NIELSEN SOUNDSCAN FIGURES CONFIRM CANADA'S WEAK DIGITAL MUSIC MARKET AND THE SHARP, ONGOING DECLINE IN OVERALL RECORDED MUSIC SALES CNW Music sales figures for 2007 released by Nielsen SoundScan Canada confirm the challenging state of Canada's recorded music industry, the Canadian Recording Industry Association (CRIA) reported today.
According to Nielsen SoundScan, 1.98 million digital albums were sold in Canada last year, which amounts to just 4.5 percent of the 44.4 million total album sold. The figures show that modest digital sales in Canada fall far short of making up for the sharp, long-term decline in sales of physical formats.
In contrast with Canada's relatively undeveloped digital market, where digital downloads, subscription services and mobile music comprise just 12 percent of total sales, in the U.S. these channels comprise 29 percent of sales (source: IFPI, June 30, 2007). Because of weak copyright rules that inhibit investment in legitimate digital services and their entry into the market, digital sales in Canada are failing to replace declining CD and music DVD sales at the same rate they do in markets like the U.S., Japan and the U.K.
Canada's digital music market continues to significantly lag behind these other markets, which long ago updated copyright laws for the digital era and in keeping with their - and Canada's - commitments under international treaties.
Nielsen also found that unit album sales fell 9.5 percent from 2006 to 2007, mirroring sharp declines reported by CRIA members, which account for the vast majority of recorded music sold in Canada.
"Nielsen's figures validate an unfortunate truth - that unabated illegal Internet music file-sharing continues to harm artists and the organizations and people behind them," said CRIA President Graham Henderson. "They also underscore the need for updated copyright laws, mirroring those of our major trading partners, to help bring unauthorized downloading under control in Canada."
All of the Nielsen figures represent unit sales as opposed to dollar sales, which have declined at an even higher rate.
Net wholesale sales figures compiled by CRIA corroborate the dramatic decline reported by the over-the-counter Neilson figures. For the 11 months ended November 2007, net wholesale shipments of CDs, music DVDs, and other "physical" recorded music formats dropped 16 percent to 37.9 million units from 45.1 million units in the year-earlier period, while the related net wholesale value dropped 20 percent to $382.4 million from $476.3 million. (CRIA figures for the entire calendar year will be available later this month). The figures vary with those of Nielsen in part because they do not represent the entire year, but also because the methods of calculation differ and, to a lesser degree, because they do not include digital sales.
"While unit figures help to indicate the direction of trends, revenues are more important because they represent the funds available to artists and to music labels to fund the development of talent, recording, marketing and other activities that support music in Canada," Henderson said. "In this market, it's harder to develop, market and sell artists and their music than ever before, so per-unit costs such as marketing continue to skyrocket, leaving less on the table for everyone."
Based on research conducted in 2006, Pollara conservatively estimates that there are more than 1.3 billion unauthorized downloads in this country per year, far overshadowing the estimated 20 million legitimate downloads in 2006 - a ratio of 65 unauthorized downloads for every legitimate download – as reported by survey respondents. This finding indicates that the readiness of many Canadians to choose unauthorized file-sharing sites over legitimate digital services is fundamentally unchanged since the OECD in 2005 identified Canada as having the highest per capita incidence of online file-swapping in the world.
"Unhindered by modern laws that signal what is acceptable on the Internet, Canada has embraced a 'free for the taking' Internet culture that ultimately undermines innovation and creativity in music while continuing to draw unwanted negative attention from our trading partners," Henderson said. |