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Canada is the 6th largest music market in the world, representing about 2% of global music sales. Canada has a population of 32.8 million and is the third-largest source of English-language music in the world. The trade value for recorded music in 2005 was $608.7 million (Cdn$). Total music units shipped in Canada in 2005 was 54.2 million (including music VHS and DVD products), with CDs accounting for 49.9 million units. Sales of domestic repertoire stands at 25% (including Canadian artists signed to multi-national companies). Physical piracy in Canada is under 5%.
Nielson SoundScan reports that 48.6 million albums were sold in 2005, a decrease of 1.8% over 2004 when 49.5 million albums were sold.
The key music centres in Canada are Toronto (Ontario), Montreal (Quebec), Vancouver (British Columbia) and Halifax (Nova Scotia) although there are active regional markets throughout the country.
Sales certifications are issued by CRIA, the Canadian Recording Industry Association. CRIA is the Canadian member of IFPI, the International Federation of the Phonographic Industry. Certifications are as follows: a gold recording is 50,000 units, a platinum recording is 100,000 units and a diamond recording is 1,000,000 units. Certifications for CD Singles, Videos and DVDs are as follows: Gold – 5,000 units, Platinum – 10,000 units, Diamond – 100,000 units and Double Diamond – 200,000 units.
Awards Shows and Trade Fairs
There are five national trade fairs and conferences, each of which has its own awards show: Canadian Music Week (CMW), North by Northeast (NXNE), the Western Canadian Music Awards (WCMA), the East Coast Music Awards (ECMA) and the Canadian Country Music Awards (CCMA). Of course, there are many smaller and/or genre-specific events held across Canada.
There are also three annual Canadian awards shows independent of any trade fairs: the Juno Awards which are held in different locations around the country, the Félix Awards in Quebec and the Canadian Urban Music Awards (CUMA) held in Ontario.
Rights, Representation and Royalty Rates
IFPI Representative
CRIA, Canadian Recording Industry Association
(www.cria.ca)
Authors’ Rights Body
SOCAN, Society of Composers, Authors and Music Publishers of Canada
(www.socan.ca)
Independents’ Bodies
• CIRPA, Canadian Independent Record Production Association (www.cirpa.ca)
• ADISQ, Association quebecoise de l’industrie du disque, du spectacle, et de la video (www.adisq.com)
Mechanical Rights Organizations
• CMRRA, Canadian Musical Reproduction Rights Agency Ltd. (www.cmrra.ca)
• SODRAC, Société du droit de reproduction des auteurs, compositeurs et éditeurs au Canada (www.sodrac.com)
Mechanical Royalty Rate (since 2003, Cdn$)
• 7.7 cents (where running time is less than 5 mins., plus 1.54 cents for each add’l min.)
• Pay as You Press rate: 8.5 cents per song per copy (where running time is 5 minutes or less, plus 1.7 cents per additional minute
• Industry rates determined via collective bargaining between CMRRA and CRIA
Canadian Music Publishers Earned Royalties (2004)
$87.6 (Cdn$)
(Source: A Statistical Profile of the Canadian Music Publishing Industry, 2006)
Neighbouring Rights Collective
NRCC, Neighbouring Rights Collective of Canada (www.nrdv.ca)
Private Copying Collective
CPCC, Canadian Private Copying Collective (www.cpcc.ca)
Levy on Blank Audio Recording Media
• Audio Cassettes: $0.29 (Cdn$)
• CD-R, CD-RW: $0.21 (Cdn$)
• MiniDiscs, CD-R Audio, CD-RW Audio: $0.77 (Cdn$)
• No levy on digital recording equipment
Video Licensing
AVLA, Audio Video Licensing Agency Inc. (www.avla.ca)
CD Player Penetration (2004)
110%
DVD Player Penetration (2004)
83%
Overall Internet Access (December 2005)
78% (At Home: 64%)
(Source: CRTC)
Cell Phone Usage (December 2005)
17 million subscribers
(Source: CRTC)
MP3 Players (2006 Projected)
30%
(Source: CRTC)
Large Independent Distributors
• Distribution Select (Montreal)
• DEP Distribution Exclusive (Montreal)
• Distribution Fusion III (Montreal)
• FAB Distribution (Montreal)
• Madacy Entertainment Group (Montreal)
• Koch Entertainment (Toronto)
• Fontana North (Toronto, was MapleNationWide)
• Outside Music (Toronto)
• Trend Music Group (Toronto)
• Zing Distribution (Toronto)
• Sonic Unyon Distribution (Hamilton, Ontario)
• Festival Distribution (Vancouver)
• Scratch Recordings and Distribution (Vancouver)
• RED Distribution Canada (U.S.-based)
Major Labels/Distributors
• Universal Music Canada
• EMI Music Canada
• Sony BMG Music (Canada) Inc.
