In what appears to be a continuation of a long-running trend, sales of music CDs, DVDs and other formats fell 35 per cent in the first quarter of 2007 compared with the same period a year earlier, the Canadian Recording Industry Association reported Thursday.
That comes after a 12 per cent sales drop between 2005 and 2006 -- the largest-ever annual decline in Canada's music market -- and an almost unbroken string of sales declines since 1999.
"We've experienced sizable short-term drops before, but nothing compares to the drastic numbers we're seeing so far this year," said CRIA President Graham Henderson.
CRIA, a non-profit trade organization, believes the shrinking sales are due in large part to music pirating and downloading. It's calling upon the federal government to update the Copyright Act and bring in more government policies to deter counterfeiting.
"The reforms sought would place Canada on an equal footing with its major trading partners, most of which have already updated their copyright laws in line with the World Intellectual Property Organization (WIPO) Treaties, to which Canada is a signatory," CRIA says in a release.
Henderson says the problem of illegal Internet file-swapping and counterfeit CDs and DVDs looms larger in Canada than many other developed nations because of Canada's relatively lax laws and enforcement against both digital and physical piracy.
"Independent research, academic studies and common sense all point in the same direction -- that file-swapping and counterfeiting, and the decline in music sales, are closely linked," Henderson said.
Is every download a lost sale?
University of Ottawa Professor Dr. Michael Geist, who specializes in Internet and E-commerce law, disagrees.
"Just because someone has downloaded a song doesn't mean that they otherwise would have bought that song," he told CTV.ca.
"So this idea that every downloaded song is a lost sale, I don't think that anyone can credibly argue that."
He says CRIA's sales figures fail to mention Canadian digital music sales, which are growing every year so that Canada now has more online music stores than the U.S., on a per capita basis.
"I find it hard to believe that anyone can criticize growth rates in digital music sales that are double what they are in the United States," he says.
Henderson called CTV.ca to counter Geist's math: "In terms of the size of the digital market place, per capita, the market is four times bigger in the U.S.," he said. "In Canada when people think about music, they don't think 'buy music', they think 'take it'."
CRIA notes that digital music sales are estimated to make up only about six per cent of the Canadian market in 2006 and that per capita digital music sales in the U.S. are nearly four times those in Canada.
They say digital music sales in Canada haven't grown nearly enough to offset the almost 50 per cent drop in annual CD sales since 1999.
Geist responds that is because the industry is going through a shift; music lovers are downloading music song-by-song from the Web, and are not as interested as going to a store to buy a CD.
"There is a move to a singles market again, which is becoming the dominant sales model, so of course it's going to be difficult to compensate for that," he says.
"But if the only approach to this is to scream to government for them to intervene with more protection, then the industry really is in trouble."
In his , Geist points out that there is a distinction between the music industry and the CD industry, "with the former very healthy and the latter diminishing year-by-year."
Music retailers themselves are partly to blame for the decline in sales, Geist suggests. He says CD retailers have failed to provide consumers with music in the form and manner they are demanding and that sales have dropped every year since the end of the "CD replacement surge" of the early 1990s, when music lovers sent CD sales soaring as they raced to replace their vinyl and cassettes.
Some musicians in Canada have said they not only have no problem with peer-to-peer sharing, they encourage it.
In an interview earlier this year with CTV.ca, The Barenaked Ladies' Steven Page said P2P sharing is a great way for artists to get their music heard by as many fans as possible and can generate other sales, such as concert tickets and merchandise.
Page said P2P sharing is the future and record companies are too concerned with maintaining old business models that are growing obsolete, and then griping when their models fail to generate sales.
CRIA's Henderson says The Barenaked Ladies got a headstart, thanks to their track record of sales:
"Those fans are fans that were built throughout the years on the sale of recorded product by their labels who invested millions and millions in their career. And if you go to their website, see what's for free. Nothing is for free; you buy on their site."
