Geoff Taylor, the chief executive of the music industry body the BPI, said:
He said that although market conditions proved troubling for High Street sales, digital growth was helping to counter a slump in CD sales.
The volume of UK single sales grew for the fifth successive year, according to new figures from the BPI.
Total single sales increased by 6 percent from £177.9m in 2011 £188.6m in 2012, with 99.6% accounted for by digital tracks.
CD singles sales nearly halved - falling from £1.1m in 2011 to £0.6m last year.
Gotye's Somebody That I Used to Know was 2012's biggest-selling single, with X Factor's James Arthur the highest placed British artist at number five, Official Charts Company data showed.
Psy's Gangnam Style was one place behind.
The BPI, the music industry body, says on its website that online copyright infringement cost the UK music community an estimated £200 million in 2009 - "this is money that should have gone to those who created the music and into developing new musical talent."
The 2010 Digital Economy Act set out plans to have internet providers send warning letters to those infringing copyright by downloading illegal music copies. Under the act, those doing so could face having their internet connection cut off and substantial fines.
The act is not due to come into force until 2014. The letter, whose signatories include Elton John and Simon Cowell, states the London Olympics will put new global attention on Britain’s creative industries, and argues that the country is well-placed to increase its exports from the music industry.
“We can realise this potential only if we have a strong domestic copyright framework, so that UK creative industries can earn a fair return on their huge investments creating original content.”
Musicians and music producers have said in a letter sent to the Daily Telegraph and David Cameron, search engines must “play their part in protecting consumers and creators from illegal sites”.
They add that broadband companies and online advertisers must also do more to prevent piracy.
Pete Townshend of The Who and Brian May of Queen are leading a group of music stars in a public attack on internet search engines, such as Google, for helping users get access to pirate copies of their music.
Sir Elton John, Lord Lloyd Webber and the rapper Tinie Tempah are among other leading musical figures who have signed a letter to the Daily Telegraph calling for more action to tackle the illegal copying and distribution of music.
The letter, which will also be sent to David Cameron, highlights the role search engines can play in giving people access to illegal music copies.