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The U.K. music industry has had a record-breaking start to 2006, according to trade org the British Phonographic Industry.

It revealed Tuesday that sales of digital downloads were up 152% in the first quarter compared with the same period in 2005.

The widely predicted demise of the CD seems far off as a boom in sales of new British artists, such as Arctic Monkeys, Kaiser Chiefs, James Blunt and Gorillaz, persuaded consumers to purchase a record 27.9 million albums in the first three months of 2006, up 1.5% vs. the same period last year.

Two weeks ago Gnarls Barkley scored a No. 1 in the U.K. singles chart on downloads alone, and has since sold another 73,000 downloads and 121,000 physical singles to stay at No.1.

This week digital downloads became eligible for the albums chart for the first time.

“We thought it would take three years, but in just 30 months the U.K. record industry has transformed itself from one that was 100% focused on physical product to the most advanced digital music market in Europe,” BPI chairman Peter Jamieson said.

However, despite the success of artist album sales, piracy and the growth in digital (both legal and illegal) took their toll on compilation sales, which have fallen to just 31.3 million units annually. The effect of that meant total album sales suffered a 3% decline.