• Warner Music Canada
Media
Terrestrial Radio Stations
(Canadian Content on Commercial Radio is 35% for popular music; CBC/SRC Canadian Content is 50%. French-language content on French-language radio stations is 65%. Note: the Canadian content regulation is currently under review by the broadcast regulator CRTC.)
• Canadian Broadcasting Corporation/Société Radio Canada (CBC/SRC): national public broadcaster with 2 English networks (Radio One and Radio Two) and 2 French networks (la Première Chaîne and la Chaîne culturelle). CBC also provides radio services to the North.
• About 575 private commercial AM and FM stations. The larger radio broadcasters are Corus Entertainment, CHUM Limited, Rogers Broadcasting, Astral Media Radio, Standard Radio and Newcap Inc. Also included in this category are ethnic and Christian stations, and stations with specialty formats such as jazz and classical. The majority of commercial radio stations in Canada program popular music.
• CKUA Alberta: public English-language network in Alberta
• Numerous community, campus, native, religious, tourist/traffic and special event stations across Canada. Many of these stations are low power.
• See the CRTC’s Broadcasting Policy Monitoring Report 2006 for further information.
Digital Audio Services (Regulated)
• Galaxie (CBC/SRC): pay audio service available via cable and satellite
• MaxTrax (Corus Entertainment): pay audio service available via cable and satellite
• Galaxie and MaxTrax have also teamed up to offer a joint residential pay audio music service
• CBC and many commercial radio stations in Canada’s largest cities have been granted digital licences. Technology is Eureka-147. This technology is still at an experimental stage with hardly any consumer usage.
• Satellite radio subscription services: XM Canada and SIRIUS Canada were licensed and began operating in Canada in 2005.
Digital Audio Services (Non-Regulated)
• CBC’s Internet English-language radio service is CBC Radio 3, aimed at 18 to 34 year-olds.
• CBC’s Internet French-language service is BANDEAPART.FM
• Iceberg Media.com (Internet) offers about 100 different music channels within 9 genres
• Other Internet portals (audio streaming): telephone company Bell Canada’s Sympatico offers MusicMatch and cable company Rogers Cable offers LAUNCHcast. Astral Media offers radiolibre.ca.
• Downloading services such as Napster and Nettwerk also offer audio streaming choices
• AOL Canada offers 150 channels
• Some commercial radio stations also stream on the Internet
• XM Canada satellite radio is now available to subscribers of Telus Corp.’s celluar service.
TV Stations
• Canadian Broadcasting Corporation/Société Radio Canada (CBC/SRC): national public broadcaster with 2 terrestrial networks (one English, one French) plus 2 cable news (one English, one French) channels and one digital channel (Country Canada). Also provides services to the North.
• CTV: national private network, plus one national cable news channel and other specialty channels
• CanWest/Global: private commercial stations in most provinces plus specialty channels
• CHUM: private commercial stations in Ontario, Manitoba, Alberta and British Columbia
• Corus Entertainment: three private commercial stations in small markets plus specialty channels
• Privately-operated ethnic stations in large cities
• Religious stations (five across Canada)
• “Community” channels, usually provided by cable companies
• TVOntario (TVO): Ontario-only public educational broadcaster with one English channel and one French channel
• Private French-language commercial networks in Quebec (Groupe TVA, TQS Inc.)
• Télé-Quebec: French-language network, public, educational, Quebec only
• Aboriginal television services: Aboriginal Peoples Television Network, Native Communications Inc. and Wawatay Native Communications
• Canadian specialty channels are distributed across Canada via cable and satellite systems. These channels must be licensed. Specialty channels are so-named because they specialize in one theme only: music, news, arts, sports, etc. Some channels are analogue while others are digital.
• Many American specialty channels are distributed across Canada by cable and satellite
• Pay TV, pay-per-view and video-on-demand channels, both analogue and digital. The digital-only channels offer a wide variety of choices.
