Latest figures published by the International Federation of the Phonographic Industry (IFPI) showed a marked downfall as sales of CDs slumped.
Digital downloads brought a welcomed silver lining as global sales via the web and mobile phones grew by nearly 40 percent, albeit at a lower rate according to the NYTimes.
Digital Downloads brought in $2.9 billion in 2007 compared to $2.1 billion in 2006, which was not enough to compensate for the 10 percent drop in music CD Sales - to $17.6 billion.
Some commentators however have pointed out that the number of quality performers and songs on the music market has shrunk considerably.
Avril Lavigne was the most downloaded singer in 2007 with the US online and mobile sales accounting for 30 percent of the world's total digital music revenues, ahead of everyone else.
According to the IFPI's record, more than 80 percent of all Internet Service Providers' traffic is made up of illegal file sharing content; for every 100 illegal music files downloaded, only five are legally purchased and downloaded.
IFPI has commended the position taken by the French government which has encouraged ISPs to shut down the accounts of persistent pirates.
The IFPI also said they would embolden their efforts to tackle digital piracy, even in places such as China and "havens" such as Russia.
The report remains optimist about new revenue streams, including advertiser-supported models such as the one that Yahoo is rumoured to be working on, and partnerships with social networks such as Myspace.