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All three major segments of Canada's music industry - record production, music publishing, and recording studios - posted a profit in 2005, with total operating revenues estimated at Can$942 million, and an overall operating profit margin of 14 per cent. This, despite the fact that Canadians are among the most prolific music sharers on the planet, and the legality of casual music downloading in Canada, where there is no law in place equivalent to the U.S Digital Millennium Copyright Act (DMCA), is ambiguous at most.
In March, 2005, Canadian Federal Court Justice Konrad von Finckenstein ruled that the Canadian Recording Industry Association (CRIA) had failed to prove 29 unnamed file sharers sued by the muscibiz organization had violated copyright material owned by its members. His ruling reaffirmed and amplified a previous decision by the Copyright Board of Canada that casually downloading music in Canada is legal.
According to Global Digital Living, a multinational survey conducted by Dallas, Texas-based Parks Associates, more than 40% of all Canadian households with broadband Internet hookups download music files on a monthly basis, compared with 28% of similar American households. Additionally, one-third of all Canadian broadband-connected households use a peer-to-peer (P2P) network each month, but in the United States, this figure is just 16%.
The Copyright Board of Canada has also approved and implemented "levy" (since 1998) on recordable media, which funds a compensation plan for recording artists whose financial estate is alleged to be harmed by people pirating copyrighted music off records, tapes and CDs
Notwithstanding that, while 2005 Canadian record production segment revenues of Can$767 million represented an 8.6 per cent decline from 2003, total expenses fell a whopping14.9 per cent to Can$713 million, resulting in an average profit margin of seven per cent - a vast improvement over the industryh's 0.1 per cent profit margin in 2003, with sales of recordings by Canadian artists at $123 million in 2005, up 3.3 per cent from 2003. These sales accounted for 21 per cent of total sales. The majority of revenues still came from the sale of albums in CD format (90%). Survey data show that electronic music sales accounted for 3.9% of all national sales in 2005.
Canadian artists also released more music in 2005 compared with the previous survey year. New releases of musical recordings by Canadian artists rose 8.8% to 521 releases, so the industry can hardly claim to be on life-support due to unauthorized downloading.
Annual reports from the major industry players reveal that the firms achieved profitable growth in 2005 through a variety of methods, including streamlining and restructuring global operations, as well as lowering costs. Canada's heavily concentrated record production industry is dominated by four large companies, ranked on the basis of revenues earned. They accounted for about 80% of the national total.
According to the International Federation of the Phonographic Industry, Canada ranked as one of the top 10 digital markets in 2005. An estimated 3% of Canada's global sales came from digital formats.
The development of new distribution and delivery channels geared towards digital markets also helped boost the operating margin. The market for digital products requires less inventory along with lower distribution and return expenses.
On another relevant note, yesterday, The Register's Andrew Orlowski quoted British "Digital MD" Ben Drury predicting that music DRM will be 'dead by next summer' and that according to British retailer 7Digital, DRM-free music sales now outnumber sales of DRM-enumbered music by 4:1. Drury prognosticates that "By next summer all four major labels will have removed DRM from MP3s."
Nevertheless, it is arguable that Apple, with the iPod and iTMS, has done more than any other major industry player to force the issue of redefining copyright for the digital era. We are now in a phase of structural realignment, with the some vested interests fighting tooth and nail to return us to the tight-lockdown days of the pre-digital era when big business essentially controlled music recording and distribution technology from the top down and called all the shots. They have been alarmingly successful at convincing some politicians and governments to back their regressive quest with legislation, such as the DMCA), and other draconian laws against unauthorized music copying recently imposed in Germany and France.
Like the Recording Industry Association of America (RIAA), the Canadian Recording Industry Association (CRIA) sanctimoniously claims to represent the interests of recording artists, but some of the latter vigorously disagree. Some of the biggest names in Canadian music are letting the government know they consider DMCA-style legislation that would make it illegal to share music online and facilitate lawsuits "destructive and hypocritical," and asking govenrment to back off on legislating more restrictions on music downloaders.
Members of the Canadian Music Creators Coalition, who include Barenaked Ladies, Avril Lavigne, Sarah McLachlan, Chantal Kreviazuk, Sum 41, Stars, Raine Maida (Our Lady Peace), Dave Bidini (Rheostatics), Billy Talent, John K. Samson (Weakerthans), Broken Social Scene, Sloan, Andrew Cash and Bob Wiseman (Co-founder Blue Rodeo), don't want the federal government to enact harsher copyright laws that make it easier for the CRIA to sue downloaders as the RIAA does in the US.