• Non-Canadian satellite services – services from 31 countries
• See the CRTC’s Broadcasting Policy Monitoring Report 2006 for further information.
Music specialty TV channels (Cable, Digital)
• MuchMusic, MuchMoreMusic (both English, based in Toronto), MusiquePlus and MusiMax (both French, based in Montreal), all four owned by CHUM (English) or 50% owned by CHUM (French). Formats: MuchMusic (rap, urban, pop – aimed at 12 to 24 year olds), MuchMoreMusic (A/C, Top 40 hybrid); MusiquePlus and MusiMax follow a similar pattern.
• CMT (Country Music Television) based in Calgary, Alberta, and owned by Corus Entertainment.
• Music videos are occasionally shown on Bravo!, an arts specialty channel owned by CHUM. These videos focus on the more specialized music genres.
• MTV and MTV2 re-launched in Canada under a partnership with national private network operator CTV.
• Nine music digital channels have been licensed but carriage by cable or satellite is not guaranteed. Examples: CHUM’s MuchLoud (rock, alternative), MuchVibe (urban), MuchMoreRetro (80s and 90s) and PunchMuch (automated all-request video service).
Music Magazines
• Access Magazine (www.accessmag.com)
• Applaud! Magazine (international distribution)
• Canadian Musician (www.canadianmusician.com)
• Country Music News (www.countrymusicnews.ca)
• Chart Magazine (www.chartattack.com)
• Exclaim! Magazine (www.exclaim.ca)
• Real Blues Magazine (www.realbluesmagazine.com)
• Canoe (www.canoe.ca)
• www.cleverjoe.com/publicationshas a list of magazines
• newspapers provide the majority of local print coverage
Music Retailers
Retail Stores/Chains
• HMV (HMV.com) has stores across Canada. Others: Music World (musicworld.ca), Archambault (archambault.ca), CDplus (CDplus.com: owner Entertainment One Income Fund (was Records on Wheels) which also owns the country’s biggest wholesale distributor as well as Koch Entertainment). Also: A & B Sound (absound.ca) and Sunrise Records (sunriserecords.com)
• consumer electronics stores Future Shop (www.futureshop.ca) and Best Buy (Future Shop’s parent, www.bestbuycanada.ca)
• bookstore chain Indigo (www.chapters.indigo.ca)
• department stores (Wal-Mart, Zellers)
• other retailers such as Costco and Price Club
• various independent record retailers throughout the country; i.e., CD Warehouse (www.cdwarehouse.ca)
• Starbucks coffee shops
• online sites such as maplemusic.ca and CD Warehouse’s mymusic.com and mymusic.ca
(some retailers’ Internet sites also sell some digital downloads)
Internet Download Sites
• Puretracks.com. The Puretracks platform is licensed to telephone company web portals across Canada including Bell Sympatico and Telus Corp. It has also been licensed to Future Shop/Best Buy and AOL Canada.
• Napster.ca
• zik.ca (Archambault)
• Apple iTunes Music Store
• Yahoo! Music Unlimited Canada
• iMesh (legal P2P service)
• (CMRRA has issued an Online Licensing Agreement to MusicNet)
Wireless Carriers (Networks)
• Bell Mobility
• Telus Mobility
• Rogers Wireless
• Virgin Mobile Canada in partnership with Bell Canada
Characteristics of the Canadian Market
Music Genres
Popular genres are adult contemporary, urban and rock, with sales of jazz and blues showing signs of increasing their market share; declining popularity of teen-oriented pop and dance music; sales of country music have also declined but are showing signs of rebounding; slow increase in sales of Christian music. Sales of compilation albums, which recently accounted for about 12% of sales, appear to be decreasing.
World Market Share
Canada accounts for about 2% of global recorded music sales.
Music Formats (Physical)
The CD album format continues to dominate the Canadian market; in fact, the CD accounts for practically 100% of all album sales. Sales are negligible for vinyl and cassettes. Less than 1% of all recorded music sales by unit are in the singles format. Music DVDs account for 8% to 10% of sales in 2004 (depending on source).
In 2002 the singles format was briefly revived but with only limited success - singles now contain two tracks and carry a lower price. Sales of singles have been overtaken by digital downloads. During the first quarter of 2006, the No. 1 single in Canada often sold less than 200 physical copies.
