the canadian music industry: a statistical report and analysis in 2010
TRANSCRIPT
The Canadian Music Industry: A Statistical Report and Analysis in 2010
MUIN 445: International Music Industry
Report by:
Matthew Reagan
November 16th, 2010
EXECUTIVE SUMMARY
Prospective Investors, I strongly encourage you to consider Canada’s music
industry as an investment opportunity. It is the sixth largest internationally, generating
approximately $2.08 billion in revenues in 2009.1 Though domestic album sales have
plummeted more than fifty percent over the past decade, recent years have seen profit
margin increases for record companies, terrestrial radio, recording studios, live music
performers and musical products retailers; especially among foreign controlled entities.
Music companies in Canada are becoming more efficient and more adaptive of the digital
marketplace, even in the face of the worldwide recession. Employment has actually
increased in the publishing and music recording sectors over the past several years.
With internet and mobile penetration at an all time high, use of emerging music
access technologies is growing rapidly. Digital music has grown at a rate thirty percent
higher than that of the United States over the past four years and mobile music
technologies are gradually incorporating track downloads and subscription services;
ringtones accounting for eighty percent of overall sales in previous years. A growing
younger generation shows signs of an increased propensity to digital spending. As such,
these sectors provide excellent incentive for investment.
Throughout the past decade, Canada has become notorious as one of the worst
online piracy havens globally. Studies suggest that they have the highest piracy rates per
capita of any territory in the world. New legislation, encouraged by government
organizations and trade associations alike, has been implemented in 2010 to combat this
1 The 2009-2014 World Outlook for Recorded Music
threat. Close monitoring of the ongoing effectiveness of these measures should be taken
when considering potential investment.
Rights organizations in Canada continue to be front runners in defining royalty
rates for new domains. These models provide a much higher financial benefit to artists
and companies, through increased rates based on gross income and a wider range of
applicable revenue streams. These standards have been effective in generating revenue,
but have alienated important services such as Pandora, due to very high royalty rates.
The Canadian government places significant emphasis on the development of
their cultural industries, offering numerous tax breaks, grants and other incentives to
artists and corporate entities. Fourteen percent of the annual federal government budget
goes towards these initiatives.2 As a leader in the global music business, an investment in
Canada will continue to foster talent that has an impact on worldwide music culture:
Canadian artists have been among the most prolific and well-respected over the past fifty
years.
Investors, please consider the information within this report to make an informed
decision for allocation of your funds within Canada’s music industry.
TABLE OF CONTENTS
2 The Effect of the Global Economic Recession on Canada’s Creative Economy in 2009”; Pg 13
EXECUTIVE SUMMARY
COUNTRY OVERVIEW 2
History of Canada 3
Geography 4
Population and Demographics 5
Age Structure 6
Median Age 6
Sex Ratio 6
Ethnic Groups 6
Religion 6
Language 7
Provincial Division 7
Government and Politics 8
Overview 8
Executive 8
Legislative 9
Judicial 9
Balance of Powers 10
Stability 10
Economics 10
Stability of Banking 11
Currency 11
Inflation 12
Impact of Recession on Cultural Industries 12
International Relations 13
NAFTA 14
Controversy- ‘Cultural Industries’ Exception 14
Culture 15
Language 15
Education and Literacy 15
Time Consumption 16
Music Consumption 16
Music Discovery 18
Consumer Spending 18
Technology 18
Technological Access 18
Computers and the Internet 19
Portable Music Players 20
Mobile Smart Devices / Carriers 20
INTELLECTUAL PROPERTY 22
Intellectual Property 22
Intellectual Property Rights 23
History of Copyright 24
International Agreements with Copyright Implications 25
Copyright Provisions 26
Joint Works 26
Private Copying 27
Copyright Enforcement 28
C-32 Controversy 29
Copy Protection Devices 29
Registering Copyright 30
Moral Rights 30
Trademarks 30
Piracy 31
Online Piracy 31
Pirate Technology 32
Government Piracy Studies 33
Prevention 34
THE MUSIC INDUSTRY 35
The Music Industry 35
Overview 36
Roots 36
Timeline of Key Events 37
Sectors 38
Musician Income and Expenses 39
Employment Percentage 39
Recorded Music 40
Overview 40
Sales 40
Consumer Trends 41
Industry Financial Analysis 41
Foreign vs. Domestic Labels 42
Revenue Distribution 43
CRIA 44
Awards 45
Nationality 45
Major Record Labels 46
Independent Record Labels 48
Francophone Music Sales 49
Catalog Sales 50
Genre 50
Recent Notables 51
Album Charts 52
Catalog Sales 52
Compilations 52
Physical Music Retail 53
Overview 53
Sales 54
Types of Physical Retailers 54
Primary Physical Music Retailers 54
Leisure and Goods 55
Distributors 56
Prices 57
Online Music Retail 57
Overview 57
Sales 57
Formats 59
User Trends 59
Primary Online Music Services 60
Growth of Digital Music Sales 61
Revenue Market Share 61
Unpaid Downloads 61
Subscription 61
VEVO 62
Mobile Retail 62
Overview 62
Revenue Streams 63
Ringtones 64
Licensing, Royalties and Legislation 64
SOCAN 64
Royalty Rates 65
Terrestrial Radio 66
Live Music 66
Television 67
Movie Theatres 67
Internet 67
Mobile 68
Royalties Paid 68
Performance Embodied in Master 68
Streaming 69
Mechanicals 70
Digital Royalties 71
Black Box Income 71
Music Publishing 72
Overview 72
Major Players 73
CMPA 73
Domestic vs. Foreign Control 73
Revenues Generated 74
Government Aid 75
Sound Recording Business 75
Sound Recording Studios 76
Musicians and Recording 77
Recording Technology 77
Musical Products 77
Marketing and Advertising 78
Overview 78
Social Media Advertising 79
Advertising/Brand Partnerships 79
Impact of Recession 79
Radio 80
Terrestrial Radio 80
Profitability 80
Music Breakdown 81
Internet Radio 81
National Public Radio 81
Satellite Radio 82
Cancon 82
Cancon in Television 84
Press 84
Television 84
Online 84
Print 85
Live Music 85
Overview 85
Revenue Generated 86
Classical Music 86
Booking Agents 87
Types of Venues 87
Artist Touring Activities 87
Method of Payment 88
Touring Grants 88
Ticketing Market 88
Rehearsal Spaces 89
Merchandise 89
Festivals 89
Geographic Considerations 90
Government Support 90
Government Aid for Culture 90
Canada Music Fund / From Creators to Audience 91
Creators Assistance Program 92
Canadian Musical Diversity Program 92
New Musical Works Program 92
Music Entrepreneur Program 92
Support to Sector Associations Program 92
Collective Initiatives Program 92
Canadian Music Memories Program 92
Policy Monitoring Program 92
Education 93
Additional Government Investment 94
Canada Cultural Spaces Fund 94
Canada Arts Presentation Fund 94
Others 94
IMMIGRATION TAXES AND BUSINESS 96
Immigration 97
Overview 97
NAFTA Provisions 98
Commonwealth Citizens 98
Point System 98
Permit Free Festivals 99
Temporary Workers 99
Quebec Immigrations Specifications 99
Business Visitors 99
Labour Market Opinion (LMO) 100
Performing Artists 101
Canadian Artists in United States 103
Equipment Manifest 104
Taxation
Overview 104
Corporate Taxes 105
Royalties 105
Performing Artists 105
Performing Artists (International Specifications) 106
Tax Breaks for Musicians 106
International Business Royalty Exemption 107
Withholding 108
Business Formation 108
Overview 108
Sole Proprietorship 108
Partnership 109
General Partnership 109
Limited Partnership 109
Limited Liability Partnership 109
Corporation 109
Cooperative 110
Percentages of Canadian Musicians’ Employment Status 110
Business Name 111
Access to Funding 111
New Federal Budget 112
Music Industry Financing 113
INVESTMENT 114
Investment 114
International Investment Risk 115
USD vs. CAN- Last Three Years 115
Foreign Direct Investment 115
Canadian Direct Investment 116
Venture Capital Investment 117
Reasons to Invest 117
Solid Financial Infrastructure 117
Connectivity to United Stated 117
Canadian Presence in Major World Markets 117
Cancon and Cultural Control 118
Gateway to French and Asian Cultures 118
Economic Return 118
Numerous Additional Royalty Streams 119
Cultural Return 119
Capital Gains Income 119
Reasons to Avoid Investment 119
Similarity to US 119
Cancon and Cultural Control 120
Dominance of US Artists 120
Piracy 120
Where to Invest 121
Digital Music 121
Mobile Music 121
Musical Products Retailers 122
Foreign-Controlled Record Labels 122
Proportion of Money 123
Summary 123
CONCLUSION 124
APPENDIX 125
A: Total Canadian Revenues from Recorded Music 125
B: Canadian Cities by Population 126
C: Top Worldwide Democracy Rankings 127
D: CRIA Album Certification Chart 128
E: 2009 Sales Statistics 129
F: 2009 Radio Airplay Top Songs / Artists 130
G: Sales Records 131
SOURCES 132
Artists and Websites 132
Documents and Reports 145
NB: Unless otherwise stated, all monetary figures are expressed in Canadian dollars,
CAN. (C$)
COUNTRY OVERVIEW
HISTORY OF CANADA3
The settlement of the territories that would comprise the land later known as
Canada is reminiscent of the conflicts throughout the European colonization of the new
world. The first European contact is traditionally attributed to John Cabot of England in
1497 CE, (historians attribute this to the Viking Leif Ericsson around 1000 CE) but it was
not until 1534 that the land was claimed in the name of France by explorer Jacques
Cartier. Early colonies were set up by the French in Charlesbourg-Royal and Quebec, and
the English (who also claimed Canada in 1583) in Newfoundland.4 Over the next two
centuries both nations staved off conflicts with the native Iroquois and inter-colonies
struggles. Under rapid British expansion, English forces grew dramatically in and around
New France, and extensive confrontations throughout the 17th and 18th centuries gradually
transferred control of territories like Quebec to the British. Finally, as a result of the
Seven Years War, New France surrendered to the English in 1760. As a British colony,
much of the French-influenced cultural, social and political values remained in place as
Canada was split into Upper (British-dominated) and Lower (French-influenced)
regions.5 Canada was finally unified and recognized as a British colony with self-
determination in 1867 as ‘The Dominion of Canada’: however it was not until World War
I that Canada joined the League of Nations as an independent state with nearly total
political independence. Canada’s own constitution was finally recognized nationally in
1982.
3 “Timeline; Canada History”4 “History of Canada and European Contact” Wikipedia, 20105 “History of Canada and European Contact” Wikipedia, 2010
GEOGRAPHY6
Canada represents forty-one percent of the total landmass of North America and a
total area of approximately 3.85 million square miles. Its topography represents a vast
array of geographic features that makes it one of the most physically diverse countries in
the world. The distribution of land cover types based on satellite images reveal thirty-one
distinct classes: 12 forest; 3 shrubland; 7 tundra/grasslands; 7 developed land types
including cropland, mosaic and built-up areas; and 2 water cover types.7 The majority of
Canada’s land is defined as part of the ‘Canadian shield’, a large area that is indicative of
old igneous rock formations and stabile tectonic activity.8 It is mostly a flat, grasslands,
tundra and cropland dominated area that surrounds The Hudson Bay (north-east mainland
Canada) and extends from the East Coast near the Atlantic to central Canada and North to
the Arctic Ocean. 9 Forming a southern belt below the boundaries of the Canadian Shield
is an array of lush coniferous forests. These sections (outlined in green and light brown in
the below map) extend from the Atlantic Ocean to the northwest tip of Canadian
mainland. Further west of the Shield, is an expansive farmlands and ranching area that
expands for 800 miles along the US border.10 In the northernmost areas is mostly barren
and harsh tundra with sparse sections of shrubbery and low vegetation. Sheets of ice and
snow make up the very northern bits of the country.11 Topographically, Canada’s main
mountainous features are the Sierra Nevada’s in the West, though significant mountain
6 “Canada Topography” Encyclopedia of the Nations, 20107 “Canada Landmass Sectors”8 “World Geography of Canada” Kidport9 “Canada Main Page” Info Please10 “Canada Topography” Encyclopedia of the Nations, 201011 “Land Cover and Environment” Government Atlas
ranges also are present along the Western coastline and as an extension of the
Appalachian Mountains, North of Alabama.12 The Great Lakes area, above the US border
formed by Michigan, provides an area with great potential for cultivation; and in addition
to the Hudson Bay, makes up the majority of Canada’s fresh water sources.
13
POPULATION AND DEMOGRAPHICS14
As of 2009, the Canadian population was estimated at 34,108,80015 (growing at an
annual rate of .817%) based on the most recent census of the same year. Over 75% of
Canadians live within 100 miles of the United States’ border.16 In 2008, the population
density was 9.47 people per mile^2: ranked 224th among countries in the world.17
Canada’s population increased by 5.4% annually in the first half of the 2000’s; making it
the fastest growing G8 nation. 18
12 “Canada Geography” Solar Navigator13“Topography Map” Solar Navigator14 “Canada Demographics Profile” Index Mundi, 201015 “Canada Population Growing and Aging” Canada.com, 2010 16 “Canada Facts” National Geographic 17 “Canada Information” Wolfram Alpha 2010 18 “Canada at a Glance” Invest in Canada 2009
Age Structure 19
0-14 years: 16.1% (male 2,761,711/female 2,626,836)
15-64 years: 68.7% (male 11,633,950/female 11,381,735)
65 years and over: 15.2% (male 2,220,189/female 2,862,787) (2009 est.)
Median Age 20
total: 40.4 years
male: 39.3 years
female: 41.5 years (2009 est.)
Sex Ratio 21
At birth: 1.06 male(s)/female
Under 15 years: 1.05 male(s)/female
15-64 years: 1.02 male(s)/female
65 years and over: 0.78 male(s)/female
Total population: 0.98 male(s)/female (2009 est.)
Ethnic Groups 22
British Isles origin 28%, French origin 23%, other European 15%, Amerindian
2%, other, mostly Asian, African, Arab 6%, mixed background 26%
Religion 23
Roman Catholic 42.6%, Protestant 23.3% (including United Church 9.5%),
Anglican 6.8%, Baptist 2.4%, Lutheran 2%), other Christian 4.4%, Muslim 1.9%,
other and unspecified 11.8%, none 16%
19 “Canada Information” Wolfram Alpha 201020 “Canada Information” Wolfram Alpha 201021 “Canada Information” Wolfram Alpha 201022 “Canada Information” Wolfram Alpha 201023 “Canada Information” Wolfram Alpha 2010
Language 24
English (official) 58.8%, French (official) 21.6%, other 19.6% (2006 Census)
It should be noted that Canada has two official languages: English and French. This is
representative of their attempt to sustain the heritage (French) that makes them unique,
even though English/American culture has dominated their overall societal sphere since
the 1800’s. 25 Eighty percent of Quebec inhabitants’ primary language is French26, where
English is not recognized as an official language.27
PROVINCIAL DIVISION28
Canada is divided into ten major provinces (Quebec, Ontario, Manitoba, Nova
Scotia, New Brunswick, Alberta, British Columbia, Prince Edward Island, Newfoundland
and Saskatchewan) and three territories (Northwest, Yukon and Nonavut). Federal and
provincial governments operate in a manner similar to federal and state governments in
the United States. Taxation and operation is distinguished within each territory through
varying provincial law. Canada’s national capitol is located in Ottawa, Ontario.
24 “Canada Information” Wolfram Alpha 201025 “Culture and Identity in French Canada” Multicultural Canada26 “Census” Statistics Canada, 200727 “Quebec Language” Wikipedia 28 “Provinces and Territories” Government of Canada
29
(See extended version in Appendix B)
GOVERNMENT AND POLITICS30
Overview31
Canada is a constitutional monarchy, but in practice operates like most
democracies. As a member of The Commonwealth of Nations, they share a head of state,
Queen Elizabeth II, with countries such as The United Kingdom, India and Australia.
Queen Elizabeth nominates a governor general in Canada to take on most of her decision-
making and power within the territory. The governor general is currently David Lloyd
Johnson.
Executive32
29 “Canada Information” Wolfram Alpha 201030 “Home Page” Government of Canada31 “The Governor General of Canada” Government of Canada32 “Government of Canada” Wikipedia
In addition to the Queen and Governor General, the Canadian constitution
provides for a cabinet with the role of advising the Queen on all matters. This select
group of individuals, known as the Privy Council, is comprised of legislators, members of
parliament and Supreme Court justices. One of the primary roles of the crown is to ensure
that local government is always democratically elected- and for that role the governor
general elects a prime minister; often the leader of the political party with the most seats
in the House of Commons. The prime minister stays in their role until they are voted out,
or decide to retire. Currently, the prime minister is Stephen Harper.
Legislative33
The legislative branch is divided into two specific sections: The Senate and The
House of Commons. The most widely dominant component, The House of Commons,
currently awards 308 seats to politicians; representative of the 308 electoral districts in
Canada, where each is democratically elected. The senate is comprised of 105 members,
who are directly selected by the Governor General and Prime Minister. The party that
wins the most seats in the House of Commons becomes the controlling party, from whom
the prime minister is chosen when necessary.
Judicial34
The Canadian constitution provides for the establishment of a Supreme Court,
which is centered in Ottawa: also known as ‘The Court of General Appeal’. 35 Sitting just
below it in power is “The Court of Federal Appeal” and many provincial courts of appeal.