In a statement, the CMCC says:
"We are the people who actually create Canadian music. Without us, there would be no music for copyright laws to protect.
"Until now, a group of multinational record labels has done most of the talking about what Canadian artists need out of copyright. Record companies and music publishers are not our enemies, but let’s be clear: lobbyists for major labels are looking out for their shareholders, and seldom speak for Canadian artists. Legislative proposals that would facilitate lawsuits against our fans or increase the labels’ control over the enjoyment of music are made not in our names, but on behalf of the labels’ foreign parent companies....
"Artists do not want to sue music fans. The labels have been suing our fans against our will, and laws enabling these suits cannot be justified in our names. We oppose any copyright reforms that would make it easier for record companies to do this. The government should repeal provisions of the Copyright Act that allow labels to unfairly punish fans who share music for non-commercial purposes with statutory damages of $500 to $20,000 per song...."
As for DRM, the coalition says:
"Artists do not support using digital locks to increase the labels’ control over the distribution, use and enjoyment of music or laws that prohibit circumvention of such technological measures. The government should not blindly implement decade-old treaties designed to give control to major labels and take choices away from artists and consumers. Laws should protect artists and consumers, not restrictive technologies. Consumers should be able to transfer the music they buy to other formats under a right of fair use, without having to pay twice."
"This effort is not about giving our music away, it's about encouraging innovative approaches that will compensate musicians and protect music fans from litigation," Barenaked Ladies frontman Stephen Page said in a release.
Digital technology has made traditional copyright law essentially unenforceable, and like it or not, sharing (or, depending on your politics, "stealing") music has become a way of life for millions. If maintaining free information conduits on the Internet means that commercial music interests will have to put up with what they consider piracy, I say so be it. The benefit to the common good far outweighs problems it causes for vested interests, whi appear to still be making lots of money anyway.
This fight is ultimately about money and power and control of the culture - over what you will be able to see and read and watch and listen to, and how it will be delivered, and who will make money from it. It is about protection of vested interests versus cultural and technological development and innovation. The technological clock can't be turned back, but unfortunately the legal one can through oppressive legislation.
Ultimately, legalities, ethics, and so on aside, you can't defy gravity. If they so choose, governments will be able to persecute some pirates through great legal effort and suppression of civil liberty, but they won't end unauthorized file copying and sharing, and even if they could it would be tragically bad news for the freedoms of speech and information exchange. What we need is a commitment to reality (even cognizance of reality) among lawmakers (especially American lawmakers).
Charles W. Moore
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I resent your title. It’s not piracy if you pay for it. Having to pay for something means that you’re allowed to do it.
Between 1999 and 2002, I never, ever downloaded, copied or shared any music. If I liked a song, I went and bought the CD. I was that way until I realized why blank CDs were so expensive in Canada compared to the US. Between 1999 and 2002 I bought eight spindles of 100 blank CDs each for my business use. At the time I didn’t have a CD player in my car, only cassette. So I didn’t even have any motivation to use CDs to copy music.
When I realized that I had paid the music industry $168 ($21 per spindle) for something that I’ve never done, I got pissed. Yes, I paid the music industry money that I worked hard for in order to compensate them for something that I had zero fault in. Later, I bought an iPod and paid an additional $25 levy, before it was repealed off music players. I hear now that they’ll reinstitute that too. Since 2002, I have purchased an additional 12 spindles and paid the music industry an additional $252. But now I have no qualms about using some of those CDs for music. For a payment of $445 I figure that the music industry owes me a minimum of 445 songs. I haven’t download that many yet.
Logically, if you pay for something, then it’s yours. If you pay for music copying, then it’s your RIGHT to copy. It’s not piracy, we Canadians don’t pirate music. It is our RIGHT to copy it. Anybody that says otherwise is either a liar or a crook.
It’s the levy that caused the Canadian court to throw out the four lawsuits. They’re getting paid for ‘unauthorized’ music copying. They shouldn’t even try to stop it. They’re taking our money and they dare to sue us for getting our rights?
Needless to say that since then, I haven’t bought a single CD published by one of the majors, I only buy indy-published music. When I like something published by one of the majors, I simply download it (as is my right to do). I want the artists to get paid for their work; they deserve it. When I know that it is the artist that will get a good chunk of my money, I have no problem buying their CDs. But I won’t pay the majors twice.
Your title should be:
Canadian MusicBiz Racks Up Buoyant Profits Despite Canuck Penchant For *Free Downloads*