CRIA has lowered the singles sales levels required to meet Gold and Platinum designations, to 5,000 and 10,000 respectively (from 50,000 and 100,000). The same figures apply to music DVD sales.
Music DVDs accounted for 8% of recorded music sales by unit in 2004.
The hybrid CD/DVD DualDisc format is also available in Canada.
Canadian artists release over 2,000 CDs each year.
Radio
There is a high concentration of ownership within the Canadian radio broadcasting industry; radio listening by teenagers declined 25% since 1999 to 8.6 hours per week in 2006. The CRTC reports that commercial radio revenues for the year ending August 31, 2005, were $1.3 billion (Cdn$), an increase of 9% over the previous year.
TV
Canadian Idol is a very popular talent show and is now in its 4th season. The Quebec market has its own very popular version of the TV talent show format, Star Académie.
There are limited options for exposure of music on conventional TV.
Internet
CMRRA has entered into licensing agreements with record labels and Internet music distributors, thus opening the Canadian market to legitimate music download services; however, payments are considered “advances” until a permanent rate is set. In this regard, CMRRA and Quebec association SODRAC under the name CSI have filed a joint tariff application with the Copyright Board of Canada to set a royalty rate for songwriters and music publishers for online music sales.
SOCAN has also filed a tariff application with the Copyright Board of Canada to set rates for the communication of musical works over the Internet (“Tariff 22”). The second part of the hearing is set for April 2007.
97% of sales of singles are in the digital format. The overall digital music market in Canada was valued at $18 million (Cdn$) in 2005; 71% of these sales were online while 29% involved cell phones.
Estimates of digital music sales in Canada range from 1% to 3% of overall music sales; however, the figure is expected to increase as sales of ringtones and over-the-air tracks to cell phones increase. However, CRIA puts the figure at less than 1% of total recorded music revenue due to illegal downloading. For the week ending February 19, 2006, there were 243,000 digital track sales in Canada compared to physical singles which sold a total of 14,000 year to date.
The Canadian market for music downloads is estimated to be worth $100 million (Cdn$). High-speed Internet penetration in Canada is among the highest in the world – about 70% of Internet households in Canada now have high-speed broadband Internet access; about 7 million Canadians download music from the Internet.
Independent labels and artists are eager to reap the benefits of having their product available on pay-download services alongside product from major record labels, and on fair terms.
In response to barriers at traditional retail (and radio), independent labels and artists have developed their own web-based sales and promotional strategies.
Mobile Music Downloads
The price to download a track to a cell phone varies from $1.99 (Cdn) plus a fee of 50 cents or one dollar per download (depending on carrier) to $3 (all inclusive). The fees also include a download to a PC. The market for music services on cell phones is not as developed in Canada as in other countries partly due to high prices and slower adoption of advanced cellular technology.
Ringtones
Ringtones are gaining in popularity in Canada, with the average price about $3 (Cdn) per ringtone. The annual retail value of the ringtone market in Canada is estimated to be $1.5 million (Cdn$, (June 2005 estimate).
Cellular carriers exert significant control over the types of phones their networks will support. Cellular carriers say music publishers and record labels had been slow to issue licences but the situation is changing as record labels and their affiliated publishing companies establish North America-wide licensing frameworks to facilitate new digital uses of their repertoire.
SOCAN has filed for a tariff to cover ringtones (Tariff 24, “communication to the public by telecommunication)”. CRIA is opposed to the tariff. A hearing took place June 2005.
Master tones (or true tones) were introduced into the Canadian market in early 2005.
Podcasts
The industry is figuring out how to licence music contained in podcasts. SOCAN has filed a tariff proposal with the Copyright Board of Canada. In the meantime, SOCAN will issue experimental licences.
Evolving Business Practices
Independent music group Nettwerk Music Group is advising the artists it manages to set up their own record labels rather than signing or re-signing with an established record label. Nettwerk is advising its clients to negotiate pressing and distribution deals only. Several of its clients, including Barenaked Ladies and Sarah McLachlan, have already done so. Such arrangements are more lucrative since artists can earn higher revenues from new technology services such as downloading and streaming, and from TV and film placements. (Note: Nettwerk has a distribution agreement with Sony BMG Canada.)
