Japan, which accounts for more than a fifth of worldwide sales, saw revenue fall 16.7 per cent as sales of CDs and ringtones declined while streaming services had yet to catch on, the trade group said Tuesday.
Outside of Japan, the growing popularity of free and paid streaming music services such as Pandora and Spotify are helping offset the decline of CD sales. Excluding Japan, global music revenue fell just 0.1 per cent.
Global digital music revenue grew 4.3 per cent to $5.9 billion in 2013. Physical revenue declined 11.7 per cent to $7.7 million, performance rights revenue grew 19 per cent to $1.1 billion, while synchronization revenue from use of songs in movies and TV shows fell 3.4 per cent to $322 million.
The IFPI says rising demand for subscription services contributed to a shift away from piracy. The number of paying subscribers rose 40 per cent last year to 28 million.
The federation's chief executive, Frances Moore, said in a statement that the music industry "is in a positive phase of its development," adding that most major markets are growing.
In the U.S., total revenue was $7 billion in 2013, the fourth consecutive year of relatively unchanged revenue, according to the Recording Industry Association of America.
The number of people in the U.S. paying for music subscriptions jumped 79 per cent to 6.1 million and streaming revenue grew 39 per cent to $1.4 billion. Revenue from downloads of songs from places like iTunes fell 1 per cent to $2.8 billion. Sales of CDs and vinyl albums fell 12 per cent to $2.4 billion.