Below that are the local superior courts of general jurisdiction and tax courts and at the
bottom are the lower level provincial courts
33 “Home Page” Parliament of Canada34 “Home Page” Supreme Court of Canada35 “The Canadian Judicial System” The Supreme Court of Canada
Balance of Powers36
Like the US, Canada has both federal and local governments for each of their ten
provinces; which are often at ends. Historically it has been weighted in favor of the local
governments, though with the emerging international markets consolidation of power has
become increasingly important in Canadian infrastructure. In theory Canada balances
powers between federal and provincial law, but federal is essentially absolute.
Stability37
In 2006, The Economist’s Intelligence Unit ranked Canada as the 9th most
functional and stable democracy on the globe; well ahead of the United States and United
Kingdom respectively. Especially effective for Canada is the functionality of their
government and amount of civil liberties bestowed on their people. The top of the chart
can be viewed in Appendix C.
ECONOMICS38
GDP : 1.565 trillion per year (world rank 9th) Q2 2010
GDP at Parity : 1.328 trillion per year (work rank 14th) Q2 2010
Real GDP : 1.506 trillion per year (world rank 11th) Q2 2010
GDP per Capita : $46,200 per person per year (world rank 19th) Q2 2010
GDP real Growth : +2.21% per year (world rank 136th) Q1 2010
Gini Index : .32 (world rank 34th) 2005 estimate
Inflation Rate : +3.949% per year (world rank 149th) 2008 estimate
Unemployment Rate : 6.1% (world rank 103rd) 2008 estimate
36 “Canada’s Constitution” Nesara37 “Democracy Index Rankings” The Economist 2007 38 “Canada Information” Wolfram Alpha 2010
Stability of Banking
By and large, investors and economists view the Canadian economy as one of the
most secure of any country in the world. Backed by gold and valuable natural resources
such as oil, through 2008 Canada had achieved eleven straight years of budget surplus. 39
Its international demand of product grew at a rate of 3.2% in the 2nd quarter of 2010, more
than three times that of the United States. 40 In 2010 overall budget deficit represented
4.5% of Canada’s GDP; far less than the US’ 8.9%. 41 In 2008, the pit of the international
recession, Reuters declared that Canada has the soundest banking system in the world, at
a ranking of 6.8 out of 7. 42 Projected GDP growth of major territories may be found in
the chart below, with Canada taking top honors.
43
Currency
Canada operates on the “Canadian Dollar”, often referred to as the Looney. The
Canadian Dollar had been traded for many years at a rate hovering around .56C$=1.00
39 “Cashing in on Canada” Money Morning 201040 “Investing in Canada” Money Morning 2010 41 “Investing in Canada” Money Morning 201042 “Canada Rated World’s Soundest Bank System” Reuters 200843 “Cashing in on Canada” Money Morning 2010
USD. However, due to growth in the Canadian financial sector and decline in the US’, it
is now almost equivalent in value with the USD; trading at .98C$=1.00 USD. 44
Inflation45
Historically, Canada’s inflation has averaged +3.26% annually since 1915, with
high swings in both directions over various years. The graph below shows that over the
past two years the inflation rate has remained around 1.5%. As of October 22nd, 2010 the
inflation rate was approximated at 1.9% annually.
46
Impact of Recession on Cultural Industries47
The global recession has threatened Canadian consumers’ discretionary spending
budgets significantly. As such, revenues in the cultural industries have taken hits in the
past year. Most notable for the purposes of this report are declines in Broadcasting (-
4.8%), Festivals (-2.6%), Performing Arts (-2.9%) and Sound Recording and Music
Publishing (-1.2%). These figures are estimates on the direct effect of the recession only,
as opposed to overall revenue declines. 48
44 “Canada’s Geology” Wolfram Alpha45 “Canada Inflation Rate” Trading Economics 201046 “Canada Inflation Rate” Trading Economics 201047 “The Effect of the Global Economic Recession on Canada’s Creative Economy in 2009”; Pg 1348 “The Effect of the Global Economic Recession on Canada’s Creative Economy in 2009”; Pg 13
49
INTERNATIONAL RELATIONS
In the past several decades, Canada has made measures to ensure positive and
mutually beneficial international relations globally. In 1970, then Canadian Prime
Minister Pierre Trudeau established diplomatic relations with China when he recognized
the existence of the PRC (one of the first western countries to do so).50 Since then, China
has become Canada’s second highest trading partner behind the United States, with
Chinese imports into Canada totaling almost $40 billion. 51 In 1985, a group of Canadians
founded the National Council on Canadian-Arab relations in an effort to better
understand and work with Middle Easterners. Its mission is to be a reference for
politicians to make informed decisions when it comes to maintaining good relations with
Arab populations.52 As a part of The Commonwealth of Nations, Canadian citizens enjoy
49 “The Effect of the Global Economic Recession on Canada’s Creative Economy in 2009” Pg. 1350
“Canadian PM hails China-Canada diplomatic relations on 40th anniversary” Xinhuanet 201051“Canada & People’s Republic of China Relations” Wikipedia 2010 52 “Mission” National Council of Canada-Arab Relations
free trade and free short-entry visas across many member nations, among many other
benefits.
NAFTA
The North American Free Trade Agreement established a series of regulations
that was intended to encourage trade and investment between The United States, Canada
and Mexico; coming into effect January 1st, 1994. One of its primary methods was the
elimination of nearly all tariffs, scheduled to be completed within ten years of its
induction. Canada is often thought to have gained the most from NAFTA with their GDP
increasing steadily from 1994-2003 at 3.6%, faster than the United States’ 3.3% and
Mexico’s 2.7%.53
Controversy – “Cultural Industries Exception”54
Much controversy has been generated over a specific provision in NAFTA in
regards to the protection of Cultural Industries- one of the few categories that are exempt
from unrestricted free trade. Article and annex 2106 of NAFTA defines cultural
industries as “persons engaged in any activities involving the publication, distribution or
sale of books, magazines, periodicals or newspapers, film or video recordings, audio or
video music recordings and broadcasting.”55 This was a major negotiation point for
Canada because they put high precedence on protecting their unique cultural heritage
from United States’ media saturation. However, if Canada decides it wants to impose
tariffs on the importation of cultural products from the U.S., under NAFTA the U.S. has
the right to take equal aggressive action against Canadian products of similar nature;
53 “NAFTA’s Economic Impact” Council on Foreign Relations 200954 “Chapter 21 Exceptions” Foreign Affairs and International Trade Canada55 NAFTA; Chapter 21
making the provision in many ways useless and harmful to income streams from
Canadian products.56
CULTURE
Language57
Canada is unique in the fact that they recognize two languages as being their
official language: English (approximately 59%) and French (21%). Additionally, twenty
percent of the population has a different native language. 58 The integration of French and
English languages is thought by many to be the heart of what it means to be Canadian. As
such, there is significant stressed placed on the advancement of the bilingual system. Of
the 6.6 million who speak French in their home, 92% of them live in and around Quebec:
the hub of the Francophone population (Eastern Coast). 59 The Canadian federal
government protects and represents aspects of French culture: publishing all reports and
documents in both English and French.
Education and Literacy
Historically, Education in Canada has always been in the high margins, with
literacy rate estimations consistently in the ninety-ninth percentile.60 (Though some
sources suggest that as many as 20% of Canadian adults do not possess basic literary and
mathematic skills61) However, a growing lower-class immigrant population and
56 “Cultural Exemptions in Canada’s Major International Trade Agreements” Library of Parliament57 “2006 Census Profile of Federal Electoral Districts: Language, Mobility and Migration and Immigration and Citizenship”; Pg 258 “2006 Census Profile of Federal Electoral Districts: Language, Mobility and Migration and Immigration and Citizenship”; Pg 259 “Languages of Canada” Wikipedia 60 “Canada Information” Wolfram Alpha 201061 “Literacy in Canada” Canada Online 2009
underperforming class of senior citizens are expected to drive the literacy rate down by
significant percentages in the coming decades.62 Educational spending represents
approximately four percent of Canada’s GDP.63 Upon graduation of the equivalent of
‘high school’, Canada has the highest percentage of graduates to enroll in university of
any country in the world.64
Time Consumption65
A June 2010 report on Canadian citizens’ well-being follows several key
emerging trends in everyday life. Most noticeable is a decrease in individuals working
long hours from 15% in 1999 to 11% in 2009, but an increase in working non-standard
hours such as weekends and nights. Additionally, time spent on social leisure activities
(defined as sports, games and family activities) is decreasing .3% annually. This means
that the additional hours are being spent in the so-called ‘arts and culture’ activities
category which include activities like live performances, radio, television, internet and
mobile. Overall performing arts attendance and production has decreased since 2001,
though media spending has risen 10% in that same period. One can attribute these
disparities to the growing importance on mobile and internet consumption, which has
surpassed TV consumption nationally in 2009 for the first time ever. 66
Music Consumption67
A Decima study in 2008 estimates that Canadians listen to music on average
twenty-seven hours per week: up from nineteen hours per week in 2005. While traditional
62 “Canada’s Literacy Rate is below World Standards” Canada.com63 “Education in Canada” Wikipedia64 “Education in Canada” Wikipedia65 Canadian Index of Wellbeing66 “Canadians’ Internet use exceeds TV” by Iain Marlow The Globe and Mail 201067 The Canadian Music Industry 2008 Economic Profile; Pg 17
radio continues to be the dominant means of listening (36%, down from 44% in 2005), a
new generation of teenagers brought up on social media and the internet is shifting music
consumptions towards streaming sites, and considerably increasing consumption as a
whole. Canadians between 15 and 19 years of age listened to fifty percent of their music
through either portable digital players or computers, with social media sites accounting
for twenty percent of their time. Within this demographic, traditional radio falls to a mere
twelve percent of consumption share.
68
The time spent listening to Canadian artists is estimated at thirty percent
nationally, and forty percent in francophone-dense areas such as Quebec. Listening to
Canadian artists is significantly more popular among those aged twenty and older than
for teenagers. 69
Music Discovery70
Traditional radio continues to be the dominant method of music discovery among
Canadians, accounting for sixty-five percent of new music found; down from seventy-
68 The Canadian Music Industry 2008 Economic Profile Pg. 1869 The Canadian Music Industry 2008 Economic Profile Pg. 1970 The Canadian Music Industry 2008 Economic Profile Pg. 19
five percent in 2007. Among those aged 15 to 19, word of mouth was the largest
proponent of music discovery at thirty-seven percent. Web sites and blogs in this
demographic accounted for eighteen percent.
Consumer Spending71
In 2008, Canadians spent an average of $71,364 Canadian dollars annually, up
2% from 2007 but below the inflation rate of 2.3%. Taxes and shelter accounted for 40%
of spending, transportation was approximately 13.5%, food was 10.4%, recreation was
5.5%, household operation and equipment was 7% and Games of Chance were .33%. 72
Online, growth in Canadian spending has tapered off with only forty percent of online
consumers making purchases as of 2008. Web purchasers tend to be male, college-
educated and already constant web users. 73 As the Canadian dollar has grown against the
US dollar in the past several years, US retailers have gained incentive to sell to Canadian
consumers through D2C measures online.74
TECHNOLOGY
Technological Access75
New technologies continue to gain penetration throughout Canada. In 2008, seven
of ten Canadian homes had access to high-speed internet, 75% of people owned a cell
phone and almost sixty percent had a portable digital music player. Within the teenage to
early twenties demographic, there is essentially universal access to new technologies. In
71 “Average Expenditures by Income Level” Statistics Canada 201072 “Average Expenditures by Income Level” Statistics Canada 201073 “Who’s Shopping Online in Canada?” by Carrie Johnson Forrester 200774 “Who’s Shopping Online in Canada?” by Carrie Johnson Forrester 200775 The Canadian Music Industry 2008 Economic Profile Pg. 16
largely Francophone populations, internet access is generally lower and is separated
statistically from its Anglophone counterparts.
76 77
Computers and the Internet78
In 2009, Canadian Internet demand reached an estimated $4.88 billion and is
expected to increase at a rate of $350 million per year through 2013. The US’ demand is
at $55 billion and will grow annually by $6 billion. In 2009, eighty percent of Canadians
who were at least sixteen used the internet at some point; up seven percent from the year
before.79 In the highest populated metropolitan areas, the percentage reached almost
ninety-percent. High speed internet now accounts for 92% of total internet use. Also
notable is the narrowing gap in internet use between wealthy and poor families: In 2009
the highest and lowest income quartiles’ internet usage was 94% and 56%, whereas in
2008 it was 90% and 48%.80 The computer market, like the US, has been largely
dominated by PC based players. In 2009, HP held 22.1% market share, Dell had 21.7%
and Apple, continuing a huge upward trend, just cracked ten percent market share.81
Twenty-five percent of the Canadian households have broadband - only South Korea is
76 The Canadian Music Industry 2008 Economic Profile Pg. 1677 The Canadian Music Industry 2008 Economic Profile Pg. 1678 “Canadian Internet Use Survey” Statistics Canada 200979 “Canadian Internet Use Survey” Statistics Canada 200980 “Canadian Internet Use Survey” Statistics Canada 200981 “Apple Takes Double Digit Market Share in Canada” Apple Insider 2010
ahead in the World in terms of broadband penetration.82 “By 2009, sixty-five percent of
all Canadians reported using the Internet for five or more years, up from fifty-four
percent in 2007. People who had used the Internet longer also reported a wider range of
online activities.”83
Portable Music Players
The iPod currently holds almost 50% market share in Canada with models from
Sandisk, Samsung, Creative Labs and Microsoft’s Zune making up the majority of the
rest of the market. MarketResearch estimates that Canada’s demand for portable music
players is at $31.6 million with growth of $2 million annually.84
Mobile Smart Devices /Carriers
The mobile smart device market is completely dominated by the iPhone/iTouch,
which as of February 2010 held 86% market share. 85 Behind it are the Opera at 4%, the
Sony PSP at 3% and an assortment of other devices with 7% total.86 For wireless carriers
in 2009, Bell Canada owned 25% market share, Telus owned 27% and Rogers owned
23%. 87 Many believe that Canada has been late getting into the mobile world, with
penetration hovering around seventy percent since 2007.88
82 “Canada- a land of lost opportunity?” by John Kennedy International Federation of Phonographic Industries201083 “Canadian Internet Use Survey” Statistics Canada 200984The 2009-2014 World Outlook for MP3 Players85 “iPhone Has a Huge Market Share in Canada” GoSammy 201086 “iPhone Has a Huge Market Share in Canada” GoSammy 201087 State of Consumers and Technology, pg. 1388 “Canada’s Mobile Penetration Remains Stable-Study” Wireless Federation 2009
INTELLECTUAL PROPERTY
Intellectual Property Rights
According to the Intellectual Property Institute of Canada, “Patents, trade-marks,
copyright, industrial designs and similar rights are referred to as "intellectual property".
These rights are "property" in the sense that they are based on the legal right to exclude
others from using the property and in that ownership of the rights can be transferred. The
rights are "intellectual" in the sense that they protect intangible subjects, usually arising
out of some form of human creativity.”89
According to s.3(10) of the Copyright Act of Canada rights owners have the
exclusive right to:90
Produce or reproduce a work or any substantial part of a work, in any material
form
Perform a work, or any substantial part, in public
Publish an unpublished work or any substantial part
Translate a work
Convert a dramatic work, i.e. a play to a novel
Convert a dramatic work by way of performance, i.e. convert a novel to a play;
Make any sound recording
Adapt a work as a cinematographic work, i.e. a novel to a movie
Communicate the work by telecommunication to the public, i.e.
Send a work to another person using an e-mail program
Present a work at an artistic exhibition
Rent a computer program or a sound recording
Authorize somebody other than the copyright holder to do any of the above acts.91
NB: Unlike the US, Canadians have the ability to rent sound recordings.
History of Copyright92
89 “What is IP?” Intellectual Property Institute of Canada90 Copyright Act of Canada91 “Canadian Copyright Law” Creativecommons.ca92 “Chronology of Canadian Copyright Law” Digital Copyright Canada
Canada’s copyright history begins loosely with The Statute of Anne in 1709
having relative (though no formal) applicability to Canada as a British colony in the early
1800’s. In 1841, the groundwork for native Canadian copyright was founded with the
protection of musical compositions, maps, books, charts and prints with the passing of
The 1841 Copyright Act. It was passed with the goal of encouraging book production and
creativity in Canada. One could only obtain copyright if residing in Canada at the time.
In 1842, Britain passed a copyright law for all of it’s colonies that prevented the
importation of British works from any country besides Britain. At that time, it was not
illegal in the United States to reprint works published in a foreign territory without
paying royalties or getting clearance. This stemmed controversy between Canada and
Great Britain, as British imports were far too expensive and fueled a legal battle for self-
determination with copyright which was finally denounced by the British in 1847.