No Canadian country artists are signed to a major record label in Canada due to the cost of developing these artists and difficulties securing concurrent U.S. releases. Canadian country artists have signed with independent Canadian labels which then will attempt to negotiate some sort of U.S. deal.
Warner Music Canada announced in October 2004 that it will sign fewer Canadian artists but will seek out artists with existing fan bases. Major labels are devising special marketing initiatives and pricing schemes to introduce and sell new artists at retail; labels are releasing “value-added” titles that include bonus video and exclusive content. Private-label deals are proving to be a successful line of business for major record labels seeking to profit from their back catalogues.
There are more independent labels in Canada and they are competing against each other and major record labels to sign domestic artists; however, many indie labels were created to develop artists within genres that multinational labels ignore. Competition among labels has resulted in better quality product. The major record labels are signing more licensing and distribution deals, and co-ventures, with independent labels and are becoming more involved in these labels’ artist promotions – Universal Music Canada has been particularly active in this area. Music lawyers and publishing companies are also becoming more involved in their clients’ careers especially clients who seek international licensing deals. Management skills have improved; Canadian management companies are expanding the services they offer and are taking on artists from other countries. Both major and independent labels are developing and marketing their artists for the international market; 30 percent to 50 percent of some indie labels’ revenue comes from outside North America. Canadian songwriters are enjoying greater international success but some move to the U.S. or Europe to further their careers. Well-known Canadian producers often leave the country.
U.S. labels sometimes test new artists in Canada first, and foreign labels sometimes introduce their artists in the Canadian market before tackling the much larger U.S. market.
Warner Music, Universal Music and the former BMG have outsourced their physical manufacturing and distribution business to Canadian company Cinram.
Government
Federal and provincial governments have allotted funds for music industry programs (i.e. Canada Music Fund/Music Entrepreneur Program, FACTOR, Tomorrow Starts Today, Ontario Media Development Corp., Alberta Foundation for the Arts, etc.); however, the music industry continues to be concerned about long-term funding stability. Radio Starmaker Fund is a popular artist support program funded by commercial radio broadcasters.
Canadian embassies and trade missions in foreign markets provide support to the Canadian music sector by assisting with artist showcases and facilitating business connections.
Retail
Universal Music Canada officially lowered its suggested list price to a maximum of $14.98 for nearly all of its front-line CDs but retailers have to sign up for the program and Universal will no longer offer co-op advertising funds or discounts; other labels say they also lower prices on established and emerging artist product but have not enacted an official policy. Record retailer A&B Sound and consumer electronics chain Future Shop both lowered the prices on all CDs sold in their stores.
Music specialist retailers have removed from their shelves the music products of artists who make exclusive deals with only one retailer such as Starbucks or Best Buy (i.e., Bob Dylan, Alanis Morissette and The Rolling Stones). Other music retailers will stock the artists’ CDs but will not promote them. Specialist music retailers want major record labels in the U.S., their artists and the artists’ managers to understand that Canada is a different music retail market than the U.S.
Retail chains have centralized their dealings with record labels; music retailers have invested in sophisticated inventory systems; music retailers expect labels to fully support and market new releases to ensure continued sales otherwise retailers will not promote the product in their stores; such policies can negatively impact indie labels because indie labels have less money to spend on promotion and marketing; increasing amounts of retail space in traditional music stores are being devoted to movie DVDs; DVDs accounted for 41% of HMV’s 2004/2005 sales in value.
Over the last decade mass merchants such as Wal-Mart, Zellers, Price Club and Costco have increased their share of the Canadian music retail market to up to 35% – although they charge generally the same prices as specialist music retailers, mass merchants have recently expanded their range of music genres and increased promotion; the market share of traditional music retail stores was 54% in May 2004, up from 46% one year earlier – this represents a significant difference compared to the U.S. market; record labels still set prices and are not as greatly influenced by the buying power of mass merchants and other retailers as is the case in other countries. Record club sales declined to 3% in 2003 from a previous high of 25%; sales seem to have shifted to online retailers Amazon.ca, HMV and book store Indigo/Chapters. Labels are placing select titles in non-traditional locations such as drug stores, truck stops and clothing stores.
Quebec (French)
The province of Quebec has its own French-language industry where the majority of record labels are independent; one distributor (Distribution Select) distributes 90% of independent French-language labels in Quebec; independent publishers publish 85% to 90% of local works and most have connections with independent labels; several French-language artists and composers are very successful in French-speaking Europe; many successful French-speaking artists intend to eventually release English-language albums. The Quebec music industry has its own awards and music shows and entertainment magazines. Other provinces with French-speaking populations are New Brunswick, Manitoba and Ontario.
