Street-corner peddlers of pirated compact discs sold more than 1 billion illegally copied CDs last year, turning a shady black-market trade into an estimated $4.5 billion industry, a new study said Thursday.

More than one out of every three music compact discs bought by consumers in 2003 was pirated, according to global trade body the International Federation for the Phonographic Industry (IFPI).

And at $4.5 billion, the pirated music market represents nearly 15 percent of the worth of the global record music market, the IFPI estimated.

Already mauled by free song downloads from the Internet, the beleaguered music industry is fighting a second front against more-established commercial piracy outfits where factories in Eastern Europe, Latin America and Southeast Asia crank out large quantities of knock-off chart-topping CDs.

Piracy is cited as a main culprit for the $32 billion industry's four-year slump in recorded music sales.

In unit terms, piracy grew four percent year-on-year in 2003 compared with a 14 percent jump a year earlier. The slowdown was viewed as welcomed news, but IFPI officials cautioned it would still step up policing efforts in various hot spots and lobby for tougher anti-piracy laws.

The IFPI named its top ten offending countries in its annual report, including G8 member Russia and Spain, the only European Union entry on the list.

Other perennial hot spots on this year's list were Brazil, China, Taiwan, Ukraine, Thailand, Mexico, Paraguay, and first-time entry Pakistan, which replaced Poland.

"In several of the music industry's very largest markets -- countries with low rates of (Internet) broadband penetration such as Brazil, Mexico and Russia -- piracy of physical discs still dwarfs its Internet equivalent," said IFPI chairman Jay Berman in the annual report.

In Brazil, the amount of pirated music sold grew nine percent in volume terms in 2003 while the legitimate market for recorded music dropped 25 percent, the IFPI said to illustrate the runaway nature of the industry's problem in certain territories.

The IFPI represents scores of independent and major music labels including EMI, Universal Music, Warner Music and the soon-to-merge Sony Music and BMG.

From Reuters