In 1924, the most important legislation for copyright in Canada’s history was
passed: The 1922 Copyright Act of Canada. While it is still Canada’s prevailing doctrine,
the act itself has gone through major revisions through the 20th century, most notably in
1988 and 1997. (Provisions listed in previous section). In 1988, computer programs were
protected, moral rights (droit morale) were clarified, and the compulsory license for the
reproduction of musical works was removed temporarily. In 1997 sound recordings were
declared to embody a performance and royalties were imposed on playing them publicly,
a private copying tax was placed on blank audio devices; and libraries and museums were
granted free use of copyrights in many instances.93 Over the next decade many provisions
93 “History of Copyright Law in Canada” Maple Leaf Web
were added in similar fashion to the Digital Millenium Copyright Act, allowing for
copyright infringement on the grounds of circumventing piracy protection.94
International Agreements with Copyright Implications95
Canada-US Free Trade Agreement (1989)
-Precursor to NAFTA that was superseded upon NAFTA’s implementation
North American Free Trade Agreement (NAFTA, 1994)
-Rental right for Sound Recordings
-Increased protection against pirated works
-Cultural Industries free trade exception (see NAFTA section)
World Trade Organization (WTO, 1995)
-Provisions to prevent against unauthorized recordings and transmissions of live
events
-Extended protections in Canada to all WTO members
World Intellectual Property Organization (WIPO, 1997) - (Still Awaiting True
Adoption 96 )
-Brought signatories’ copyright law in accordance with WIPO agreements
-Adjusted protections for digital mediums
Convention for the Protection of Performers, Producers of Phonograms and
Broadcasting Organizations (1997)
-Allows performers/songwriters to receive royalties for public performance or
broadcast internationally
94 “Copyright Act of Canada” Wikipedia95 “History of Copyright Law in Canada” Maple Leaf Web96 “Setting the Record Straight: 32 Questions and Answers on C-32” by Michael Geist 2010
Berne Convention
Followed Berne minimum standards for copyright protection
Copyright Provisions97
Like in the United States, in order for a work to be copyrightable in Canada it
must be an original, non-utilitarian work in fixed form. "For copyright to exist in a 'work'
it must be expressed to some extent at least in some material form, capable of
identification and having a more or less permanent endurance."98 The works that are
technically protected are “literary, dramatic, musical and artistic.”99 Copyright only
pertains to the expression of ideas, as opposed to the ideas themselves. Additionally, for a
copyright to exist in Canada the creator must be a citizen or subject of Canada, or be of a
country that is a member of a ‘multinational or bi-national agreement to which Canada is
also a member’ at the time of it’s creation. 100 In general, current copyrights last for the
life of the author plus fifty years; although there are several exceptions and adjustments
to this rule based on the type of work and other factors.
Joint Works101
A joint work is when one or more authors consciously create a work together, and
as such, share a piece of work’s copyright. In Canada, the duration of this copyright is
fifty years after the last author dies. 102 Either party can license the work as a non-
exclusive license.
Private Copying
97 “Canadian Admiral Corp v. Rediffusion” Wikipedia 98 “Canadian Admiral Corp v. Rediffusion” Wikipedia 99 “History of Copyright Law in Canada” Maple Leaf Web100 “History of Copyright Law in Canada” Maple Leaf Web101 Joint Authors by Robert Lesperance pg. 4102 “History of Copyright Law in Canada” Maple Leaf Web
According to The Copyright Act of Canada, copying music for private use is legal
across all formats. However, in 1999 the Canadian government levied a tax on every
blank recording disk that manufacturers produce in the ‘Private Copying Tariff bill.’ It
provides that for each product sold, the manufacturer must pay (as of 2010) 29c103 to the
Canadian Private Copying Collective (CPCC), whereupon the cents will be distributed
58.2% amongst The Society of Composers, Authors and Music Publishers (SOCAN), the
Canadian Mechanical Reproduction Rights Agency (CMRRA), and the Society for
Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) to
distribute to the applicable artists. 23.8 percent will go to Re:Sound Music Licensing
Company for eligible performers and the final 18 percent will go to Re:Sound Music
Licensing Company for eligible distributors (record labels).104 This statute has raised
millions for artists, labels, publishers and songwriters.105 It has not been adapted to any
form of digital medium as of now.106 In 2008, the CPCC collected $29.3 million in
revenues. Among that, they distributed $27.6 million to the copyright collectives
(SOCAN, CSI) that represent songwriters, composers, performers, producers, etc. Since
2000, the CPCC has distributed $173 million to these entities. 107
Copyright Enforcement108
With a population of less than .5% of the world, Canada hosts four of the top ten
most used bittorent sites globally. Many consider Canada to be severely lacking in proper
piracy protection, and among the worst of developed economies. With efforts leading
103 “The Private Copying Tariff, 2010” Canadian Private Copying Collective104 The Private Copying Tariff Pg. 5105 “Copyright Act of Canada” Wikipedia 106 “The Private Copying Tariff, 2010” Canadian Private Copying Collective107 The Canadian Music Industry 2008 Economic Profile Pg. 23108 “Canada” International Intellectual Property Alliance 2010
towards the implementation of the WIPO treaties and Bills C-60 and C-61 that were
proposed specifically to target and punish pirates, it had appeared for a time that Canada
would be among the front runners in combating the outbreak of digital stealing. However,
a lack of incentive for internet service providers to aid anti-piracy measures and a lack of
liability on the parts of P2P site operators led to in-action over the past several years.
Moving forward it has been suggested that ISP’s must cooperate in shutting down
copyright infringing sites in order to maintain their low liability in the matter. Previous
legal attempts to shut down sites have resulted in a ‘notice and then notice” action, as
opposed to the desired “notice and shut down;” displaying government officials’ lack of
effort and power.
Since information is vague on the legality of all these measures, consumers are
still drawn to consume pirated material. In 2007, Pollara estimated that 1.3 billion songs
had been illegally downloaded; a 65:1 ratio to legal downloads of that same year. In June
2010, bill C-32109 was signed into law- a successor of the failed C-60 and C-61 bills. It is
a solid attempt to strengthen copyright protection within Canada to encourage
investment, clarify the illegality of non-ISP compliance and P2P sites, stop DRM
circumvention, and impose a statutory payment of $500 for music downloading
infringements.110 Additionally, it makes digital lock hacking (DRM) became officially
illegal and punishable.111 Reports indicate that large numbers of infringers are receiving
warning messages for the first time.112
C-32 Controversy113
109 “Setting the Record Straight: 32 Questions and Answers on C-32” Michael Geist 2010110 “Bill C-32” Wikipedia111 “Music of Canada” Wikipedia112 “New Canadian Copyright Law”
Beyond the questions over the effectiveness of the new bill, a specific provision is
garnering significant doubt; even among the Canadian Recording Industry Association
president. The bill provides that a compulsory license of $5,000 may be issued to an
individual who wishes to copy media and information off the internet for non-commercial
use. The issue is that by the law, the obtainer of the license may essentially obtain
unlimited content and only be liable to pay the $5,000 to the first rights holder they
downloaded from. Graham Henderson, president of the CRIA, said that: “Nobody else
would get a cent. It's close to saying that for people who want to steal stuff, there's a
compulsory license of $5,000." 114
Copy Protection Devices115
Like in the US, Digital Rights Management (DRM), a method of restricting
access to copying and modifying files and specific technologies, is of wide use and a
subject of much debate. The aforementioned Bill C-32 provides harsh penalties for the
disabling and circumventing of DRM tools; up to $20,000 per offense.
Registering Copyright116
Though it is not required to register one’s copyright in order to gain protection, it
does give legal presumption that the copyright does exist and the specific individual
registered it. One cannot license a musical work unless it has been properly registered
with the federal government. It also allows one to issue injunctions and file for damages
against infringers. 117
113 “Canadian Recording Industry Claims that Canadian Copyright Proposal is a $5k License to Infringe” by Mike Masnick Techdirt 2010114 “Canadian Recording Industry Claims that Canadian Copyright Proposal is a $5k License to Infringe” by Mike Masnick Techdirt 2010115 “Setting the Record Straight: 32 Questions and Answers on C-32” Michael Geist 2010116 “Copyright Registration in Canada” Business Development Centre117 “Copyright Registration in Canada” Business Development Centre
Moral Rights118
Moral Rights are a protected component of Canadian Copyright Law, expressed
in The Copyright Act of Canada and The Berne Convention. Essentially, moral rights
give the author of the work the ability to prevent ‘the mutilation or distortion’119 of their
work ("integrity right") and that the creator will always get credit for their work by name.
("Attribution right")
Trademarks120
The Intellectual Property Institute of Canada (IPIC) defines a trademark as
follows:
“A trade-mark is a word, design, number, two-dimensional or three-dimensional form,
sound or color, or a combination of two or more of these elements which a trader uses to
distinguish his/her products or services from those of his/her competitors and serves to
establish goodwill with the consumer.”
Trademark registration goes through the federal government and must be used in
territories in order to gain complete rights, in addition to the legal benefit of the doubt.
PIRACY
Online Piracy
In July 2005, the OECD cited Canada as having the largest per capita online
piracy in the world. 121 In 2010, the IFPI put out a report that ranked Canada as having the
118 “Moral Rights” Creative Commons119 Mark Goldstein, lecture 11/9/10120 “About Trade Marks” Intellectual Property Institute of Canada121 “Canada- a land of lost opportunity?” by John Kennedy International Federation of Phonographic Industries2010
11th worst pirated country; next to Pakistan, Indonesia and China.122 In the past decade,
Canada’s music industry has lost an estimated $525 million annually due to piracy; and
has contracted to eighty percent of the original workforce.123
An extreme example that the IFPI gives is the band Tragically Hip, one of the
most prominent and critically acclaimed indie rock acts of the past decade. Over a six
week period, they nationally sold 1,000 tracks and simultaneously had over 2.8 million
tracks illegally downloaded. 124
Every year the US publishes a Special 301 list, designating countries that provide
poor intellectual property protection. In a statement making move, Canada was added to
that list last year.125 They are placed among countries that are notorious for having highly
unstable government, such as North Korea and China.126Seventy-one percent of Canadian
musicians think that piracy is at least a minor threat to their industry.127
Pirate Technology
One of the most prominent torrent sites in the world is Isohunt. After it was shut
down by its ISP in the United States at the end of 2007, it moved its primary servers to
Canada because the owners thought they would have less legal trouble. 128 After being
sued by the Canadian Recording Industry Association (CRIA) in 2008, Isohunt counter
sued for damages and tried to establish Bittorrent trafficking as a legitimate aggregator of
122 “Canada- a land of lost opportunity?” by John Kennedy International Federation of Phonographic Industries2010123 “Canada- a land of lost opportunity?” by John Kennedy International Federation of Phonographic Industries2010124 “Canada- a land of lost opportunity?” by John Kennedy International Federation of Phonographic Industries2010125 “Canada: Internet Piracy Haven” by Javad Heydary Technews World 2009126 “Canada: Internet Piracy Haven” by Javad Heydary Technews World 2009127 An Overview of the Financial Impact of the Canadian Music Industry; index ii128 “IsoHunt Lawsuit Send Message to CRIA, RIAA, MPAA & More” Web TV Wire2008
information under Canadian law; claiming to operate much in the same way that Google
does.129 As of now, the case has not yet been decided. Isohunt is said to host
approximately 1.2million torrent files, and is growing at a rate of 1,000 torrents per
day.130 At a point in 2007, Canada hosted six of the top ten P2P sites globally; a current
list can be found below:
131
Government Piracy Studies132
The following are notes obtained from a third party (albeit government-
sponsored) study on the effects of piracy and peer to peer downloads in Canada in 2006.
It touches upon both the negative and positive effects of such a controversial subject, and
produced some very interesting Canadian-consumer-specific findings. It additionally
provides data on consumers’ overall music purchasing habits. It is assumed that the
researchers had no direct desired or influenced outcome for the results: it was simply
instigated to aid policy making decisions in the federal government level. Here are
excerpts of the findings:
129 “IsoHunt Lawsuit Send Message to CRIA, RIAA, MPAA & More” Web TV Wire2008130 “Top 10 Most Popular Torrent Sites” Aimersoft131 “Canada’s Embarrassing place in the BitTorrent rankings” Barry Sookman 2009132 “The Impact of Music Downloads and P2P File-Sharing on the Purchase of Music: A Study for Industry Canada” Industry Canada 2008
“Among Canadians engaging in P2P, P2P file sharing increases CD purchases.
The study estimates that 12 additional P2P downloads per month increases music
purchasing by 0.44 CDs per year.”
“When viewed in the aggreggate (ie. The entire Canadian population), there is no
direct relationship between P2P file sharing and CD purchases in Canada. There
is no direct evidence to suggest that the net effect of P2P file sharing on CD
purchasing is either positive or negative for Canada as a whole."
“P2P downloads neither increase nor decrease the likelihood of iTunes purchases”
“CD prices have little impact on CD purchases, though pricing does indirectly
affect P2P sharing”
“People who buy digital downloads are not less likely to buy CDs”
“People who own MP3 players are less likely to buy CDs”
“People who buy large numbers of DVDs, videogames, cinema and concert
tickets also buy a higher number of CDs.”
“Household income has no statistically significant effect on CD or digital
download purchases”
Prevention
For prevention tactic implementation, please review the intellectual property
copyright enforcement section.
THE MUSIC INDUSTRY
Overview
Canadian music history has a rich tradition that draws influence from its French,
British, American and Aboriginal Indian cultural connections. Today, Canada has
produced some of the most well-known and highest selling artists of all time. Notables
include Celine Dion, Neil Young, Bryan Adams, Shania Twain, Alanis Morrisette,
Michael Buble, Avril Lavigne, Nickelback, and countless others.133 Though its global
market share (two percent) is small compared to the likes of the US, UK and Japan134, its
presence has had an undeniable effect on the music world.
133“High Fidelity: Top Selling Canadian Artists” by Josh Learn 2009134 “Music Industry” Wikipedia
Roots135
With the early settlers of New France came the influence of European music and
instruments to the Canadian territory. Records trace back to the early 16th century as
being the first time that Indians and French settlers in Quebec City were trained in
‘Western’ classical instruments such as violin, viola, piano, guitar, flute and brass.
Though these early musical experience was disorganized, it is believed that communities
held informal concerts. The first records of initial concerts came with the penetration of
the newspaper into the mainstream in the mid 1700’s. With little to no copyright
protection, the only way to make a living in music was to be able to play, perform, repair
instruments and teach.. During these first centuries, native Canadian folk songs were
transmitted orally, and made up some of the most sustainable evidence of early Canadian
identity. After the French-Indian wars in the 18th century culturally crippled the country,
music production accelerated again in the 19th century, consisting of mostly ‘classical’
dance music. (Polkas, waltzes, etc) Music was published for the first time; leading to folk
classics being replaced with ballads and dance tunes. The first music organizations were
introduced in the early 1800’s as a means for singers and instrumentalists to find one
another. Organ and piano production began in the 1820’s and brought about a new age of
parlor singers and learned musicians.
Timeline of Key Events 136 / 137
Mid 1800’s- Music instruments were sold and sheet music was first published
1860’s- Music conservatories emerge across the country
1900- Sound Recordings first manufactured by Berliner Gramophone Company
135“Music History” The Canadian Encyclopedia136“Music History” The Canadian Encyclopedia137 “Recording Industry” The Canadian Encyclopedia
Early 1900’s- Independent music labels first emerge
1908- First music competition festivals
1910- Piano sales are at their prominence
1920- Commercial radio stations come to prominence
1925- The Canadian Performing Rights Society was founded, the early equivalent
of ASCAP or BMI for the collection of royalties for lyricists and composers
1927- Early Canadian folk music re-recorded and distributed by Marius Barbeau,
W. Roy Mackenzie, and Helen Creighton
1930’s, Jazz and Swing music become immensely popular during Great
Depression
1936, Creation of Canadian Radio Broadcasting Commission to moderate all
Broadcasting. Over a million Canadians have radios.
1942- Biggest conservatory in Canadian history built in Quebec: fuels new age of
musical interest
1945- Canadian Broadcasting Company releases first album
1960’s- Neil Young garners international acclaim; establishing Canada’s new
folk scene
1968- Federal Broadcasting Act implemented – 30% of all music radio must
feature Canadian artists
1970’s- FM Radio begins playing mainstream music
1975- Juno Awards first held (Equivalent of Grammys)
1985, Hip Hop invades Canada
1999- Napster is launched. Begins ten straight years of recorded music losses.
2004, Celine Dion passes worldwide sales of 175 million; the most of any
Canadian artist ever
Sectors138
The Canadian Music Industry is comprised of (though not limited to) the
following sectors:
Live Music (Technical, Managerial, Performance, Vendors)
Recorded Music (Record Labels, Recording Studios, Manufacturing Plants,
Producers, Engineers)
Distribution / Marketing (Labels, Human Resources, Promoters)
Broadcast (Terrestrial Radio, Online Radio, Podcasts)
Publishing (Performance, Mechanicals, Songwriting)
Supervision (Music for use in other media)
Retail (Merchandise)
Legal
Trade Associations (Unions, Award Shows)
Musicians Income and Expenses139
In 2008, musicians earned on average $24,837 from their exploits as a musician
and had direct music-related expenses of $8,346. Of their revenues, $12,050 (forty-eight
percent) came from live performances and touring, $4,319 (seventeen percent) from
studio work, $1,138 from advertisements and sponsorships, $574 from government
grants, $563 from direct CD sales, $299 from licensing, $277 from CD royalties, $236
from performing rights organizations, and $83 from merchandise. Of expenses, $2,112
138 “The Canadian Music Industry” Canadian Heritage 2007139 An Overview of the Financial Impact of the Canadian Music Industry; pg. 12
(twenty-five percent) was from transportation, $1,486 from instrument purchases and
upkeep, $721 from non-music supplies, $644 from other equipment, and $358 from
marketing. This results in a profit margin of 66.4%.
Employment Percentage140
Based on figures gathered from around 2000, and incorporating a 20%
employment drop based on industry studies, the Canadian music industry employs
approximately 12,800 individuals across all categories. Roughly the employment is
broken up as thirty percent retail (physical, digital, mobile), twenty-five percent
production and forty-five percent labels, studios, managers and lawyers.
RECORDED MUSIC
Overview
Canada has the sixth largest market in the world for recorded music with 2008
operating revenues of $456 million USD. Current revenues represent approximately two
percent of the global music market share and fell 7.4% from 2009 Q2-2010 Q2.141
Physical Revenues have consistently fallen annually over the past decade, losing 50%
since 1999, while digital revenues grew from $2.2 million to $82 million from 2004-
2008.
