PRS For Music, the organisation that represents songwriters, composers and music publishers in the UK, collected £611.2m in 2010, £7m less than was collected in 2009 and representing a decline of 1%.
The decline was particularly evident in recorded media, despite a 2.1% rise in royalties from commercial and BBC radio to £49.5m, attributed to an improving commercial radio advertising market, and stronger international revenues.
There was an 8.8% fall in royalties from recorded media to £117.2m, primarily CDs and DVDs, which PRS attributed to tough trading conditions and customers switching to digital formats, both legal and unlicensed.
Revenues from the broadcasting and online sectors rose 0.4% to £173.2m, international revenue rose 1.7% to £169.8m and public performance sales rose 0.5% to £151m.
Robert Ashcroft, chief executive of PRS for Music, said: "The loss of high street outlets, the slowdown in physical music sales as well the challenges capturing the full value of music usage online has meant for the first time we have seen royalties collected dip.
"Previously, any reduction from falling physical sales had been offset by our strong performance in music licensing both in the UK and internationally. In 2010 slower growth at home and abroad failed to fully mitigate the decline."
The growth in royalties from legal digital services slowed to 4.3% in 2010. Ashcroft said: "Collectively, the industry needs to work together to support the fledgling digital market in the UK ensuring legal choice for consumers and vital income for creators."
In 2009 royalty revenues rose 1.86% on 2008 figures which was already a significant slowing from growth of 8% between 2007 and 2008.
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