Music has been affected by the advent of the download more than any other category in the area of home entertainment.

The popularity of sites such as iTunes has revolutionised the music industry - even resulting in a return to the top of the charts for artists such as Elvis Presley and The Beatles.

While it has been good news for the owners of the rights to many of these back catalogues, it has been terrible news for retailers, who have witnessed an alarming 14.3% drop in sales by value.

The only good news for supermarkets and high street stores such as HMV and Virgin Megastores, and internet distributors such as Amazon, is that the problem is a global one and the UK market is bearing up better than most.

For the fourth year in a row UK music fans bought more CDs per capita than anywhere else in the world, according to a survey by the Entertainment Retailers Association.

The poll found that UK consumers bought an average of 2.7 CDs in 2006 - well ahead of the US and Norway in joint second place with 2.1 CDs.

"Downloading in the singles market may have captured the headlines," says ERA director general Kim Bayley, "but when it comes to albums, UK music fans still prefer the convenience and flexibility of physical formats."

According to the ERA, digital sales still only account for about one-twelfth of the music market, but this is likely to grow over the next few years.

Terry O'Kelly, technical communications manager at hardware specialist Memorex, says the music labels are struggling to come to terms with the impact of the download market and its use of sites such as MySpace to get music.

"The industry does not know what to do about a rapidly changing world," he says.

In 2006, 164.4 million individual CDs were sold in the UK - down from 172.6 million the previous year. This will not be helped by the decisions of Tesco and Asda to delist the CD single and concentrate on albums.

ERA figures show the average price of an album fell to below £9 for the first time this year. The reason given was a price war between the supermarkets.

Those retailers will be hoping that not too many bands follow the example of rockers Ash.

This month the Northern Irish three-piece revealed their next albums would be their last as they intend to release songs at regular intervals for the digital market. However, the band says it will release them on vinyl as there is a revival of this format on the way.

The band argues that albums are outdated and get leaked onto the internet, which affects sales. As well as this, 80% of downloaders are downloading individual songs, while only 20% are downloading whole albums.

So it seems inevitable that the future for music is the download. Many argue it is also the future for TV and movies but Philippe Roucoule of Buena Vista says this is still a long way off as the technology is not widely available.

Music is easier because it can be downloaded quickly and cheaply and stored easily on computers and MP3 players. The trend towards digital downloading is likely to gather pace and the battleground over price is likely to move from stores to websites. This is clearly an area the supermarkets are eyeing .n