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I -- The Music Market

Music Sales
Digital Downloads
Market Share of Canadian Artists
New Recordings Released by Canadian Artists
Breakdown of Releases by Genre
Gold and Platinum Records and Other CRIA Certifications Statistics
Canadian Music on the International Scene

Music Sales

The trade value of sound recordings sold in Canada fell 2.6% in 2005, to $658.6 million from $676.4 million the previous year. Since 2001, the trade value of music sales in Canada has fallen nearly 14%.¹

Trade Revenues of Recordings in Canada (millions $CAD)

Source: IFPI - Global Recording Industry in Numbers, 2006
Note: Digital sales included from 2004 onwards

Unit sales in Canada, meanwhile, fell 5.3%, from 60 million units in 2004 to 56.8 million in 2005, after posting a gain of nearly 3% in 2004. Between 2001 and 2005, unit sales fell 11.9%

Sales of Recordings in Canada--Units (millions)

Source: IFPI - Global Recording Industry in Numbers, 2006
Note: Full length formats - CD, DVD, LP, Cassette, Minidisc, SACD, DVD-A and VHS

The trade value of global music sales, by comparison, dropped 3.3% in 2005,² to $20.8 billion from $21.5 billion the year before. Since 2001, the value of sales has fallen 17.3% globally. The United States continues to rank first with a $7 billion sound recording market. Japan, whose sound recording market had a trade value of $3.7 billion, and the UK, at $2.2 billion, were the second- and third-ranked countries, respectively. In 2005, Canada was ranked 6th in the world for music sales, with a 3% share of the global market.

Retail Recorded Music Sales Ranking by Trade Value (2005)
2005 Rank	Country	Value (million $US)	% of World
1	USA	$7,012	34%
2	Japan	$3,718	18%
3	UK	$2,162	10%
4	Germany	$1,458	7%
5	France	$1,248	6%
6	Canada	$544	3%
7	Australia	$440	2%
8	Italy	$429	2%
9	Spain	$369	2%
10	Brazil	$265	1%
Top 10 Total		$17,645	85%
World Total		$20,795	100%

Source: IFPI - Global Recording Industry in Numbers, 2006
Note: Figures may not add up precisely due to rounding; Figures include digital sales.

Format Value Split (trade) %

Source: IFPI - Global Recording Industry in Numbers, 2006

Sales of compact discs in Canada fell 4.2% in 2005, to 52.5 million units from 54.8 million the year before; CD sales are down 13.5% since 2001. Sales of music DVDs, which had shown tremendous growth between 2001 (900,000 units) and 2004 (4.8 million), fell back to 4.2 million in 2005, a 12.5% decrease. Sales in all other physical formats were almost negligible, totaling just 100,000 units in 2005.³

Canadian albums made up 25% of the top 100 albums sold in mass merchant outlets, and 22% of the top 100 albums sold in retail.⁴ Mass merchant outlets accounted for 31.2% of albums sales in Canada, while traditional music retail stores represented 68.8%⁵.

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Digital Downloads

As the physical formats decline, the digital track is poised for strong growth, with sales of individual tracks in Canada reaching at least 6.7 million units in 2005, and digital album downloads surpassing 462,000 units, according to Nielsen SoundScan Canada.⁶

Online music services currently include subscription services, like Napster, which offer tracks for download on a temporary basis,⁷ and online "stores," like Puretracks, Zik.ca and iTunes, that sell digital music files outright as either individual tracks or as albums. An analysis of the top albums sold in Canada suggests that domestic acts benefit more from sales of digital albums than digital tracks.

Of the top 100 albums sold through Canadian online retailers in 2005, 29% of the titles were albums by Canadian artists.⁸ Digital track sales, on the other hand, were skewed towards foreign artists, with recordings by Canadian artists representing just 14.5% of the top 200 digital tracks.

Figures for global sales of digital tracks, available for 2004 and 2005, show strong growth led by the U.S. market--though not enough to compensate for the drop in global CD sales.

Downloads of digital tracks reached 419 million units worldwide in 2005, a 169% increase from 2004. Track downloads in the United States alone reached 353 million units in 2005, or 84% of the global market. The International Federation of Phonographic Industry (IFPI) puts the trade value of all paid global downloads at US$1.1 billion in 2005, a 300% increase over the previous year.⁹

Despite this growth, the IFPI reports that global music piracy remains a concern. It estimates that 37% of all CD purchases are pirate copies, and puts their value at US$ 4.5 billion¹⁰. It also estimates that 20 billion songs were downloaded for free worldwide.¹¹

Still, the ongoing boom in broadband and mobile technology bodes well for the digital music market. Just over half of all Canadian households, or 6.4 million households, subscribed to high-speed Internet access in 2005, up from 43% in the previous year. This is only expected to increase, as broadband Internet as of 2005 had the potential to reach 98% of urban and 74% of rural households in Canada.¹²

The number of mobile phone subscribers in Canada, meanwhile, grew 13.3% to 17 million in 2005.¹³ Mobile phones may one day rival portable digital devices such as the iPod, as consumers increasingly adopt both mobile handsets with music capability and 3G networks--the mobile equivalent of broadband.¹⁴ A lower risk of piracy than online¹⁵ and flexible payment options are other attractive features of the medium.

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Market Share of Canadian Artists

Nielsen SoundScan Canada's top 2000 chart is considered a good proxy for measuring the overall market share of Canadian artists¹⁶. The 2000 top-selling albums in Canada lost ground slightly in 2005, with sales of 33.8 million units compared with 34 million the previous year, a 0.7% decline, according to Nielsen SoundScan Canada.¹⁷

Following an increase in sales in 2004, albums by Canadian artists in the top 2000 fell 10.3%, from 8.5 million units to 7.6 million. Canadians' share of the top 2000 sales declined from 25% in 2004 to 22.6% in 2005. This can be partly attributed to the absence of new albums by Canada's topselling artists, such as Shania Twain, Céline Dion and Avril Lavigne. Sales of foreign artists in the top 2000, by comparison, rose 6.5% in 2005, to 22.9 million units.

Nielsen SoundScan Top 2000--Album Sales in Canada by Artist Nationality--Units