140 The Canadian Music Industry 2008 Economic Profile Pg. 12141 “IFPI publishes Recording Industry in Numbers 2010” International Federation of Phonographic Industries2010
142
Sales
In 2008, album sales (Physical and Digital) fell by 14% to a total of 35.9 million
units (Total of 40 million if track equivalent albums are added). Of the total, 32.5 million
were physical and 3.4 million were digital. Canadian albums lost almost 6% market share
to 20.7% in the same time frame.143 Sales hit their peak in 1999, when 62.7 million units
were sold.144 However in 2009, due to significant growth in the digital music sector (forty
percent), total album sales (including track-equivalent albums) gained two percent to 40.8
million units.145 Though physical albums again declined by 6.7%, the gains in digital
music more than made up for this loss.146 This represents a significant positive change
even amidst a poor global economy; and a sign of good things to come for the Canadian
music business.
Consumer Trends
In 2008, 77% of Canadians purchased at least one music compact disk (highest
among middle-aged Canadians) and 40% purchased a music DVD (highest among
teenagers). Of the percentage of Canadians with internet access, 22% legally purchased a
142 The Canadian Music Industry 2008 Economic Profile Pg. 9143 “Consumers” Canadian Heritage 2008144 An Overview of the Financial Impact of the Canadian Music Industry; Appendix iv145 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 1146 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 1
digital track. That figure for 15-19 year olds was as high as 57%. Legal track
downloaders in Quebec had only a 14% frequency. Thirteen percent of internet users
bought a digital album in 2008; with a 40% frequency among users 15-19.
Approximately one-fourth of total digital track and album sales were from Canadian
artists. 147 Since the beginning of the decade, the average number of tracks on an album
has decreased from thirteen to ten.148
Industry Financial Analysis149
In 2008, Canada’s sound recording industry had a 13.1% profit margin, up from
9.6% two years prior. The penetration of more affordable recording technologies and
digital audio, reduced marketing costs with online direct to consumer solutions, and
reduced distribution costs with digital retailers becoming increasingly prevalent led
operating expenses to drop from C$640.5 million to C$538 million from 2006-2008, a
16% decrease. Though revenues dropped 13% over that same period, the decrease in
expenses made up for the loss of revenue. This trend is bound to continue in the coming
years as digital technology becomes more widely effective and adopted, and consumption
for music increases. In 2008, integrated record production and distribution accounted for
seventy percent of the total Canadian recorded music revenues150 The number of
reporting record label entities was 425 in the same year, up from 320 in 2006.151
147 The Canadian Music Industry 2008 Economic Profile Pg. 9148 An Overview of the Financial Impact of the Canadian Music Industry; pg 32149 “The Music Market” Canadian Heritage 2008150 Sound Recording and Music Publishing pg. 1 2008151 Sound Recording and Music Publishing pg. 2 2008
152
Foreign vs. Domestic Labels
The sound recording industry is largely controlled by non-Canadian labels (major
labels), which have had significantly more success than Canadian-owned (independent)
labels over the past decade. Revenue for Canadian labels increased 24% from 2006-2008
and their market share jumped from 21% to 28%. However, Canadian labels’ expenses
have been increasing, as foreign labels’ are declining.
Canadian labels released more than 80% of new Canadian recordings and
generated 63% of total Canadian-artist revenues. Sales of Canadian artists in foreign
labels accounted for only 11% of their revenues, though they control 70% of the
marketplace.153
Revenue Distribution
152 “Sound Recording and Music Publishing” Statistics Canada 2008153 “The Music Market” Canadian Heritage 2008
Operating recorded music revenues are divided into Physical, Digital and
Performance Rights income streams. In 2008, physical sales accounted for seventy-nine
percent of total revenues at $384.2 million, digital sales captured seventeen percent at
$82.4 million and performance rights was four percent at $21.5 million. 154 Digital
albums’ unit market share against physical sales’ has been steadily increasing; from two
percent in 2006 to approximately nine percent in 2008. 155
156
CRIA157
The Canadian Recording Industry Association (CRIA) is the official trade
association in representation of all sound recording companies. Their job is to track sales
of records, award platinum and gold certifications (See Appendix B), protect the industry
from piracy and lobby to the government in favor of sound recording based businesses.158
The CRIA has a full time staff working on anti-piracy issues, and have teamed with the
Recording Industry Association of America (RIAA) and the International Federation of
the Phonographic Industry (IFPI) to combat piracy worldwide. 159 Its website estimates
154 The Canadian Music Industry 2008 Economic Profile Pg. 9155 The Canadian Music Industry 2008 Economic Profile Pg. 9156 The Canadian Music Industry 2008 Economic Profile Pg. 10157 “About Us” Canadian Recording Industry Association158 “About Us” Canadian Recording Industry Association159 “Anti-Piracy” Canadian Recording Industry Association
that in today’s industry only one in ten new releases turns a profit and that hundreds of
millions of dollars has been lost in recording revenue over the past several years in
Canada as a result of P2P sharing.160
Certification Standards
161
(See extended in Appendix D)
Awards162
Canada’s most prestigious music awards are the Juno awards, the Canadian equivalent of
the Grammy’s, presented by the Canadian Academy of Recording Arts and Sciences in
March or April of every year. They honor primarily Canadian artists, with few
‘international’ categories for others. Big winners in 2010 were Michael Buble, Drake and
Metric.163
Nationality
Within the past several decades there has been a strong push to keep Canadian-
created music at the forefront of the industry. As such, sales figures often distinguish
Canadian-born artists from foreign-born. In 2008, 77% of Canadians thought that native-
160 “Anti-Piracy” Canadian Recording Industry Association161 “Gold and Platinum Certification” Canadian Recording Industry Association162 “Juno Awards” Juno Awards163 “Juno Award Winners of 2010” Wikipedia
born artists were recognizable in stores. In Quebec, this figure was 87%. Online, 70% of
teenage consumers indicated that it was easy to find Canadian designated music online;
while only 30% of people fifty years or older said the same. In 2007, Canadian born
artists sold 7.4 million albums nationally (26.5% market share), and then dropped in 2008
by 33% to 5.1 million units (20.7% market share). By contrast, foreign-born artists only
dropped 10% in that same period. English-language releases fell 32%, and French-
languages releases fell 27% from 2007-2008.164
Major Record Labels
Though there is a growing independent climate, the major labels continue to
dominate Canada’s recorded music sphere. In 2005, Independent labels had captured
approximately fourteen percent market share; a figure that would grow to approximately
eighteen percent in 2009165; leaving majors with eighty-two percent market share. Major
label staff cuts have been as much as 20% annually over several of the past few years as
they attempt to cut costs dramatically.166 From 2002-2006, majors cut spending on
marketing and promotion by 20.4%, manufacturing by 55.3%, distribution by 19.4%, and
overhead by 52.4%. Conversely over the same time period, they increased salaries and
164 The Canadian Music Industry 2008 Economic Profile Pg 9165 The Canadian Music Industry 2008 Economic Profile Pg 10166 The Canadian Music Industry 2008 Economic Profile Pg 10
benefits by 62.8% and publishing expenditures by a significant 1,458.8%.167 From 2005
to 2006, the resulting major label expenses and revenues broke down as follows:
168
NB: Some items are hidden due to Canadian information restrictions
Because majors make so much of their revenue off of non-domestic product, their
annual expenditures remain low in comparison to their annual sales. Though revenues
have continued to fall since 2006, Canadian majors distributing primarily non-Canadian
product appear to be in decent standing statistically with cost cutting methods. With
majors now accounting for approximately eighty-two169 percent of the national market
share, the individual companies break down as such:
167 An Overview of the Financial Impact of the Canadian Music Industry; pg. 44168 An Overview of the Financial Impact of the Canadian Music Industry; pg. 42169 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 2
170
Independent Record Labels171
Independent Labels have slowly been growing in market share with the majors’
difficulty to shrug off large expenses in the transition to digital. In 2006, due to
increasing conflicts over radio restrictions with Canadian content and protection of
intellectual property, six of the largest independent labels (including Nettwerk, Stony
Plain and Marquis) withdrew from the Canadian Recording Industry Association and
formed CIRPA, the Canadian Independent Record Production Association. The CRIA is
most widely known for serving the interests of the four major labels, often neglecting the
independents in the process; and leading to the succession of independents from the
association. Since leaving the CRIA, CIRPA has joined with similar international
associations to form the Worldwide Independent Network for the advancement of
independent music globally. 172
170 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 2171 Canadian Independent Music Association172 Canadian Independent Music Association
Independent labels put out ninety percent of all Canadian content annually, and
Canadian music accounts for 25%-30% of national sales.173 Many of the independent
labels are distributed by the international majors. Many Canadian artists and industry
professionals prefer to seek international deals in the United States since they tend to give
higher advances, have higher market potential and will still release the product within
Canada. Domestic publishers and independent labels have severe capital limitations that
hinder their advancement.174
175
Francophone Music Sales176
The percentage of albums sold throughout Canada that are French is
disproportional high to the percentage of the population that primarily speaks French
(~21%). In 2008, Francophone albums accounted for 1.5 million albums; 29.4% of
Canada’s 5.1 million albums sold. This is likely a result of three factors: popular P2P
173 The Canadian Music Industry 2008 Economic Profile Pg 24174 The Canadian Music Industry 2008 Economic Profile Pg 25175 An Overview of the Financial Impact of the Canadian Music Industry Pg 42176 The Canadian Music Industry 2008 Economic Profile Pg 10
sites in Canada are less widely available in French than English, native French speakers
are likely to be older and therefore less likely to use the internet and download
illegitimately, and that internet penetration is lowest in Quebec (ninety-percent of the
French speaking population) among all metropolitan areas of Canada. This likely
confirms that a decrease in the availability of internet has a direct correlation on the
increase of sales of physical product. 177
178
177 The Canadian Music Industry 2008 Economic Profile Pg 10178 The Canadian Music Industry 2008 Economic Profile Pg 10
The percentage of Francophone to Anglophone albums in 2008 was 13.75%, but
represented sales of 29.4% nationwide. This figure speaks to the level of loyalty to
Canadian culture, influence of Radio restrictions (see CanCon section), as well as the
factors discussed above.
Genre
Canadian music has largely been defined by their innovation in the rock and pop
genres throughout the past several decades. This trend in popularity holds today. In 2008,
Pop and Rock accounted for nearly half of the total new releases. (Led by strong selling
artists such as Celine Dion, Avril Lavigne, and Michael Buble) Jazz and Blues accounted
for seventeen percent of new releases.
179
Though popular music and Rock (including Urban and Dance) accounted for
fifty-eight percent of new releases in 2008, it made up exactly two-thirds of total sales
revenues. 180 Classical, jazz and blues, and country and folk each captured around seven
percent market share. 181
179 The Canadian Music Industry 2008 Economic Profile Pg 11180 “Sound Recording Industry Revenues” Statistics Canada 2005181 “Sound Recording Industry Revenues” Statistics Canada 2005
182
Recent Notables
In 2010 several Canadian Pop acts broke through in big ways internationally.
Justin Bieber, Drake and Michael Buble have dominated U.S. airwaves and album sales
charts throughout the past year; while artists like K’Naan have received major
international exposure. (For him, a World Cup promotional campaign)
Album Charts
183
Catalog Sales
In 2009, Catalog sales fell .4% to 23.4 million units184; a slightly misleading figure with
Michael Jackson selling 700,000 albums that year.185 Digital sales of catalog albums
182 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 2183 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 2184 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 1185 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 4
increased forty-five percent, while physical sales dropped five percent.
186
Compilations
Compilation albums are collections of songs from different artists often released
in accompaniment with another form of media, such as movie and video game
soundtracks. In 2007, 2.72 million compilations were sold: a number that ballooned 36%
to 3.7 million units in 2008. Sales represent twelve percent of the total recorded music
revenue; though that number is falling.187
PHYSICAL MUSIC RETAIL
Overview188
Like the United States, the majority of physical Canadian recorded music retail is
now centered in chain stores, electronics stores and music/book combination carriers. As
of 2006, chain stores such as Wal-Mart and Costco had increased their retail market share
to thirty-five percent. At the same time, traditional retail was hovering around fifty-
percent market share, as digital newcomers Amazon and HMV (digital components) were
quickly increasing in strength. With traditional retail still prominent, record labels by and
186 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 2187 Canadian Independent Music Association188 Global Market Information Database
large still had price-setting power: a tool that had been lost in the United States with the
takeover of chain retailers for most physical sales. As chain stores crept towards fifty
percent market share in the years approaching 2010, this power gradually dissipated.
Universal Music Canada was ‘forced’ to lower its maximum suggested retail list price to
$14.98 and lower the wholesale price to dealers accordingly- allowing both chain and
mom and pop retailers to lower their price point as well. Shelf space for recorded music
has been drastically cut to make room for increasingly better selling items, such as
DVD’s. Additionally, record club revenues are down to three percent market share; a far
cry from their 25% over a decade ago. 189
Sales
From 1998 to 2007, music retail sales declined fifty-one percent from $1.4 billion
to $703 million.190 In 2009, retail music stores (chain/indie) accounted for fifty-three
percent of total album sales; down from fifty-eight percent in 2008 and sixty-three
percent in 2007.191 Overall physical album sales declined 6.7% to 30.3 million units in
2009.192 A list of the top ten physical albums and artists of 2009 can be found in
Appendix E.
Types of Physical Retailers
Chain Store (E.G. Target)
189 Global Market Information Database190 An Overview of the Financial Impact of the Canadian Music Industry; Appendix iv191 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 4192 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 1
Consumer Electronics Stores (Best Buy)
Independent Record Store (Mom and Pop Store)
Traditional Retail (Tower Records, Amoeba)
Primary Physical Music Retailers
HMV
Indigo Books and Music
Best Buy
A&B Sound
Future Sound
Wal-Mart
Zellers
Costco
Price Club
Starbucks
Leisure and Goods
Recorded music is placed by economists in the ‘Leisure and Goods’ category,
which for physical retailers fell four percent from 2008-2009 to C$1 billion. Piracy and
competitive online pricing are widely believed to justify much of this decline, as CD and
DVD sales account for a high percentage of total revenues. High performers in this
category are video games and video game accessories, which gained revenue over the
course of the year. Below are some of the top performing physical Leisure and Goods
specialty retailers, with those highlighted that feature recorded music.193 Other listed
retailers may sell music, though it is not a featured source of income or product. Omitted
193 Global Market Information Database
from this list is Best Buy, a prominent music retailer, due to its standing as a consumer
electronics dealer.
% Market Share - Leisure and Goods 2005 2006 2007 2008 2009
Forzani Group Ltd, The 11.8 12.5 14.7 14.3 14.2
Indigo Books & Music Inc 7.0 7.0 7.2 7.2 7.6
EB Games Canada 1.8 3.5 4.1 4.6 4.7
Toys "R" Us Inc 3.8 3.7 3.7 3.6 3.5
HMV Canada Ltd 3.6 3.5 3.5 3.4 3.5
Music World Ltd 0.5 0.4 0.3 - -
Others 74.9 72.6 69.7 69.8 69.4
Total 100.0 100.0 100.0 100.0 100.
Source: Trade associations, trade press, company research, trade interviews194
NB: The number of these stores is projected to grow at three percent by 2014, and store
sizes are projected to grow by 2.5% in the same time frame.
Distributors195
Major Labels/Distributors
• Universal Music Canada
• EMI Music Canada
• Sony BMG Music Canada Inc.
• Warner Music Canada
Large Independent Distributors
194 Global Market Information Database195 Canadian Independent Music Association
• Distribution Select (Montreal)
• DEP Distribution Exclusive (Montreal)
• Distribution Fusion III (Montreal)
• FAB Distribution (Montreal)
• Madacy Entertainment Group (Montreal)
• Koch Entertainment (Toronto)
• Fontana North (Toronto,was MapleNationWide)
• Outside Music (Toronto)
• Trend Music Group (Toronto)
• Zing Distribution (Toronto)
• Sonic Unyon Distribution (Hamilton, Ontario)
• Festival Distribution (Vancouver)
• Scratch Recordings and Distribution (Vancouver)
• RED Distribution Canada (U.S.-based)
Prices
As mentioned previously, the suggested retail list price for physical compact disks
has been decreased to $14.98 in Canada. Online, there is much variable pricing with
regard to digital single and album sales. A single may cost anywhere from .99c to $1.29
with albums ranging from $5 to $15, depending on the artists’ preferences and the
number of tracks included.
ONLINE MUSIC RETAIL
Overview196
196 An Overview of the Financial Impact of the Canadian Music Industry; Pg 7
The growth and creativity in the online music sector will be a key indicator of the
progress of the Canadian music industry in its transition to digital formats and prevention
of piracy. Compounded with the ambiguity of intellectual property on the web is the
uncertainty over what consumers want and how artists will get paid. Music, as of now is
considered a part of the ‘online media product’ category. Online retail media products fell
one percent in 2009 to total C$412 million. Considering the state of the economy over the
study period, this is a fairly good sign for the Canadian online economy. (Though it is
suggested that a poor economy could encourage more piracy) The number of media
products available for purchase grew significantly in the time frame.