Concerts/Touring
Outdoor summer music festivals provide up-and-coming artists with valuable exposure and sales, and competition for performance slots is intense; $2 million (Cdn$) in CD sales take place at these festivals; independent Canadian artists are very active touring at home and abroad; many independent labels encourage their artists to tour in the U.K. and Europe first before gaining exposure in the U.S. because overseas markets are more receptive to Canadian artists and non-mainstream music.
Statistics/Current Trends and Issues
Sales
(Note: the value of the Canadian dollar has increased over the last few years relative to the U.S. dollar)
• According to the IFPI, the trade value of physical music sales in Canada declined 3% in 2005. The IFPI estimated that Canadian music market sales were $732 million (US$) in 2005 (Larry Leblanc, Billboard, April 22/06)
• CRIA calculated that net music sales (net value of shipments) in 2005 were $608.7 million (Cdn$), a decline of $23 million or 4%. All format categories showed declines over 2004: CDs declined 3% and DVD declined 3% while VHS and singles declined by 96% and 50% respectively.
• CRIA announced the number of units shipped in 2004 increased 5%. Formats include CDs, Singles, VHS and DVD. This was the first year-over-year increase in shipments since 1998. Shipments of CDs increased 5% and shipments of music DVDs increased 24%. However, shipments of singles and VHS declined 45% and 40%, respectively. Total of units shipped to retail was 56,785,000, with CDs accounting for 51.3 million units. Total value increased one percent only, however, to $632.1 million ($515.3 million US$) due to decrease in CD prices.
• According to the IFPI (which calculates figures differently than CRIA), the retail value of recorded music sales in Canada fell by 4.7% to $901.9 million ($693.8 million US$ in 2004. IFPI’s calculated that 60.2 million units were sold in 2004, 54.8 million of which were CDs and 4.8 million of which were music DVDs. Trade value fell by 0.9% in 2004.
• CRIA reports that retail sales of pre-recorded CDs and cassettes fell 41%, or $541,472,000 (Cdn$), between 1999 and 2005.
Consumer Music Spending
Sales of music are affected by consumer spending on movie DVDs, cell phones and video games as well as CD copying and illegal downloading.
Judicial Rulings
In December 2004, the Federal Court of Appeal overturned the levy on MP3 players (“digital audio records”), stating that the Copyright Board did not have the legislative authority to impose levies on digital memory that is directly embedded in electronics products. The judge noted that the authority to impose levies on such devices is not found in the Copyright Act. The decision was affirmed by the Supreme Court of Canada in July 2005.
On March 31, 2004, a Federal Court of Canada judge ruled that CRIA could not obtain from Internet service providers (ISPs) the names of 29 individuals suspected of placing large volumes of music files on computer shared directories for other people to download using file-sharing software. The Decision was upheld by the Federal Court of Appeal on May 19, 2005.
On June 30, 2004, the Supreme Court of Canada ruled that ISPs do not have to pay royalties to composers and performers for music that is downloaded or streamed over ISP networks. The tariff was sought by SOCAN. The decision mentioned the need for copyright reform and called on Parliament to update the Copyright Act. The decision also suggested that web sites that make music available for download without copyright owners’ permission could be sued even for transmissions that originate outside Canada.
Digital Piracy
Recent court rulings have created the perception among Canadians that sharing music over peer-to-peer file-sharing networks is legal in Canada. The levies applied to blank audio media further confuse people. The Digital Music Report 2005 issued by the IFPI stated that “Canadians seem to be the most intensive users of [peer-to-peer file-sharing]. In no other country does the number of users, as a share of total population, exceed 1 percent.”
According to the Organization for Economic Co-operation and Development (OECD), Canada has the largest online piracy rate per capita in the world.
According to research firm Pollara, 1.6 billion music files are illegally shared over the Internet each year in Canada (source: CRIA).
Digital music sales in Canada are only one-half of one percent of U.S. sales; given the level of broadband penetration in Canada, CRIA estimates the figure should be 12% to15%.
