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The digital growth in downloaded songs and albums hit record levels in 2007, but it wasn’t enough to make up for the loss in physical CD sales.

Sales in the U.S. of all albums, digital and physical, dropped 15% to 500.5 million from the 588.2 million sold in 2006. Last year was the seventh consecutive in which music sales have dipped; the last rise was in 2000, when album sales hit 800 million.

Meanwhile, digital track sales rose 45% to 844.2 million in ’07 while digital album sales climbed 53% to 50 million, according to Nielsen Soundscan. Digital sales now represent 10% of all albums sold, nearly double the 5.5% they represented in 2006.

When track-equivalent albums — 10 songs equals one album — are added to the equation, sales hit 584.9 million, down 9.5% from 646.4 million in 2006.

Growth in digital album sales came in both current and catalog departments. Current was up 46% to 27.1 million; catalog rose 64% to 22.9 million. Deep catalog was up 63% to 16 million. The top-selling digital album was Maroon 5’s “It Won’t Be Soon Before Long,” with 252,000 downloads purchased.

Ringtone purchases hit 220 million, generating $567 million in income. Mastertones, which are portions of recordings, now represent 91% of all ringtone purchases.

Physical albums, meanwhile, took a big hit. Current and catalog both dropped 19%; current saw sales of 279.3 million, catalog 171.2 million. Deep catalog was down 17% at 122.7 million.

When all individual sales are totaled, the figure is 1.4 billion units, up 14% over last year’s 1.2 billion sold.

Universal Music Group remains the market share leader at 31.9% in total albums and 34.48% in current. Among total albums, Sony BMG is down 2.5% from last year at 25%, Warner Music is up 2.1% at 20.3%, and EMI is down 0.8% at 9.4%. Among current albums, Warner was the only distrib to post a gain over 2006, up 2.3% to 19.1%.

The digital world, however, is a photo finish. UMG and Warner Music Group tied at 22.98% while Sony BMG is off by a nose at 22.86%.

Among genres, all of which were down from 2006, rap was the biggest loser, dropping 30% to 41.7 million albums sold.

Josh Groban’s “Noel” was the year’s biggest seller at 3.7 million units; it was the only disc to top 3 million in sales and becomes the first holiday album to top the charts since Soundscan started tracking sales in 1991. “Noel” was followed by “High School Musical 2” at 2.96 million, the Eagles’ “Long Road out of Eden” at 2.6 million and Alicia Keys’ “As I Am” at 2.54 million.

Groban was also the year’s top-selling artist, moving 4.8 million copies of his albums. The two “Hannah Montana” soundtracks sold 3.85 million copies. Next were the Eagles (3.58 million), Carrie Underwood (3.23 million) and Rascal Flatts (3.13 million).

The year’s biggest sales week was posted by Kanye West’s “Graduation,” which sold 957,000 in mid-September. The album came in at No. 10 for the year, selling 1.89 million copies.

Soulja Boy’s “Crank That” was the top-selling digital song and track. The track sold 2.7 million copies. It was one of nine tracks to sell more than 2 million copies in 2007; a year earlier, only one topped that mark.

Digitally, Fergie was by far the biggest seller, moving 7.5 million individual tracks. The Black Eyed Peas singer sold 1.6 million copies more than the second-place finisher, Timbaland, whose “Apologize” and “Way I Are” were in the year’s top five.

Although mass merchants such as Wal-Mart and Best Buy have been reducing shelf space for CDs by as much as 25%, they still represent 40% of all CD sales, down just 1% from 2006. Sales at nontraditional outlets such as Starbucks rose 18% in ’07, nearing 90 million.

Indie record stores held steady at 6% of the marketplace while chain music stores, for the first time, dipped below 40% market share. They represented 36% of all sales compared to 41% in 2006 and 45% in 2005.

The final sales week of the year, in which Mary J. Blige’s “Growing Pains” was No. 1 with 203,000 sold, set a new record for total sales at 58.4 million. It topped Christmas week 2006, when there were 47.4 million music purchases.

The week also set a record for digital track sales at 42.9 million, clobbering the record of 30.1 million set 52 weeks earlier.