Sales
From 2004 to 2008, digital music sales increased from 2.2 million to 82.4
million.197 Then in 2009, both digital track and album purchased grew by a staggering
forty percent, leading to total revenues of $106 million. Of digital sales in 2009, singles
increased thirty-nine percent to fifty-six million units and albums increased forty-two
percent to 4.8 million units.198 In 2007, digital accounted for about ten percent of total
music sale revenues; a figure that would move to approximately fourteen percent in
2008199 and twenty-one percent in 2009.200 Album sales specifically represented 13.6% of
total album sales, compared to 20.4% in the US. In 2009, Mass Merchant/ Non-
Traditional retailers, such as iTunes, accounted for forty-seven percent of total album
purchases, up from forty-two percent in 2008 and thirty-seven percent in 2007. This gain
comes directly from increases in digital track and album sales.201
202 203
In 2009, the top 100 digital albums accounted for approximately twenty percent of total
197 An Overview of the Financial Impact of the Canadian Music Industry; Pg 7198 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 1199 An Overview of the Financial Impact of the Canadian Music Industry; Pg 7200 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 1201 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 4202 The Canadian Music Industry 2008 Economic Profile; Pg 9203 The Canadian Music Industry 2008 Economic Profile; Pg 9
digital albums sold.204 A list of the top ten selling digital songs, artists, and albums may
be found in appendix E.
Formats
Digital track/album purchase – ‘Standard’ iTunes type download, where a single
track or a full album may be purchased to play digitally on a computer or mobile
device
Tethered Downloads- A download that will only be usable digitally on a computer
or mobile device for the duration that the consumer pays for a service
Steaming Services- Either user interactive (like Spotify) or non-user interactive
(like Pandora), where one may listen to music streaming from an internet server;
often advertisement or subscriber supported
Internet Radio- Essentially a streaming service with no user interaction. The
content provider selects a playlist based on their personal decisions and it plays
back accordingly. (includes podcasts)
Physical Order- Ordering a physical unit (compact disk, LP) from an internet site
such as Amazon or CD Baby
User Trends
204 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 4
According to a 2009 report on the state of Canadian consumers and technology,
seven percent of Canadian internet users listen to podcasts at least once monthly, twenty-
four percent of users pay to download music legally at least once monthly and six percent
watch music videos on the web at least once monthly.205
Primary Online Music Services
These services are recognized by the IFPI as being the most prominent and
forward-looking digital music services in Canada.206 Puretracks.com, the first legal online
music service in Canada, launched October 2003 and reached a million downloads by
February 2004.207
7digital - An international music streaming/download combination site208
Bell Music Store - Phone company’s mobile download app; allowing for unlimited
track downloads for $15/month209
eMusic - International music download subscription service; pay per track210
205 State of Consumers and Technology; Pg 4206 IFPI Digital Music Report 2010; Pg 28207 “Fact Sheet – Statistics on Internet Piracy Canada” International Federation of Phonographic Industries208 “Home Page” 7digital Canada209 “Full Track Music” Bell210 “Home Page” EMusic
iTunes Canada - Affiliate of iTunes Global, album and single track download sales
with variable pricing
Jamster - Mobile ringtone and game downloader211
Napster Canada - Affiliate of Napster Global; pay per track and subscription
services
Puretracks - Pay per track international download site, learning towards top 40212
Telus – First North American mobile music subscription service ($20/month)213
Ur Music - Mobile and Digital track and album downloads, ringtones and ticket
purchases214
Vevo – Brand new Music Video Streaming Site, already most popular in Canada
Growth of Digital Music Sales
Likely due to its belated adoption of digital music, online sales in Canada have
outpaced those in the United States by thirty percent consistently over the past four years.
Growth in Digital Sales
215
211 “Home Page” Jamster212 “Home Page” Puretracks213 Mobile Media 200; Pg 37214 “Wireless Box Office” Ur Music215 The Canadian Music Industry 2008 Economic Profile; Pg 33
Revenue Market Share
In 2008, digital track download sales captured thirty-five percent digital music
market revenue share, ahead of ringtones at twenty-four percent, digital album downloads
at twenty-three percent and other formats at eighteen percent.216 Digital revenues are on
the steep incline. That same year, digital album sales increased sixty-nine percent to 3.4
million units and digital tracks increased by fifty-eight percent to 40.7 million units.217
Unpaid Downloads218
In 2007, just over twenty-five percent of Canadians claimed that they had
downloaded music over the internet without paying for it in the past year. Among 15-19
year olds, this percentage jumped to fifty-nine percent, and forty percent for ages 20-34.
Of those who downloaded music, fifty-eight percent of those said that P2P sharing was
their primary method.
Subscription219
216 IFPI Digital Music Report 2010; Pg 5217 The Canadian Music Industry 2008 Economic Profile; Pg 9218 The Canadian Music Industry 2008 Economic Profile; Pg 9219 Deloitte Media Prediction 2010; Pg 14
Deloitte and Touche, among many other sources, predicts that 2010 will be the
year that subscription music services will finally be widely adopted. Worldwide, the
number of paying subscribers is expected to eclipse 10 million, with annual dues of $40-
$180. Largely this is accredited to the increased flexibility and speed of smart phones, as
well as industry players hedging bets on their future.
VEVO220
Only six months old in Canada, VEVO already logs 7.7 million unique visitors in
Canada each month. This makes it the largest music video streaming service in Canada.
MOBILE RETAIL
Overview
The global market for mobile music is on the steep incline.221 In 2009, it was
estimated that international revenues from mobile music were approximately $11.4
billion USD; this coming from a sector which did not exist in excess until 2001. By 2013,
revenues are expected to grow to $18.4 billion. 222 Music revenues come primarily from
ringtones, but individual track downloads, streaming services and ringback tones are all
increasing in market share. Streaming is expected to show massive growth within the
next five years. 223 Approximately twenty-two percent of the Canadian population now
owns a mobile phone that has the capacity to download and play music. 224 In 2009,
Revenues from mobile music in Canada were just over $115 million USD; compared to
Mexico at $123 million, Brazil at $168 million and The United States at $1.45 billion. 225
220 “Media Giants Join Forces” Vevo 2010221 “Wireless and Canada: The Future is Here” Invest in Canda 2010222 “Effective Monetization of Mosic on Mobile” Midem; Pg 1223 “Effective Monetization of Mosic on Mobile” Midem; Pg 1224 State of Consumers and Technology; Pg 4225 The 2009-2014 World Outlook on Mobile Music; Pg 85
Mobile revenues are projected to increase in Canada by approximately sixteen percent,
while decelerating, annually. It’s market share will decrease in the American region
overall. 226
227
Revenue Streams228
Ringtone - Music that plays when an incoming call is received (one-time payment)
Ringback - Music that plays for the caller, when a call is dialing (one-time
payment)
Full-Track Downloads - Per-song or per-album downloads of music to phone for
playback (one-time payment)
Music Streaming - Music played over the internet to a phone, advertising or
subscription funded
229
226 The 2009-2014 World Outlook on Mobile Music; Pg 93227 The 2009-2014 World Outlook on Mobile Music; Pg 93228 “Effective Monetization of Mosic on Mobile” Midem; Pg 1229 “Effective Monetization of Mosic on Mobile” Midem; Pg 1
Ringtones
Ringtones are the primary source of income for Canadian mobile music;
representing almost eighty percent of total revenue and approximately $85 million USD
in 2009. Of total cell phone users, sixteen percent downloaded a ringtone in 2009. For
cell phone users aged 15-19, more than fifty percent downloaded a ringtone in the same
time period.230 Canadian artists captured eighteen percent of the ringtone market share.
231
LICENSING, ROYALTIES AND LEGISLATION
SOCAN232
230 “Consumers” Canadian Heritage 2008231 The 2009 Canada Economic and Product Market Datebook; Pg. 408232 The Canadian Music Industry 2008 Economic Profile; Pg 33
The organization that collects and administers performance royalties for Canadian
songwriters and publishers is The Society of Composers, Authors and Music Publishers
of Canada (SOCAN). Additionally, SOCAN performs these services for affiliate PRO’s
for distribution to foreign writers/publishers. They have bilateral agreements set up with
performance rights organizations in other countries to collect Canadians’ royalties and
then distribute it to them. They are instrumental in the process of helping clubs, bars,
universities, music sites and other entities obtain the correct performance licenses.
SOCAN is currently pushing for new legislation to raise fees on digital performances and
has offices in Montreal, Toronto, Edmonton, Vancouver and Dartmouth.233
The types of performances that it collects on are as follows: radio, broadcast and
cable television, pay audio, cinema, public venues including stages, and recently digital
performances. Note the inclusion of revenues from cinema theatre performances that do
not exist in the United States. The following graph displays how those various income
streams were broken up into revenue in 2008, separated by songwriters and publishers:
233 SOCAN and SODRAC
Royalty Rates (Venues narrowed down to most applicable) (X denotes multiplied
by, / denotes divided by)
Terrestrial Radio (2010) – Applicable as a percentage of gross royalties
234
Live Music (2010)235
Live Performance License for Bars- 3% of annual compensation paid to live
musical entertainment, with minimum fee of C$83.65
Recorded Music in conjunction with Live Music for Bars- 2% of annual
compensation paid to live musical entertainment, with a minimum fee of C$62.74
Live Performance License for Popular Music Clubs- Fee of 3% of total ticket
revenues or 3% of amounts paid to entertainers with floor of $60 annually
234 Commercial Radio Tariff; Pg 2 2010235 Statement of Royalties to be Collected by SOCAN, 2010
Orchestra Performance- sliding scale from $50-$400 annually based on budget
Performance of single work- sliding scale based on audience, duration of material
and number of group members within act
Recorded Music for Dancing - $500-$1000 annually based on capacity of venue,
months in operation out of the year, and number of days of operation per week
Television (2010)
Canadian Broadcast Corporation- annual fee of $6,922,586 for all stations and
affiliated networks
Société de télédiffusion du Québec- annual fee of $216,000 for each station
Movie Theatres (2010)
$1.69 per seat with a maximum of $169 per screen annually
Internet (2010)
On Demand Stream Service- 15.2% gross revenues X number of SOCAN files
streamed / total number of plays during month. Minimum fee of 96.2c per
subscriber.
Limited Downloads Service (Tethered)- 15.6% gross revenues (12.6% is no song
previews exist) X number of limited downloads licensed by SOCAN / total
number of limited downloads in month. Minimum fee of $1.22 per subscriber if
limited downloads are available portably and 79.8c if not.
Permanent Downloads Service- 9.8% gross revenues (6.8% if no song previews)
X number of SOCAN licensed downloads / total number of permanent
downloads. Minimum fee of 4.8c fee per download and 3.4c for a bundle of 15 or
more files.
Per Stream Service Alternative- 4.6c per streamed file licensed by SOCAN.
Audio Webcasts- 20% of gross revenues with $200 monthly minimum
Radio Station Webcasts (Same as gaming, Television Webcasts, Audiovisual
Webcasts, and others) - 15% gross revenues with $200 monthly minimum
Mobile (Ringtone)
Ringtone- 10% of retail price with minimum of 10c per ringtone
Ringback- 15% of retail price with minimum of 15c per ringback
Royalties Paid236
236 The Canadian Music Industry 2008 Economic Profile; Pg 33
In 2008, SOCAN paid $176.3 million USD in royalties to Canadian and
international songwriters, publishers and composers. Approximately $120 million USD
of that sum went to Canadian based entities/songwriters and $44.9 million USD went to
the US (a figure that was up $5 million from the previous year). Membership among
songwriters and publishers has steadily increased four percent annually since 2004,
reaching approximately 31,500 members by the end of 2008. “Since 2004, royalties paid
to members increased by 26%.”237
Performance Embodied in Master238
Unlike in the United States (as of now), Canadian legislature acknowledges that
there is a public performance aspect to a master recording, and not solely the
composition. As such, there is a royalty applicable to this use (in addition to the
composition performance) and payable to the rights holders (usually record labels)
through an organization called Re:Sound, formerly the Neighbouring Rights Collective of
Canada. They are a non-profit organization, taking only a percentage necessary to cover
237 “Music Copyright in Canada” Canadian Heritage 2008238 “Music Royalties” Broadcast Law Blog 2010
their expenses. According to their website, “over 80% of collected income is distributed
to [their] members.”239
Streaming240
The rights acquisitions and amounts payable are becoming increasingly
complicated in the new world of online streaming. In order to operate legally, a service
like Pandora would need to pay royalties to at least three different organizations. For the
performance of the composition they need to pay SOCAN, for the reproduction of the
composition in ‘servers, buffers and other digital mediums’ they pay a royalty to
CMRRA-SODRAC (see mechanicals), and for the performance embodied in the sound
recording they pay Re:Sound. It is a result of these compounded royalty schemes and
ongoing negotiations with Re:Sound that Pandora announced in September 2010 that
they would not be operating in Canada as long as these fees are in effect. Re:Sound’s
initial offer to Pandora was the greater of forty-five percent of gross Canadian revenues
or 7.5 tenths of a cent for each song streamed. According to Pandora president Tim
Westergren, Re:Sound is essentially asking them to pay a performance royalty ‘over
twenty times what radio delivered over AM/FM pays.’241 For an industry that is blaming
it’s failures on internet piracy, they aren’t helping legal alternatives much either. To add
to the confusion, the decade-long tariff (Tariff 22A) on streaming sites ‘for subscribers’
imposed by SOCAN expired in 2006 and CMRRA-SODRAC’s tariff expired in 2007.
Both services have re-filed for new tariff legislation with the Copyright Board of Canada
and are awaiting judgment. The implementation of these tariffs would stop direct
239 “What We Do” Re:Sound240 “Pandora and Canadian Copyright Royalties” Entertainment & Media Law Signal 2010241 “Mobile Music Service Rejects Canada, blames Fees” CBC News 2010
negotiations between the two parties entirely and standardize the license fee for streaming
sites. Recently, US based Rdio came to agreements with SOCAN and Re:Sound for
undisclosed amounts: streaming site MOG intends to do the same shortly.242
MECHANICALS243
Mechanical royalties are collected by CMRRA-SODRAC, known commonly as
CSI. In the United States, mechanicals are collected solely on the reproduction of
compositions in ‘physical’ forms such as compact disks and digital tracks. In Canada
royalties must be paid for reproductions of compositions in the forms of broadcasting,
internet streaming, digital tracks and physical forms. In 2010, new legislation was
introduced for terrestrial radio stations’ royalty payments that increased their payment to
CSI to .304% of gross for the first $625,000 in revenues, .597% for the next $625,000
and 1.238% for any above that.244 The current statutory rate for compact disks for a
standard ‘pay as you press’ plan is 8.3 cents for each copy produced for compositions less
than five minutes, and 1.66 cents. These rates are set by an agreement between CMRRA
and the CRIA.245 It is responsibility of the individual or company distributing the compact
disks to pay the mechanical royalty to CMRRA-SODRAC. Failure to do so will indicate
a breach in copyright, and the original artist will have the opportunity to take legal action
against them in the form of an injunction or punitive damages. Mechanicals are paid to
artists quarterly by CMRRA-SODRAC.246 By 2009, mechanical royalties had fallen to
242 “Mobile Music Service Rejects Canada, blames Fees” CBC News 2010243 “Mechanical Licensing and other Mysteries” Docstoc.com244 Statement of Royalties to be Collected by SOCAN, Re:Sound, CSI 2010245 “Mechanical Royalties Today” by Bruce Colfin The Firm246 “Mechanical Royalties Today” by Bruce Colfin The Firm
approximately $23 million from $34.1 million in 2005247; more than a thirty percent
decline.
Digital Royalties248 (X denotes multiplied by, / denotes divided by)
On-Demand Streaming Service- 6.8% gross revenue X number of plays licensed
by CSI / total plays of all files during month; minimum of 43c per subscriber
Limited Download Service- 9.9% gross revenues X number of limited downloads
licensed by CSI / total number of limited downloads; minimum of 96c per
subscriber is mobile downloads are available and 63c per subscriber if not
Permanent Download Service- 9.9% gross revenues X number of limited
downloads licensed by CSI / total number of limited downloads; minimum of 6.6c
per permanent download and 4.4c per bundle of 15 or more files
Black Box Income
In Canada, black box income refers to the same thing that it does in the United
States: foreign mechanical royalties that are unclaimed due to inability to tie the income
to a specific composition or author.249
MUSIC PUBLISHING
247 A Statistical Profile of the Canadian Music Publishing Industry; Pg 4 2005248 Statements of Proposed Royalties to be Collected by CMRRA/SODRAC 2010249 “Music Creators Glossary” SOCAN
Overview
The Canadian market is dominated by the large multinational record and
publishing companies. In the case of the major international publishers, Canadian music
publishing is mainly administered from the U.S. with offices in Canada focused on
signing writers. However there are opportunities for Canadian sub-publishers to work
with independent foreign publishers interested in covers and synchronization deals. In
2008, Canadian publishing firms generated $141.7 million in operating revenues while
incurring expenses of $131.4 million ($22 million of that in salary). This resulted in a
profit margin of 7.3%, down from 11.1% in 2007. Over the past several years operating
revenue has steadily increased, with gains of $19 million from 2007-2008. However,
expenses increased $22 million from 2007-2008 over the same period. 250 Music
Publishing accounted for approximately sixteen percent of the total Canadian music
industry’s operating revenues.251 In 2005, publishing revenues consisted of approximately
fifty percent mechanical royalties, forty percent performing royalties and ten percent
other royalties. Since then, mechanical royalties have lost share as album sales
dramatically declined.252
250 “Sound Recording and Music Publishing” Statistics Canada251 Sound Recording and Music Publishing; Pg 2 2008252 An Overview of the Financial Impact of the Canadian Music Industry; Appendix vii
2005 2006 2007 2008
253
Major Players254
By 2006, approximately seventy-five percent of the revenues came from the
major international record labels/publishers; EMI, Sony, Vivendi Universal and Warner.
The next ten percent is made up of the remaining top thirty-three music publishers, with
individual artist publishers and very small publishing organizations rounding out the long
tail. As of June 2005, SOCAN reported nearly 11,000 independent publishing
organizations.