In 2004, the Office of the U.S. Trade Representative (USTR) placed Canada on its annual list of Top 10 countries in which the U.S. suffered trade losses due to copyright piracy. Under the “Records & Music” category (the only category for which a loss is noted), the amount of the loss reported was $486 million (US$). Further, the report noted that the level of in-country piracy in the Records & Music category was 36%.
A Pollara research report concluded the 78% of unauthorized file sharing in Canada is done by young people between the ages of 12 and 24. The research also found that 26% of Canadians thought file-sharing is legal. However, a more recent study conducted by Pollara revealed that the 12 to 24 age group also purchases music products at twice the rate of Canadians over the age of 25. They also purchase digital music.
The use of CD burners has increased from 18% in late 2001 to 35% in 2004.
Copyright Legislation
The Standing Committee on Canadian Heritage recommended in 2003 and in 2004 that the Copyright Act be overhauled and updated as soon as possible and that the two WIPO treaties – the Performances and Phonogram Treaty and the Copyright Treaty – be ratified. There is debate whether ratification of the treaties will require that revenues from the blank audio levy must also be extended to artists in all countries which have signed the treaties.
Formation of a new federal government in 2006 has delayed implementation of the copyright reform process.
A coalition of Canadian music artists is opposed to some of the proposed changes to the Copyright Act. Specifically, the coalition does not agree with (1) the strategy of suing individual downloaders and, (2) the use of copyright protection technologies.
Not all indie artists see P2P file-sharing as theft but rather as an effective form of promotion.
Industry
Six of the leading independent record labels in Canada resigned from CRIA in spring 2006. Their departure follows disagreements on several issues, including what should be the appropriate level of Canadian content on radio and how a Canadian content recording should be defined. The independents stated their belief that CRIA mostly represents the interests of the four multinational record labels operating in Canada at the expense of the independent sector.
It is reported that major label staff cuts averaged 20% in recent years. Domestic repertoire accounted for 25% of the value of music sales in 2005; the market share of Canadian independent labels is about 14% (M&C estimates 16.7% due to the growing popularity of domestic artists). Canadian-controlled companies account for about 90% of all Canadian content releases.
Distribution: many independent labels are distributed by the major record labels.
The Canadian market is dominated by the large multinational record and publishing companies; in the case of the major international publishers, Canadian music publishing is mainly administered from the U.S. with offices in Canada focused on signing writers; however there are opportunities for Canadian subpublishers to work with independent foreign publishers interested in covers and synchronization deals. Some artists and managers prefer to shop for record deals in the U.S. because U.S. deals are more lucrative, the U.S. is a much bigger market and the albums will be released in Canada, anyway. Canadian-owned publishers and independent labels have limited access to capital. Declining record sales mean fewer and cheaper music videos are being produced per domestic release.
Independent label association CIRPA has joined with similar independent associations in other countries to form Worldwide Independent Network (WIN) with the goal of increasing the market share of independent music throughout the world.
Radio
Broadcast regulator CRTC conducted a review of its commercial radio policy in the spring 2006. Major issues examined during the review were: Canadian content levels, appropriate funding levels to assist in the development of Canadian talent and airplay of new and emerging Canadian artists. The CRTC is yet to announce its new policy.
Independent artists face problems getting airplay on Canadian commercial radio and are more likely to be heard on campus radio stations or the CBC; Canadian commercial radio is very tightly formatted; fewer stations are playing Top 40 music, which exposed new music and new artists, while a growing number of stations have switched to a format (“JACK”) that predominantly features music from the 80s and 90s. Despite this, some artists garner respectable sales of their albums despite getting very little radio airplay.
Tariffs: In October 2005, the Copyright Board of Canada increased the commercial radio tariff by 30%. Commercial broadcasters are appealing the ruling and a hearing is set for October 2006. The new SOCAN rate is now 3.2% of a station’s first $1.25 million in annual advertising revenue, increasing to 4.4% thereafter. The new NRCC rate is $100 of a station’s first $1.25 million, increasing to 2.1% thereafter. The new rates are retroactive to 2003 and extend to 2007.
Satellite Radio
XM Canada and SIRIUS Canada began operating in December 2005. The music industry opposed the terms of the services’ licences because of the minimal level of Canadian content the services are required to carry. XM Canada carries three Canadian-programmed music channels (one English, two French) while SIRIUS Canada carries five (two English, three French).
