[letmein]

Germany has overtaken the UK to become the third largest music market in the world.

Although the UK has seen a growth of 19.6% in digital sales, the overall music market has shrunk by 11%, resulting in the country's slip to fourth place after generating £797 million ($1.38 billion) in revenue.

The US is still the largest market at £2.55bn ($4.17bn), followed by Japan at £2.42bn ($3.96bn) and Germany in third position with £865m ($1.41bn).

Music Week reports that the IFPI (International Federation of the Phonographic Industry) has revealed that the worldwide music market's value fell by more than 8% last year, despite an overall rise in digital sales of 5.4%.

IFPI's report also noted that income generated from performance rights grew by 4.6% in 2010, with the US (up 27.9%) and Germany (up 18.5%) making the biggest gains.

France's new Hadopi law, which subsidises legal mp3 payments for teens to encourage them to purchase digital music instead of downloading for free, has seen the country's P2P file sharing fall by 5.1%.

It was reported last month that the amount of music royalties paid out to artists fell for the first time.

Mercury Records recently announced that they are to terminate the production of physical singles after reporting that 99% of their sales are purchased digitally.