CMPA255
253 “Sound Recording and Music Publishing” Statistics Canada2008254A Statistical Profile of the Canadian Music Publishing Industry; Pg 4 2005255 “About CMPA” Canadian Music Publishers Association
The Canadian Music Publishers Association is the offial trade association of all
domestic publishers. They advocate for royalty reforms to adapt to digital technologies,
Canadian content regulations on radio, public investment in publishing and songwriting,
and private copying tarriff regulation. The CMPA founded the CMRRA, which
established mechanical royalties in 1975.
Domestic vs. Foreign Control
In 2008, domestic and foreign music publisher royalties generated from Canadian
artists’ compositions were practically identical. Domestically, the major international
publishers were able to capture a seventy percent market share with the Canadian-artist
market, while Canadian controlled companies were able to more effectively monetize the
rest of the world. 256
257
256A Statistical Profile of the Canadian Music Publishing Industry; Pg 13 2005257A Statistical Profile of the Canadian Music Publishing Industry; Pg 13 2005
Revenues Generated
The most recent comprehensive report on overal music publisher revenues is from
a study in 2005. Below are the corresponding number divided up into specific categories.
Since overall revenues are now approximately thirty-eight percent higher than they were
in 2005 ($141 million from $103 million), one may extract more value from the
information by analyzing the percentages of overall income on the right column. 258 To do
so effectively, one must first assume that mechanicals have dropped significantly
(approximately thirty-three percent, paralleling the decline of unit sales259)
260
Government Aid261
The Canadian Heritage Fund (government program) reviews applications for
eligible music publishers ($40,000-$5 million annual income, at least 50% revenue from
Canadian musical works, 3 years of minimum operation, controlled and owned in
Canada, etc.) to cover 50% of all expenses unrelated to artists’ advances, depreciation
258 An Overview of the Financial Impact of the Canadian Music Industry; Pg 49259 Canada Music Fund Music Entrepreneur Component260 An Overview of the Financial Impact of the Canadian Music Industry; Pg 49261 Mechanical Publishing
and non-business plan activities up to $50,000. The applicant must submit a business plan
with projected expenses and all activities for review.
SOUND RECORDING BUSINESS
The Canadian music recording business (recording studios, recording equipment,
engineers, producers, mixers, mastering engineers, studio architects and designers)
continues to grow amidst the overall recorded music crisis. It has achieved a steady
revenue increase throughout the past decade of two percent annually, with continuing
growth projected. According to Icon Group, 2009 gross revenues totaled approximately
$900 million. 262 The gross revenues for the United States were approximately $10.5
billion in the same time frame. 263
264
262 The 2009-2010 Global Outlook on Music Recording; Pg 86263 The 2009-2010 Global Outlook on Music Recording; Pg 92264 The 2009-2010 Global Outlook on Music Recording; Pg 86
Sound Recording Studios
In 2008, sound recording studios specifically had revenues of $118.3 million and
a profit margin of 13.6%, which decreased from 15% in 2007.265 Figures also point to
progressively higher employment in this sector. 266 In 2008, the highest expenses for
studios were salaries and wages at thirty-three percent, followed by cost of goods sold at
eleven percent.267 Recording studios accounted for approximately thirteen percent of the
total Canadian music industry’s operating revenues.268
269
Musicians and Recording270
Among Canadian musicians who recorded product in 2008, 57.2% rented studios,
30.7% used home recording equipment primarily, and 7.5% used a personal studio
outside of their home. Of total recording expenditures, 69.6% came out of the musicians’
pocket, 26.2% came from government grants and arts organizations, 11.4% came from
friends and family, and 9.9% came from label funding. The 26.2% from government
grants signifies a large commitment to the arts among provincial and federal government
bodies.
Recording Technology
265 Sound Recording and Music Publishing; Pg 2 2008266 “Sound Recording and Music Publishing” Statistics Canada267 Sound Recording and Music Publishing; Pg 4 2008268 Sound Recording and Music Publishing; Pg 5 2008269 “Sound Recording and Music Publishing” Statistics Canada270 An Overview of the Financial Impact of the Canadian Music Industry; Pg 16
The advent of digital recording devices has revolutionized the music recording
business. While larger studio operations with higher overhead have declined in revenue,
home recording and small studio technologies such as Pro Tools have launched a new age
of musician independence. The overall revenue in this sector has continued to increase
mostly due to an explosion in demand in home recording technologies and more
reasonably priced digital audio tools and recording equipment.
MUSICAL PRODUCTS
Musical instrument manufacturing and demand for musical products has a seen a
steady rise for the past decade, 271 leading Canada to becoming the seventh largest most
prominent musical products retailer in the world; at a per capita rate of $7.68 annually.272
Manufacturing is rising at a rate of four percent per year and is projected to continue that
trend through 2014. At an expenditure of $225 million USD, Canada has approximately
nine percent of the United States’ instrument manufacturing costs; which hover around
$2.5 billion USD annually. 273 Music supply retailers, such as guitar center, have also
fared reasonably well through the poor economy, growing by $10 million USD annually
since 2004 and from $461 million USD to $472 million USD from 2008 to 2009. The
United States’ music instrument retailers had revenues of $5.1 billion USD. 274 Canada
exports more than $100 million in musical products annually. 275
MARKETING AND ADVERTISING
271 The 2009-2014 World Outlook for Musical Instrument Manufacturing, pg 158272 An Overview of the Financial Impact of the Canadian Music Industry; Appendix viii273 The 2009-2014 World Outlook for Musical Instrument Manufacturing; Pg 158274 The 2009-2014 World Outlook for Music Instrument and Supplies Stores; Pg 155275 An Overview of the Financial Impact of the Canadian Music Industry; Appendix viii
Overview
Music advertising falls into the media advertising sector, a segment that has seen
significant growth since the advent of social media. It has grown from $3.2 billion USD
in 2004 to $3.75 billion USD in 2009. Canada represents approximately eight percent of
North America’s spending in this sector, with the United States totaling ninety percent
with spending of $41 billion USD. 276
277
276 The 2009-2014 World Outlook for Media Advertising; Pg 151277 The 2009-2014 World Outlook for Media Advertising; Pg 155
Social Media Advertising
Advertising over social media platforms has exploded in the past several years,
with spending more than doubling from 2004-2009; an increase from $91 million USD to
$230 million USD. This represents 6.75% of North America’s overal spending in the
sector; with the United States at $3.12 billion USD and 91.6% of market share. 278
279
278 Social Media Advertising Projections 2009; Pg 144279 Social Media Advertising Projections 2009; Pg 148
Advertising/Brand Partnerships
Since 2007, the major labels in Canada have been making strong efforts to find
new ways to monetize their artistic assets through brand and advertising partnerships. In
2007, Warner Canada signed an agreement with Rogers Media to sell advertising space in
their music video content.280 Following suit, EMI281, Sony282 and Vivendi Universal283
have all set up branding partnership departments throughout their international affiliates.
Impact of Recession284
The recession has hit advertising company’s revenues hard- Canada’s largest
media company, CanWest Global Communications Corp, layed off eight percent of their
7,400 employee work force in 2008 alone. Revenues continued to decline through 2010;
when it was expected that advertising would begin to get back on track.285
280 “Warner Music Canada form New Digital Advertising Partnership” Profectio 2010281 “Microsoft and Gorillaz come together to Launch Internet Explorer 9” EMI 2010282 “Chrysler Finds ‘Brand Harmony’ with Celine” All Business283 “Universal Music Brand Partnership” Universal Music284 The Effect of the Global Economic Recession on Canada’s Creative Economy in 2009; Pg 16285 The Effect of the Global Economic Recession on Canada’s Creative Economy in 2009; Pg 16
RADIO
Terrestrial Radio
Terrestrial Radio continues to be the dominant force in music consumption and
music discovery (see page 32) It currently occupies approximately 33% of Canadians’
overall music-listening share, down from almost 45% in 2005. Younger demographics
such as teens, listen to radio only 12% of their music listening time. Statistics suggest that
this group listens tosignificantly more American music than Canadian music.286 Canadian
terrestrial radio employs approximately 10,100 people annually.287 A list of the top ten
radio singles and artists by number of spins may be viewed at Appendix E.
Profitability
286 “Consumers” Canadian Heritage287 “Over the Air Radio and TV Employees by Staffing Category” Canadian Radio-television and Telecommunications Commission
Canadian musical AM/FM radio stations across all formats and languages had
revenues of 1.58 billion in 2008, up from 1.5 billion in 2007; and expenses of 1.2 billion
in 2008, up from 1.16 billion in 2007. Over the past several years, profit margin has
stayed constant (around twenty percent) and very healthy; though there is assumed
decline in 2009 and 2010 due to the recession.288
289
Music Breakdown290
288 “Commercial Private Radio” Canadian Radio-television and Telecommunications Commission289 “Commercial Private Radio” Canadian Radio-television and Telecommunications Commission290 “The Hits Charts” BDS
Radio is dominated by pop, urban and R&B acts, mostly from the US, with
country and alternative artists gaining little traction among top forty. Charts appear
extraordinary similar to those in the United States, with all ten of the top songs in Canada
also appearing in the top ten in the US for the week of November 4th, 2010.
Internet Radio291
Internet Radio has become a minor factor in Canada throughout the past several
years; with stations streaming nation-wide through all eclectic genres and nationalities.
Additionally, many terrestrial radio stations have begun to simulcast their broadcast
online. Reproduction, performance and webcasting royalties apply to these types of
streams.
National Public Radio292
291 “Internet Radio May Stream North to Canada” Michael Geist292 “Canadian Broadcasting Corporation” Wikipedia
The Canadian Broadcasting Company (CBC) is the national public broadcasting
association, owned and operated as a part of the government; much like BBC in the UK.
Its predecessor was founded in the late 1920’s to prevent the domination of American
radio throughout Canada. It is currently commercial free, though it used to rely heavily
upon advertisements up through the 1970’s as a primary source of revenue. In Quebec,
the public radio operator is ‘la Société Radio-Canada’.
In early 2009, the CBC announced that they would be laying off 800 people and
significantly cutting pay for senior managers to balance a $171 million budget deficit.
Many major private sector broadcasters, such as CTV, have also cut hundreds of jobs
since 2008.293
Satellite Radio294
293“3-CBC to cut executive pay, try to sell assets” Reuters 2009294 “Bringing Satellite Radio to Canada” CBC
Satellite radio is becoming increasingly prevalent in Canada with the adoption of
Sirius and XM satellite radio companies. In 2002, XM was brought to Canada as a public
company. In 2005 Sirius, a private company, began broadcasting in Canada. The
Canadian Broadcasting Company holds a forty percent stake in Sirius.
Cancon295
The most unique aspect of the Canadian music industry is their content
restrictions for terrestrial radio and other media; often shortened from Canadian Content
to Cancon. A component of the Broadcasting Act, the government stipulates three key
points: one, radio frequencies are public property; two, broadcast programming is
partially responsible for the cultivation of national identity and cultural sovereignty; and
three, the Canadian broadcast system should provide programming that reflects Canadian
values, artists and media of cultural significance. Starting in 1970, the Canadian Radio-
Television and Telecommunications Commission mandated that AM radio had to provide
content that was at least thirty percent Canadian-created. As of 1998, this number jumped
to thirty-five percent for the majority of commercial stations (AM & FM). Additionally,
Francophone radio stations must provide at least sixty-five percent content in French per
week, and ethic radio stations must have at least seven percent Canadian content. 296 The
desired effect of this act was not just to stimulate Canadian culture and protect it from
foreign media saturation, but to encourage domestic sales of media products. Music by
Canadian artists now represent approximately 30% of the music Canadians consume,
with Quebec’s figure as high as 40%.297
295 “Canadian Content Rules” Media Awareness296 “Canadian Content Rules” Media Awareness297 “Consumers” Canadian Heritage
In order to qualify as Canadian, the recording must meet at least two criteria of
the following:
The music is composed by a Canadian
The music/lyrics are performed principally by a Canadian
The music is a live performance that is recorded in Canada or performed in and
broadcast live in Canada
The lyrics are written by a Canadian
Before 1960, a very low number of albums sold in Canada were actually made by
Canadians. By the 21st century a steady increase in the production of albums and the
updated Cancon rules led to airwaves being dominated by Canadian pop stars. Despite
this success, significant conflicts have arisen over this issue; such as the succession of
independent labels from the CRIA.
Cancon in Television298
Cancon rules also apply to television. Television licenses must meet a content
level of sixty percent Canadian created content throughout the day. (Either the key
creative personnel are Canadian, Canadians get paid to create the content or it is
processed and edited in Canada) The Canadian Broadcast Company, the national
broadcaster, must also follow these rules strictly.
PRESS
Television
298 “Canadian Content Rules” Media Awareness
Like the rest of the world, Canada has its own variation of the ‘idol’ series, aptly
named ‘Canadian Idol’. Its format is identical to that of the US, as is its success. Fourteen
of the top competitors since the inception of the program have had at least one album go
gold or platinum.299 Similarly, top American Idol contestants achieve strong success
throughout Canada, with eight different artists achieving platinum or gold albums. 300
Online
299 “Canadian Idol Alumni Album Sales” Wikipedia300 “Canadian Idol Alumni Album Sales” Wikipedia
Canadian artists achieve online recognition through similar channels as US artists such as
YouTube, music discovery and news sites like Exclaim301, and iTunes recommendations.
Noted is the lack of a service such as Pandora, a major music discovery tool in the US,
due to very high royalty rates for semi-interactive music streams.
301 “Home Page” Exclaim
Canada’s first prominent music magazine was RPM (“Records, Promotion, Music”; a
publication that helped start the Juno awards.302 Today, a myriad of small and large music
magazines are distributed throughout Canada alike, representing all genres and
nationalities. American magazines such as SPIN also have Canadian affiliates and
distribution.303
LIVE MUSIC
Overview
The live component of the music business is an increasingly important sector in
Canada. Not only is overall artist revenue becoming increasingly dependent on live
shows, but the suffering of the artist-fan connection in an oversaturated media world has
placed heightened emphasis on this sector.304 Three out of five Canadians attended at
least one musical performance over the past year. On average, Canadians attended five
performances in this period and a significant portion (58%) of these performances
featured Canadian artists. This is in decline, as more Canadians reported going to less
shows in 2008 (37.8%), than those who were to more shows in 2008 (22.2%).305 Forty-
percent of Canadians who attended a musical performance purchased CD’s or DVD’s at a
total average price of $27 per performance. Thirty-three percent bought other types of
302 “RPM” Wapedia303 “Free Music Download from Spin Magazine Canada” Smart Canucks2010 304 An Overview of the Financial Impact of the Canadian Music Industry; Appendix iii305 An Overview of the Financial Impact of the Canadian Music Industry; Pg 52
merchandise for an average price of $38.50 per purchase. 306 Average expenditures per
capita across Canada on musical performances are $122 annually.307
Revenue Generated308
In 2008, gross live music revenues in Canada amounted to $752.8 million. Of this
revenue, $353.4 million came from general concerts (pop, rock, jazz, etc), $312 million
came from classical music, $80.9 million came from musical cabarets and $6.5 million
came from music exhibitions. Not accounted for in this figure are massive sales derived
from food and beverage, parking, sponsorships, merchandise and other ancillary streams.
This figure fell from $771 million in 2007, for a loss of 2.4%. The profit margin for
musical groups and artists increased from 16.5% in 2007 to 19.9% in 2008. 309
Classical Music
Only 7.8% of the population reported going to one or more classical music
performance in 2006, and only one percent claimed that they went to more than five
classical performances in the past year. 310 Yet simultaneously, revenues derived from
classical music performances nearly equal those derived from general concerts. This
implies that either intense Classical music fans go to significantly more shows than their
popular music counterparts, or that ticket prices are much higher for classical
performances. Likely, it is a combination of both
.
306 An Overview of the Financial Impact of the Canadian Music Industry; Appendix iii307 An Overview of the Financial Impact of the Canadian Music Industry; Appendix iii308 An Overview of the Financial Impact of the Canadian Music Industry; Appendix iii309 An Overview of the Financial Impact of the Canadian Music Industry; Appendix iii310 Classical Music Attendance in Canada; Pg 1
Booking Agents
Canadian booking agent revenues remain relatively small, estimated at $11-$13
million total nationwide. Unlike the United States, where agents are capped at ten percent
of gross, Canadian booking agents can get a fifteen to twenty percent gross commission
depending on the type of event.311 Usually though, their revenue is held to ten percent of
gross. Bookings of Canadian artists through agents are estimated to derive revenues of
$120 million annually.312
Types of Venues
(See Immigration / Work Permit Section on pg. for excerpt of classified music venues)
Artist Touring Activities313
Below is the frequency with which Canadian musical artists are estimated to play
specific types of events and venues. Note the high percentage of artists (35%) that have
performed internationally; likely almost entirely attributed to the US. Seventy-one
percent of touring Canadian artists also performed in the United States in the past year.314
315
311 Booking Agent Agreement; Pg 13312 An Overview of the Financial Impact of the Canadian Music Industry; Pg 30313 An Overview of the Financial Impact of the Canadian Music Industry; Pg 5314 An Overview of the Financial Impact of the Canadian Music Industry; Pg 17315 An Overview of the Financial Impact of the Canadian Music Industry; Pg 17
Method of Payment316
Of these activities, musical artists were paid in a variety of ways. Eighty percent
of ‘gigs’ were paid by a flat performance fee, 9.9% were a guarantee plus a percentage,
ten percent were given 100% of the admission and 8.7% were paid a percentage of the
admission.