West-coast retailer A&B Sound filed for bankruptcy in January 2005 at the same time it announced new ownership and company restructuring. The company had been losing market share to competitors, both traditional and non-traditional (i.e., U.S.-based “big-box” stores).
The concert scene in Canada is very active due to factors such as a strong economy, a strong Canadian dollar, reasonable ticket prices, willingness of both domestic and international artists to tour, and the influence of the Internet in helping music fans discover new music and live shows. More concerts are being held in smaller cities. Large stadiums as well as smaller clubs and concert theatres are doing good business; however, the Canadian live music scene relies heavily on summer weekend festivals and community events.
Geography
Touring Canada is challenging and expensive due to Canada’s large land mass and relatively small population spread out across the country. There are long drives between major centres and winter weather adds to costs.
Sources
Applaud! July 23, 2006, 2003 Midem Issue; Backbone July/August 2006; Billboard June 17, May 20, April 22, April 15, April 1, March 4, January 28, January 21, 2006; Sept. 11, August 6, July 23 , June 25, June 18, May 28, March 19, February 5, January 22, 2005; November 27, November 20, August 21, April 10, April 3, March 13 and February 21, 2004; November 15, November 8, October 4, August 23, July 26, June 21, June 7, April 12, March 22, March 1, January 18, 2003; December 14, October 12, June 29, 2002; March 24, 2001; Billboard Biz, March 2, 2006; Broadcaster September 2005; Broadcast Dialogue July 20, 2006; Canada.com, June 20, 2005, July 1, July 1, June 4, 2004; December 2, 2003; CCN Matthews (Internet) February 2, 2006; (Department of) Canadian Heritage Canadian Film and Music Opinion Study, July 2005; The Canadian Music Industry 2004 Economic Profile, Music Distribution in Canada , April 2003; Canadian Music Network (plus website), June 9 – 15, February 10 – 16, 2005; November 25 – December 1, July 8 -14, June 10 – 16, April 22 – 28, 2004, Sept. 18 - 24, June 19 –25, May 15 – 21, March 27 – April 2, Feb. 20 – Feb. 26, Jan. 9 –15, 2003; Nov. 21 –27, Oct. 10 –16, Oct. 24 –Oct. 30, May 23 –29, April 4 –10, March 28 –April 3, 2002; CIRPA (Canadian Independent Record Production Association); Canadian Musical Reproduction Rights Agency (CMRRA) Music Publisher Canada Summer 2006, Winter 2005/06, Fall 2005; CRTC (Canadian Radio-television and Telecommunications Commission) Broadcasting Policy Monitoring Report 2006; Canadian Recording Industry Association (CRIA) news releases; Digital Home Canada website April 3, March 2, 2006; Digital Music News March 6, February 1, January 24, January 12, 2006; September 6, February 3, 2005; Financial Post, January 19, January 4, 2005; October 25, August 20, July 13, May 13, 2004; Globe and Mail, July 27, July 7, 2006; November 7, April 14, February 17, January 19, 2005; September 7, July 6, July 1, June 25, 2004, July 1, December 21, November 14, July 12, 2003; IFPI The Recording Industry in Numbers, 2004, 2003, 2002 and 2001; LeBlanc, Larry: The Music Distribution Industry in Canada 2006; Music & Copyright May 10, April 26, April 12, March 15, 2006; December 7, May 11,March 30, February 2, 2005; September 1, July 7, February 18, 2004, November 12, July 11, Jan. 22, 2003; August 29, 2001; Music Industry News Network January 25, January 7, 2005; National Music Publishers Association & the Harry Fox Agency, Inc., 2001 and 2000 Survey of Music Publishing Revenues; National Post December 15, 2004; The Ontario Council of Folk Festivals letter March 15, 2004; RBC Capital Markets October 19, 2005; Reuters June 30, 2004; Statistics Canada; Solutions Research Group Consultants Entertainment Retail Monitor, 2003, and In the Name of Cool, 2003; Statistics Canada; Toronto Star November 10, August 17, June 13, March 3, 2005; December 17, November 13, July 13, July 7, July 1, May 18, May 12, April 1, March 5, January 13, 2004; January 16, 2003; Words & Music (SOCAN publication) Summer 2006, Winter 2004; Yahoo! News, May 27, 2004.
CIMA has negotiated a discounted rate of $521.50 CAD for an Executive Music Badge (full value = $845 CAD) for members of CIMA.