Overview

This document presents an overview of the evolution of the music industry. It provides a reference point to compare the Canadian music market with the global music industry, and identifies the principal trends affecting the industry's scope and activities.

Worldwide, the music industry is in a state of flux as the digital revolution and its effects reverberate throughout the industry's value chain. Consumption habits are changing and the industry is responding by gradually shifting away from traditional business models and opting for strategies that take advantage of the inherent possibilities of new technologies.

The Canadian music market suffered a setback in 2005 following signs of recovery the year before. The trade value of music sales declined 2.6% in 2005 while album sales fell 5.3% to 56.8 million units, reversing a 3% increase in unit sales in 2004. Despite the decline in sales, other emerging trends point to the relative health of the music industry in Canada.

Sales of Canadian albums led the 2005 decline, falling 10.3% to 7.6 million units. Canadian artists nevertheless are in a stronger position now than five years ago, with unit sales 12.4% higher than in 2001. Foreign artists, by comparison, saw their unit sales grow 6.5% in 2005. However sales of foreign albums remain 15% below 2001 levels.

The year 2005 saw a decline in sales of all physical music formats in the Canadian market, a trend consistent with foreign music markets. The digital track, with sales of 6.7 million units in 2005, was the only format to show growth.

Digital music sales benefited from Canadians' ever increasing access to online services. Just over half of all Canadian households subscribed to highspeed Internet access in 2005, up from 43% in the previous year. In addition, mobile phone subscriptions increased 13.3% in Canada. At the same time, mobile phones themselves are becoming more sophisticated as music players. As mobile and broadband adoption are only predicted to grow, so too are downloads from legitimate suppliers expected to show strong growth through subscriptions to these services. Furthermore, the opportunities presented by new technology may point to potential new revenue streams for Canadian artists.

Despite the slow sales in retail, Canadian artists found greater exposure in 2005 for their works in broadcast and other media, as performing rights royalties for writers and composers increased 11.6% from the previous year. The royalties amounted to $57.4 million and were disbursed to 20,811 artists, a record number which is 4.7% higher than the number of recipients in 2004.

Besides presenting music sales and copyright royalties in Canada, this profile also summarizes a 2005 Decima survey of the Canadian music consumer and features salient music industry data from the Statistics Canada 2003 Sound Recording Survey.

No single source offers exhaustive data on all aspects of the Canadian music industry. This profile brings together the most pertinent data from the most widely used sources to present the overall trends in the industry.

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