Touring Grants317
The Canada Council for the Arts provides touring grants to increase the
opportunities of up and coming Canadian musical artists. If one meets the proper
requirements, an artist may apply for a grant to cover per diem, transportation, lodging
and promotional expenses. There are no financial limitations to this, and one may apply
for multiple tours at once. Additionally, there are grants for international touring for
Canadian artists that meet many of the same requirements and benefits.318
Ticketing Market319
Like in the United States, Ticketmaster dominates the concert ticket market in
Canada. Though unlike in the US, there are very few mid sized competitors: instead there
are countless ticket resellers buying up concert tickets in bulk and then selling them back
over the internet at a premium. While this practice is frowned upon, it is not strictly
illegal. Reports from the Canadian government indicate that reform for this issue is not
high in their priorities.
316 An Overview of the Financial Impact of the Canadian Music Industry; Pg 18317 “Music Touring Grants” Canada Council for the Arts 2010318 “International Touring Assistance in Music” Canada Council for the Arts 2010319 “Ticket Resellers snap up best Concert Seats” CBC News 2007
Rehearsal Spaces
A myriad of rehearsal space options are available in all price points across all
major Canadian cities. There are no clear leaders in this sector; merely independently
owned and operated facilities throughout the country.
Merchandise
(See Live Music Overview Section)
Festivals
Like in the United States, Music Festivals have emerged as high growth market in
Canada. As such, an unprecedented amount of new festivals are being introduced into the
popular music scene. For one, Canada has started an unaffiliated sister festival of South
by South West, entitled North by North East that draws 250,000 fans annually.320 Other
longtime international festivals, such as the Virgin Mobile ‘V Festival’ are being re-
introduced to Canada in 2011321. Prominent folk festivals, such as the Winnipeg Folk
Festival and the Ottawa Folk Festival consistently draw over 50,000 attendees,322 while
thirty year stalwarts such as the Vancouver Folk Music Festival have drawn 30,000
people out annually dating back to 1980.323 Additionally, electronic music festivals have
seriously begun to capture Canadians’ dollars. This past summer there were more than
ten major ‘rave’ shows all over the country that drew over 10,000 attendees and featured
mainly Canadian artists324; at average ticket prices of more than $100.325 Outdoor country
320 “Festival Dates Announced” Hip Hop Canada2010321 Virgin Festival 2009322 “Folk Fest gets Bigger, Better” Winnipeg Free Press 2010323 “Folk Festivals spin off Profit for both Artists and Venues” Canada.com 2007324 “Top 6 Canadian Electronic Music Festivals” Hubpages 2010325 “Top Canadian Electronic Music Festivals” Suite101 2010
music festivals continue to be exceedingly popular; the largest of which (Big Valley
Jamboree), consistently brings out 80,000 people per year.326
Geographic Considerations
As previously stated, seventy-five percent of the Canadian population lives with
100 miles of the United States border; so national touring should take place primarily
within that region. Additionally, the West and East coasts of Canada are covered in
mountain ranges, making travel by bus or car extraordinarily difficult.327 Train routes
exist that bridge the gap between the far east coast and cities such as Vancouver, passing
through many major cities en route to Quebec and finally Toronto.328
GOVERNMENT SUPPORT
Government Aid for Culture
Government aid and tax breaks to culture related industries represent 14.1% of
total federal income. 329 Of this total, approximately forty-six percent comes from the
federal government and twenty-nine percent from provincial governments.330 The
industry specific percentages are as follows:
326 “Jamboree attendance hits almost 87,000” Jam Canoe 2006327“Mountain Ranges of Canada” The Canadian Encyclopedia328 “Train Travel in Canada” Seat 61329 “The Effect of the Global Economic Recession on Canada’s Creative Economy in 2009”; Pg 13330 “The Effect of the Global Economic Recession on Canada’s Creative Economy in 2009”; Pg 13
331
Canada Music Fund / From Creators to Audience332
The Canadian government has assumed responsibility for a smooth transition to
the digital medium. The primary means of governmental aid to the sound recording
industry was established in 2001 under the name ‘Creators to Audience’. This program
outlines goals and standards in government investing in the domestic music industries in
order to fulfill three goals: provide access to many different Canadian music genres to the
public through different mediums, increase opportunities for Canadian artists and
industry workers to contribute to overall cultural expression, and give artists and industry
workers the skills to succeed in the global music marketplace.333 This is accomplished
through the establishment of the Canada Music Fund; the organization that creates and
implements eight different initiatives to fulfill this purpose. The eight major initiatives
are as such:
331 “The Effect of the Global Economic Recession on Canada’s Creative Economy in 2009”; Pg 14332 “Canada Music Fund” Canadian Heritage333 “From Creators to Audience” Canadian Heritage
Creators' Assistance Program
Financial aid and educational programs for the success of Canadian songwriters
and composers
Canadian Musical Diversity Program
Financial aid for the production and distribution of music that represents the
diversity of Canadian music, and challenges conventional genre and expression
restrictions
New Musical Works Program
Financial aid and development for up and coming Canadian artists and music
entrepreneurs on a project basis
Music Entrepreneur Program
Financial investment in companies led by forward thinking entrepreneurs for the
progression of the Canadian Music Industry
Support to Sector Associations Program
Financial support to leading trade associations for the progression of the music
business
Collective Initiatives Program
Funding provided for the creation of conferences and networking events that
bring together content creators, entrepreneurs and media outlooks for the
advancement of new Canadian music and the industry at large
Canadian Music Memories Program
Will protect and maintain pieces of historic music for Canada in all formats
Policy Monitoring Program
Self-governing regulations for the Canada Music Fund and delegation of funding
Education334
New provisions were recommended by the Canadian government with respect to
children’s musical education in 2008; closely following the standard provided by NAMM
for United States musical education. It states that:
Every student shall study music in each grade in elementary school.
In secondary school, students should have the opportunity to choose from a
variety of music programs that are available to them in every academic year.
Students should have the opportunity to participate in a range of musical
performances, both in the school and in the community.
Students should have creative musical experiences and understand the joy of
participation.
“Music education programs shall be taught during regularly scheduled classroom
hours throughout the school year at every level.”
Programs should be sequential and skill-based, leading to clearly-defined musical
skills and knowledge.
Teachers should be properly qualified, including a university degree, teaching
certificate, music education training as well as additional in-service training.
School boards should have a music education specialist as their coordinator or
consultant.
The music taught should come from a variety of styles and periods.
Additional Government Investment
334 “Music Education Guidelines” Hill Strategies
Canada Cultural Spaces Fund 335
Fund set up for investment in venues that promote Canadian culture in all
performing arts. As of 2009, annual funding will be scheduled to continue at $30
million dollars through 2015. In the past two years, an additional $60 million has
been spent to help cultural infrastructure recover from the recession.
Canada Arts Presentation Fund 336
Created for non-profit organizations to provide significant musical experiences to
the Canadian public at large through the hiring and facilitating of music experts
and performers. It is intended as motivation to get individuals within communities
interested in music and to interact with professionals within the given field.
Others337
Building Communities Through Arts and Heritage
Canada Arts Training Fund (formerly National Arts Training Contribution
Program)
Canada Cultural Investment Fund (formerly Canadian Arts and Heritage
Sustainability Program)
Cultural Capitals of Canada
Games of La Francophonie
National Arts Service Organization Designation
335 “Canada Cultural Spaces Fund” Canadian Heritage336 “Festivals and Performing Arts” Canadian Heritage337 “Festivals and Performing Arts” Canadian Heritage
338
338 “Government Expenditures on Culture” Statistics Canada 2008
IMMIGRATION, TAXATION AND BUSINESS
IIMMIGRATION
Overview339
Canada is by nature a country with an immense immigrant presence. In 2008,
Canadian immigrants totaled almost 250,000; with 65,000 family immigrants, 20,000
refugees and 150,000 economic immigrants. It is estimated that in 2008, almost forty-one
percent of Canada’s population was either a first or second-generation immigrant.340 2002
saw legislation that dramatically revised Canadian immigration law with the passing of
the Immigration and Refugee Protection Act. Immigrants represent population growth of
approximately .85% annually.
There are multiple classes of immigrants in Canada, with specific provisions for
each classification. Temporary workers, permanent residents, visitors for business and
pleasure and others all have distinctions on limits, applications and many sub-classes.
Those most pertinent to endeavors in music business will be discussed in further extent.
341
NAFTA Provisions342
339 “Canadian Nationality Law” Wikipedia340 “Immigration to Canada” Wikipedia341 Canada Facts and Figures: Immigrant Overview 2009342 “Working Temporarily” Canada International
NAFTA has several provisions on temporary work between citizens of Canada,
Mexico and the United States. The general concept is to encourage the flow of temporary
workers between countries as an attempt to benefit all three economies and expand
opportunities for skilled workers. NAFTA only applies to temporary work immigration;
for which it does not apply a time limit, but merely states that as long as the individual
does not intend to make permanent residence they may stay and work. The initial work
permit can be granted for a maximum of twelve months, though it may be renewed
several times. Temporary work permits do not extend to performing artists and ‘specialty
occupations’, 343 though business visitors in most capacities have access.344
Commonwealth Citizens345
Commonwealth citizens are members of the Commonwealth of Nations and have
access to a special set of benefits in regards to immigration between membership
countries. Most prominent is a free short-visit visa for business and pleasure, and the
ability to become a citizen from registration, rather than naturalization.
Point System346
Under the skilled worker immigration category, one’s eligibility is determined by
a point system that awards those with various skills and qualifications. A total of sixty-
seven points is required in order to qualify to work-based immigration. Categories
include age, education, linguistics, employment, criminal offenses and adaptability.
Permit-Free Festivals
Canada does not offer Permit-Free festivals, unlike major territories such as the UK.
343 “Working under NAFTA” Invest in Canada344“Frequently Asked Questions” Invest in Canada345 “Commonwealth Citizen” Wikipedia346 “Points Calculator” Work Permit.com
Temporary Workers347
According to the Canadian government, over 150,000 people come to Canada to
work temporarily every year.348 Primarily this is comprised of emigrants from China,
India, Philippines, Pakistan, the US and the UK.349
Quebec Immigration Specifications350
Most immigration statutes distinguish between working in Quebec and the rest of
the country. They have their own immigration board, the ‘Ministère de l’Immigration’. If
one wants to obtain a permit to work in Quebec, they must first obtain a certificat
d’acceptation du Québec, which approves individuals for residence similarly to a
temporary living permit.351
Business Visitors
A business visitor is defined by the Canadian government as someone who
“intends to engage in business or trade activities” but does not intend to enter the
Canadian job market. Other provisions that must be met include that the worker must be
conducting business between borders (internationally), the worker’s employer is based
outside Canada and the worker is paid through channels outside of Canada. Negotiating
and planning ventures are covered under this category. In order to qualify one must
obtain a license, which extends for usually around six months maximum depending on
the type of work.352
347 “Temporary Foreign Workers” Citizenship and Immigration Canada348 “Working Temporarily in Canda” Citizenship and Immigration Canada349 “Immigration to Canada” Wikipedia350 “Statistics and Publications” Immigration of Quebec351 “Submitting an Application” Immigration of Quebec 352 “Entering Canada as a Business Visitor” First Reference
353
Labour Market Opinion (LMO)354
In Canada, employers must obtain permission from the government in order to hire
temporary foreign employees. This is done to establish that there is a requirement for the
foreign worker to be hired because no Canadian is available to do so, so as not to disturb
the Canadian labor force. To obtain an LMO, a company must show that they made
adequate effort to attempt to hire Canadian citizens first; the wages are equal for both
foreigners and Canadians, and any benefits the hiring of a foreign employee in this
position will bring to Canada. The foreigner must submit a copy of the LMO with their
application for a temporary work permit. Those required to obtain an LMO include
Actors, Artists, Technicians, and similar workers in Film, Television, Theatre & Radio.355
LMO's are not required for music festival performances, but they are for shows in bars
and other venues.
Performing Artists356
The fees and permits required of foreign performing artists in Canada are largely
determined by the type of venue that they are being hired to play and the number of
353 Canada Facts and Figures Immigrant Overview; Pg 4354 “Labour Market Opinion Basics” Citizenship and Immigration Canada355 Foreign Worker Manual356 Cost Recovery
shows during their stay. Every performing artist must obtain a temporary residence visa
(permit IMM 5257), regardless of whether or not they require a work permit. The fee for
the temporary residence visa is $200 per person, but may be waived in specific situations.
Temporary work permits are $150 per person (permit IMM 1102B)) and a maximum of
$450 for a group of three or more people (IMM 1442B). Groups are defined as
performing musicians and their accompaniment, so it could very well be a solo artist with
two technicians. This also means that an artist can bring indefinite amounts of additional
help with them under the same work permit and price. Processing begins when either the
work permit application or temporary residence visa is submitted with the appropriate
fees (unless otherwise applicable, as some government and academic individuals are fee
exempt). Artists must pay fees for both temporary residence visas and work permits, and
lack of requirement of a work permit does not exempt an individual from a temporary
residence visa. Whether the artist has a contract with the venue owner or festival owner
bears great consequence on permit requirements. Below are the qualifications for work
permits depending on venue:
Permit Required:
• Bars
• Beer parlors
• Bistros
• Cabarets*
• Cafes
• Cafeterias
• Coffee shops
• Lounges
• Nightclubs
• Pubs
• Restaurant
• Tapas bars
• Taverns
• Tea houses
No Permit Required:
• Auditoriums
• Banquet halls
• Casinos
• Comedy clubs*
• Community centers
• Concert venues
• Convention centers
• Dinner theatre establishments*
• Hotels
• Public parks
• Religious establishments (such as churches, temples and mosques)
• Shopping malls
• Sports arenas
• Theatres
In order to determine if an establishment is distinguished as a bar or performance
venue, government officials will often look to the liquor license for guidance. As long as
an employment relationship is not established between artist and ‘employer’ then no
work permit or LMO needs to be obtained. An employment relationship is defined by a
series of steady shows, e.g. being hired as a performer every day of the month at a local
bar. Playing a one off show, or a short series of sporadic shows or festivals does not
constitute such a relationship and a permit is not required.
Individuals who have reserved time in or rented equipment from recording studios
are exempt from obtaining a work permit and may enter Canada with only a temporary
residence visa. Musical guests on Canadian television and radio programs do not require
LMO’s or work permits, as they have no personal stake in the show itself and are nothing
more than ‘guests’.
Canadian Artists in United States
In order for Canadian Artists to obtain work in the United States, they need to
obtain a Visa. As stated previously, seventy-one percent of touring Canadian artists
performed in the United States in the past year. Fifty percent of touring musicians say
that it has become more difficult to obtain the work permit necessary to do so.357
Equipment Manifest358
Canadian law provides that any individual entering Canada must provide an
accounting of goods in order to product against sale without the applicable tariffs. This is
especially important when considering touring in Canada.
TAXATION
357 An Overview of the Financial Impact of the Canadian Music Industry; Pg 17358 Ken Lopez, Lecture 10/28/10
Overview359
Canada’s tax system is a combination of its federal and provincial dues that are
set up progressively; much like the United States. For personal income taxes the first
$10,320 is non-taxable until gross income exceeds that figure.360 The following are the
standard federal tax brackets.
Taxable Income / Tax Rate %
CAN 0 - 40,726 15%
CAN 40,726 - 81,452 22%
CAN 81,452 - 126,264 26%
Above CAN 126,264 29%361
Provincial taxes vary from province to province. Some areas have as many as ten
brackets, while some only have three. The combined federal and provincial taxation rate
is usually around 25% for the first $40,000 CAN and 45% above the highest income
bracket at $125,000 CAN. Personal income taxes account for three times the amount of
corporate taxes. Any individual, regardless of citizenship or affiliation, is required to pay
income taxes on revenues earned or derived from business activity or employment in
Canada.362 Non-resident individuals conducting business in Canada are taxed on the
income solely earned through their Canadian endeavors and at the standard resident
income tax rate.The governing body over taxes is the Canadian Revenue Agency (CRA),
who administers all the taxation to the federal and provincial governments.
359 “Income Tax Rates for 2010” Canada Revenue Agency 2010360“International Visas and Taxation” Australia Council 2010361 “Income Tax Rates for 2010” Canada Revenue Agency 2010362 “Update Notice” Department of Justice
Corporate Taxes363
The federal corporate tax rate is approximately 18%. When combined with
provincial tax rates the maximum total rate is at 34%. A business is declared a resident of
Canada if it effectively operates and/or has management in Canada. If a business is
incorporated in Canada, it automatically qualifies to be taxed at the full rate. Canadian
companies must pay tax for the revenue it receives internationally, though tax credits
may be acquired depending on the payment of taxes in other territories and the bilateral
agreements between Canada and other countries.
Royalties
Royalties paid on copyrights for “the production or reproduction of any literary,
dramatic, musical or artistic work” are exempt from taxation.364 Royalties are also exempt
from withholding of taxes for this reason.
Performing Artists 365
There is great scrutiny in determining whether an artist is employed or self-
employed for tax and deduction purposes. This is distinguished by the examining the
various agreements that have been made and which party has the control over when,
where and in what amount the music will be presented. One must look at whether the
artist is actively pursuing work for themselves in various capacities, as opposed to a
company providing work for them. If an artist is self-employed they have access to many
important deductions including: insurance, repairs, legal and accounting fees, union dues,
agent commission, remuneration to an assistant, makeup, publicity expenses,
transportation to performances including board and lodging, telephone, professional
363 “International Visas and Taxation” Australia Council 2010364 Income Tax Act, subparagraph 212(1)(d)(vi)365 “Performing Artists” Canada Revenue Agency
residences, industry trade magazines and music lessons. Employed artists may only
deduct those expenses provided for in the ‘Tax Breaks for Musicians’ section below.
