New figures from the International Federation of Phonographic Industries (IFPI) show that 34 per cent of the world's CDs are pirated, and sales of counterfeit CDs outstrip legitimate sales in 31 countries. 

The IFPI, which represents the recording industry around the world, estimates that the total value of pirated CDs is now $4.6bn.

It bases the figure on prices being charged by pirates rather than the full retail cost, and the amount does not factor in music downloaded via the internet.

"Over the next few years governments and society are going to have to learn to take piracy more seriously, not just of music but in all its forms," said John Kennedy, chairman of the IFPI.

"It is no longer acceptable for governments to turn a blind eye, or to regard piracy as merely a small irritation. The illegal music trade is destroying creativity and innovation, eliminating jobs and bankrolling organised crime."

But the report is optimistic on some aspects of the business. Global piracy rose by only two per cent during 2004 to 1.2 billion units, but this still represents a doubling of levels from 2000.

The slow growth of piracy was attributed to a 28 per cent decline in the pirated cassette market, and increased downloading in Asia.

In 2003 there were 23 countries that had pirated sales outpacing legitimate CD retailing, but this has risen to 31. Greece, Turkey, India and the Czech Republic are all new to this list.

The availability of cheap CD burning hardware has also had an effect. Previously pirates concentrated on big name stars who could be sold around the world, but cheap easy to use hardware has meant pirates are now concentrating on local music markets.