Shipments in the first half of 2000 totaled $6.2 billion.

Hilary Rosen, president and chief executive of the RIAA, said that while consumer loyalty to physical music products still dominates, the industry is working aggressively to embrace new forms of online distribution.

"Our companies recognize the fact that more consumers are looking to get music online and are experimenting with a number of approaches, including legitimate subscription services," she said.

The RIAA represents all the major labels such as Vivendi Universal's Universal Music, Sony Corp.'s (6758.T) Sony Music, Warner Music, EMI Group Plc (EMI.L), and Bertelsmann AG's (BTGGga.D) BMG, which won a preliminary injunction against Napster in March. The injunction barred the online music-sharing service from offering copyrighted music.

The RIAA had claimed that the popularity of Napster would depress music product sales. All the big companies now are poised to launch music subscription services of their own.

The RIAA said unit shipments to retail outlets and special markets like music clubs and mail order dropped 9.4 percent in the first six months of the year, to 442.7 million from 488.7 million a year earlier.

"We are committed to delivering the music consumers love, when they want it and how they want it. We are confident that our year-end numbers will be strong," Rosen said, citing new releases from artists including Mary J. Blige, Andrea Bocelli (, Brandy, Goo Goo Dolls, Macy Gray, Enrique Iglesias, Jewel, Natalie Merchant, and Alanis Morrissette in coming months.

The RIAA said full-length CD units dropped 5.3 percent at mid-year 2001, representing a $5.5 billion dollar value within the market, a 2.7 percent decrease in dollar value from mid-year 2000.

As expected, the compact disc format grew in popularity over other formats in the first six months of 2001 from mid-year 2000.

While CDs represented close to 86 percent of the units shipped to U.S. markets at mid-year 2000, that number grew to close to 90 percent at mid-year 2001.

DVD music video shipments rose by an impressive 115.9 percent at mid-year 2001 to 3.0 million units. These music videos created a $70.1 million market in the first half of the year, an increase of 99.2 percent from $35.2 million a year earlier.

Cassette units shipped to U.S. markets decreased by 42.9 percent, representing a $176 million value, down 41.9 percent from mid-year 2000.