased to 18% from 17% a year earlier, and London-based EMI Group, which climbed to 12% from 9.3%.

Sony BMG is a venture of Sony Corp. and Bertelsmann. Universal is a unit of Paris-based Vivendi.