Surging numbers of music downloads and aggressive pricing will mean that sales of music CDs this Christmas will be the weakest for five years.

Disc sales are being eroded by the success of song download sites such as iTunes and Napster, which generally undercut the market, are more convenient and allow listeners to buy a single song rather than the whole album.

Revenues from sales of CDs and DVDs have been falling since 2001, and total unit sales peaked in 2004 at 183.5 million before dropping off. Since 2001, when UK retailers took £2 billion in sales of music CDs, sales have fallen 10 per cent.

Between 2004 and 2005 digital music downloads in the UK rose more than four times to 26.3 million, the British Phonographic Industry said.

Yesterday, Woolworths, the third-biggest CD retailer in Britain, said that most of its 6.5 per cent slide in like-for-like sales in the past 18 weeks was a result of poor CD and DVD sales. Trevor Bish-Jones, chief executive of Woolworths, said that weak demand had meant that sales volumes of CDs were down 7 per cent in that period, compared with last year.

As Woolworths shares dived 7 per cent, Mr Bish-Jones said he had been forced to “materially” cut the price of music CDs and DVDs to stir demand, compete with supermarkets and try to win back market share. He gave warning pre-Christmas sales were also slow. He cited Rudebox, the new album by Robbie Williams, as being especially disappointing. Instead of the 450,000 copies that had been tipped to be sold in its first week of release, only 150,000 albums were sold nationwide.

Woolworth’s woes come amid concern that music retailers have been caught out by the changing nature of the market. Supermarkets’ buying power, and the legalisation in 2004 of digital download services such as Napster, have eaten into sales at the high street retailers. Some retailers are hoping that the number of new bands in the UK will stir demand and mitigate the download effect.

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