Performing Artists (International Specifications)366
Alien performing artists (as with all temporary residents) who have carried on
business in Canada are taxed for the income earned; as such they must file a tax return in
the province they earned the revenue. 15% of gross income367 is withheld by the CRA
against potential tax liability, often collected on the day of the show for performing
artists. They must provide documentation to show that the withholding is too high for
their projected taxes if they want to alter the amount.
Tax Breaks for Musicians368
Musicians are allowed a series of tax breaks depending on their employment
status and creation of new works.
Employed artists (see immigration section for clarification) may deduct expenses
paid in the composition of a musical work, or performance of a musical work
from their income statement.369 This is limited to the lesser of your total expenses
in these endeavors, $1000 minus instrument and gas expenses, or 20% of income
from these activities minus instrument and gas expenses. One may use un-
deductible expenses against future years. 370
Employed artists may deduct the cost of maintaining, renting and insuring their
musical instrument if it is required as part of their job, so long as the actual
purchase price of the instrument is not included in this category, nor that the cost
366 “Non Resident Withholding Tax” University of British Columbia367 “Non Resident Withholding Tax” University of British Columbia 368 “Employed Artists” Canada Revenue Agency369 “Employed Artists” Canada Revenue Agency370 Income Tax Act, subparagraph (1)(q)
of doing so exceeds the artists’ taxable income. A 20% declining capital cost
allowance may also be claimed for the instrument.
An individual may deduct income derived from the production of a literary,
dramatic, musical or artistic work, as well as the income from the individual’s
activities as a musician or public entertainer, so long as it does not exceed net
income.371
For businesses that are artist’s musical endeavors (holding company or
otherwise), the inventory may be excluded from taxable assets indefinitely.372
International Business Royalty Exemption373
Usually foreigners who conduct business in Canada must pay an income tax of
25% for the total revenues generated through sale of product or service to domestic
Canadians. However, in respect to payment of royalties of a copyright derived from
reproduction or production of musical and artistic works the foreigner is exempt from
paying this fee. 374 Additionally, international royalties and management fees
(administrative publishing) are exempt from being withheld for tax purposes.375
Withholding
Canadian corporations are subject to the full extent of taxation for investment
income. Additionally, one fourth of dividend payments are withheld for tax purposes.
Private ‘Canadian-controlled’ corporations are exempt from many taxes and withholding,
so starting a non-resident business in Canada becomes increasingly difficult amongst
371 Income Tax Act, subparagraph 66(1)(b)372 Income Tax Act, subparagraph 66(2)373 Income Tax Act, subparagraph 212(1)(d)(vii)374 Income Tax Act, subparagraph 212(1)(d)(vii)375 “Non Resident Tax Withholding” Canada Revenue Agency
competitors. 376
BUSINESS FORMATION
Overview
Registration is a legal requirement in order to operate as a business within
Canada, with a few exceptions to be discussed later. There are four main types of
businesses that one may form in Canada; each with their own distinct advantages and
disadvantages for setup costs, liability, taxation and flexibility.
Sole Proprietorship377
A sole proprietorship is the most basic level of business, where the singular owner
possesses all the assets and liabilities of the company. It is not incorporated. The income
and expenses of the business appear on the owner’s personal tax return.378 Setting up and
maintaining a sole proprietorship is very inexpensive, and in many provinces you don’t
have to register it if it’s under your own name. You must renew proprietorship once every
five years. Ease of use and primary ownership are the main reasons why one may
consider this as a business option. Lack of tax flexibility and difficulty to obtain loans are
primary disadvantages.
Partnership379
A partnership is when two or more persons decide to own and operate a business
together. There is no limit on the number of individuals who can be involved. By
spreading the liability around among people and designating it to the company in the case
376 “Withholding Tax” The Tax Issue377 “Choosing a Form of Business Ownership” About.com378 “Selecting a Business Structure” Invest in Canada379 “Choosing a Form of Business Ownership” About.com; Pg 2
of a Limited Liability Partnership it reduces the individual risk to its founders. However,
in some instances it also makes you liable for your actions’ effects on the other members.
Like a sole proprietorship, income is accounted for on the members’ individual tax
returns.
General Partnership - each person is jointly and severally liable for all aspects of
the businesses’ operation.
Limited Partnership - One or more of the partners do not actively participate in the
management of the company, and as such are only liable for the amount that they
invest.
Limited Liability Partnership - A company that takes on a liability of its own;
mostly separated from the liabilities of its partners. Provincial law dictates which
types of professionals may form an LLP.
Corporation380
A corporation is separate in its liability from its owners, and exists as a
completely separate entity. Corporations are expensive to operate and apply for, and
registration can be obtained on a federal and provincial level- offering different stages of
protection. Operating a corporation makes it easier to get loans and often qualifies the
business for an approximate 9% deduction in annual taxation through the ‘Small Business
Deduction”.381
Cooperative382
A cooperative is a hybrid corporation and partnership, where the members have
individual liability limited to their shares in the company but the corporation has the
380 “Choosing a Form of Business Ownership” About.com; Pg 3381 “7 Reasons to Incorporate Your Business” About.com382 “Corporations Canada” Industry Canada
ability to enter in contracts and act as a business in the same way as a traditional
corporation.383 It usually operates much the same way as a democracy with each
owner/director being equally represented in decision making.
Percentages of Canadian Musicians’ Employment Status
The following are estimated percentages of Canadian musicians’ business
affiliations as of 2007. Note that ‘employee’ designates that they have a steady job at a
venue such as a bar, where they get paid on a salary basis.
384
Business Name385
One must file the business name with the local and/or provincial governments in
order to receive protection in different levels of territory. Each province has a different
organization with which you must register your name. An initial name search is required.
In most provinces, Sole Proprietorships in the owner’s name are the only type of
companies that do not legally require registration in all cases.386
Access to Funding387
383 “Choosing a Form of Business Ownership” About.com; Pg 3384 An Overview of the Financial Impact of the Canadian Music Industry; Pg 5385 “How do I register a Business?” About.com386 “Starting a Business: Register a Business Name” About.com387 “Overview” BDC
The Canadian government established the Business Development Bank of Canada
(BDC) in the mid-20th century as a means to council small business owners, provide loans
and attract investors for companies. They list their only goal as accelerating the success
of Canadian entrepreneurs. They have a team that provides help to 29,000 small and
medium businesses throughout Canada.
The bank system itself is in excellent status (see page 25), so loan availability has
not and will continue to not slow down even amidst the economic downturn. The largest
bank (and largest Canadian company for that matter), is the Royal Bank of Canada. It is
commonly recognized as one of the most prestigious global brands and most effective
international banks.388
New Federal Budget389
The 2010 federal budget has implemented several measures that will drastically
aid business owners in Canada, with the intention of heightened job growth and increased
accessibility to funding; helping pull them out of poor economic state. Here are several of
the key components:
Machinery Tariffs eliminated – No more tariffs on the importation of input
machinery
Corporate income tax cut – The corporate tax rate will fall to 15% by 2010, from
22.1% in 2007
Business Credit Availability - Business Development Bank of Canada and Export
Development Canada have loaned $5 billion to businesses so that they have
continual access to credit
388 “Royal Bank of Canada” Wikipedia389 “The Budget Plan” Budget 2010
Youth Business Funding – Through BDC, the government will allocate $10
million for the mentorship, financing and lending to young entrepreneurs
Stimulus Spending – $2.2 billion dollars to industries that have suffered
significantly due to the economy, such as small businesses, cultural industries and
tourism
Creation of Committee on Small Business and Entrepreneurship –Created to
consult government and small business owners alike on how to best provide
funding for new ventures
Music Industry Financing
Factor Loans for Recording - Loans available for aiding the English language
recording industry, as well as songwriters, composers and music artists; they will
fund recordings, artist development, marketing, promotion and international
business development. $750-$60,000390
Emerging Music Business Program - the Nova Scotian government gives a 50%
credit for a project that costs up to $4,000; given to emerging artists, industry
professionals and registered societies391
390 “FACTOR Loans for Recording” Canada Business391 “Emerging Music Business Program” Canada Business
INVESTMENT
International Investment Risk392
The inherent difficultly with investing in foreign countries is that fluctuations
between the various currency rates can have massive consequences for one’s return on
investment. For instance, if a US national puts $1,000 USD into a Canadian business
when the exchange rate is $1 USD = .50c CAN and immediately ‘cashes out’, she will
receive $500 CAN and $1,000 USD when converted back. However, say during that
period her investment realized a gain of 10% and the Canadian dollar increased it’s value
against the US dollar by 100%, so now $1 USD =$1 CAN. When she ‘cashes out’, she
will receive $550 CAN, but only $550 when it’s converted back to USD. In this
extremely hypothetical situation, even though her investment gained a healthy margin she
lost a significant amount of money. ($1,000-$550= $450 loss) As such, when deciding on
whether to invest in the Canadian music industry one must take said currency fluctuations
into account.
USD vs. CAN – Last Three Years
392 Currency Risk; Pg 1
393
Foreign Direct Investment
The Economic Intelligence Unit ranks Canada as the best G7 country to invest
and do business due to high federal and economic stability, key trading partners and
effective bilateral trade agreements.394
In 2009, foreign direct investment in Canada totaled $549.4 billion dollars, up
only $9 billion from 2008, but up $112 billion since 2006.395 The United States’ direct
investment in Canada in 2009 was $288.3 billion, or 52.5% of total foreign
contributions.396 Direct investment in Canada’s cultural industries reached $10.2 billion in
2009; slightly down from 2008, but almost two times that as 2006397. Since NAFTA and
the US-Canada Trade Agreements were enacted, the countries have developed the most
financially symbiotic relationship of any two nations in the world.398 Canada currently
ranks tenth highest in foreign direct investment directly behind China.399
Canadian Direct Investment
393 “Targeting the Canadian Dollar Today” BabyPips394 “Canada: A Great Place to do Business” Location Canada 2008395 Foreign Direct Investment in Canada; Pg 2396 Foreign Direct Investment in Canada; Pg 2397 Foreign Direct Investment in Canada by Industry; Pg 1398 “Canada Economy 2010” Theodora399“Stock of Direct Foreign Investment” Photius2010
In 2009, Canadian international investments totaled $593.2 billion, down from
$641.6 billion in 2008.400 $261 billion or forty-four percent of total investments went to
the United States401; where Canada is the fifth largest investor. 402 Canadian investment in
global cultural industries totaled $22.1 billion, up from $18 billion in 2008 and $13.4
billion in 2007.403
Venture Capital Investment
In Q1 of 2010, Venture Capital investment in Canada totaled approximately $170
million USD; making it total approximately two percent of the global VC market of $7
billion.404 VC investment is Canada was up more than thirteen percent from Q4 of 2009
and over forty percent up from Q3 of 2009.405
REASONS TO INVEST
Solid Financial Infrastructure
As stated previously, Canada’s federal government and banking system have
grossly outperformed the rest of the G7 countries. In the past twelve years, they only
have one year of budget deficit.406 Additionally, financial experts and leaders worldwide
have proclaimed Canada to be a market of secure growth for the next several years.
Connectivity to United States
The Canadian music industry in many ways mirrors the music market for the
United States. Many of the artists who experience success in one territory tend to achieve
400 “Canadian Direct Investment Abroad”; Pg 2401 “Canadian Direct Investment Abroad”; Pg 2402 “Canada: A Great Place to do Business” Location Canada 2008403 “Canadian Direct Investment Abroad by Industry”; Pg 1404 “Q1 2010 Global Venture Financing Report” Dow Jones405 “Q1 2010 Global Venture Financing Report” Dow Jones406 “Canada Economy” Theodora 2010
at least marginal success in the other. Therefore developing artists in Canada has greater
immediate potential than just the domestic market. Additionally, knowledge in the US
music industry will translate well to knowledge in the Canadian music industry.
Canadian presence in major world markets
Throughout the past several years, prominent Canadian artists have gained
significant recognition throughout all genres. To name a few: Drake and Justin Bieber
(Hip Hop), Celine Dion and Michael Buble (Pop), Tegan and Sara, Tragically Hip and
Arcade Fire (Indie), Nickelback (Rock) and Sum41 and Avril Lavigne (Punk). The
potential and past precedent exists for Canadian artists to sell and tour extremely well
overseas. Many of the artists listed above have dominated American and International
airwaves and record stores alike over the past few years.
Cancon and Cultural Control
Though a subject of much debate, content regulations on Canadian media for
domestic artists have had a major impact on the continued presence of Canadian artists in
the national marketplace. If one is planning to start a company that features primarily
Canadian talent, these regulations will theoretically help one gain exposure for artists
through radio and television.
Gateway to French and Asian cultures
Due to the heightened linguistic and ethnic diversity in Canada, as well as an
increasingly high immigrant population, artists’ successes have the opportunity to expand
to additional territories and cultures. Primarily in Canada, that would mean an adoption
within the domestic French and native Asian populations.
Economic Return
As the sixth largest music industry worldwide, there is significant potential to
generate income from Canadian music exploits. Though it is still struggling with anti-
piracy legislation and the adoption of digital music, foreign controlled music business
entities have increased their profit margin in recent years, from 11.2% in 2006 to 16.3%
in 2008.407
Numerous Additional Royalty Streams
In 2010, Canada has implemented succinct royalty provisions for licenses across a
multitude of emerging digital and mobile formats. Additionally, Canada requires royalty
payments for licenses not recognized by the US such as: performances in movie theatres,
sound recordings embodied in performances, private copying fees, and mechanical rates
for transfer between formats such as through a streaming site. Additionally, they permit
the rental of sound recordings. These various extra revenue streams give artists and
entities greater potential to generate revenue.
Cultural Return
Canada’s music industry have produced some of the most recognizable and
prolific music icons over the past fifty years; including Neil Young, Joni Mitchell, Celine
Dion, Rush, The Band, The Guess Who, Leonard Cohen, Daniel Lanois and David
Foster. Continuing to invest in a haven of musical progression will yield positive results
for the global cultural community.
Capital Gains Income
Profits that are derived from gains in investment are only taxed for fifty percent of
total income.
REASONS TO AVOID INVESTMENT
407 The Canadian Music Industry 2008 Economic Profile; Pg 13
Similarity to the US
Though Canada appears a few years behind the United States in its adoption of
digital music, it is going through many of the same difficulties as its counterpart with
piracy, lack of consumer incentive to purchase music and an overall recession reducing
cultural spending dollars.
Cancon and Cultural Control
Conversely, there is an implied greater difficulty in garnering exposure for non-
domestic artists. These rules make foreign companies and artists theoretically less
penetrative in the Canadian marketplace.
Dominance of US Artists
Despite Cancon, US and international artists dominate Canada’s music sphere,
accounting for seventy to seventy-five percent of domestic sales.408 This displays the
difficulty with which it is for Canadians to achieve success on an international scale; as
opposed to their primarily US counterparts. Additionally, studies suggest that the teenage
generation is becoming increasingly keen to US artists over Canadian artists. Overall, it
may make more sense to sell US and international artists in Canada than to try to develop
domestic talent.
Piracy
Canada is one of the most flagrant pirate havens internationally. Many studies
suggest that Canada has the world per capita piracy of any country in the world. As of
2010, six of the top twenty international pirate P2P websites were hosted in Canada. New
legislation is being adopted and industry associations are hard pressing federal and
408 The Canadian Music Industry 2008 Economic Profile; Pg 19
provincial governments to increase protection and go after pirates; though it will take
another couple years to determine the effectiveness of these programs. Canada does not
recognize the WIPO treaties and is thought to have underdeveloped intellectual property
violation regulations.
WHERE TO INVEST
Digital Music
Digital music is the fastest growing sector of the Canadian music industry with
increases in sales of forty percent over 2009; enough to counteract the decline in physical
sales, if individual track downloads are accounted for. Internet technologies are
expanding to further reaches of the population, and the youngest generation is adopting
services like iTunes rapidly. Though growth is still high, it has decelerated since digital
services were introduced in 2003. Therefore, investment is still recommended in the short
term, but close-monitoring is required in order to anticipate an exit strategy if necessary.
Legislation on music piracy should also be followed closely; as it will have dramatic
effects on the development of this sector.
Mobile Music
Mobile music is largely undeveloped in Canada, with only twenty-two percent of
the population able to access music on their mobile device. Ringtones have historically
accounted for eighty percent of sales. However, all studies point to stable and
accelerating growth in this sector as new streaming and download technologies achieve
higher penetration and smartphones continue to gain market share. The lack of a piracy
threat and burgeoning mobile phone market make the development of mobile music an
attractive investment option. In years past it had appeared to be thoroughly risky, but
after five years of solid, consistent growth, mobile music seems relatively secure.
Musical Products Retailers
Like in the United States, Canada has experienced an explosion in the sale of
musical products and recording technologies since the mass marketing of digital audio
equipment. This sector is experiencing very steady and secure growth, and appears to be
an excellent market for longer-term investment.
Foreign-Controlled Record Labels
Even amidst the global recession and the shrinking sales of music, foreign
controlled labels in Canada (primarily the international majors) have increased profit
margins within the last several years. With recording and marketing costs dramatically
lowered due to digital technologies, expenses have decreased significantly: falling faster
than revenues. Since foreign (primarily US) content accounts for seventy to seventy-five
percent of recorded music sales, Canadian companies do not have to incur production
costs with the majority of their content. Also, due to the proximity and interconnectivity
of the countries, marketing efforts in the United States have direct effects on Canadian
consumers and channels of exposure. Therefore, Canadian affiliates get to distribute and
sell American content (growing in popularity in Canada) with few up-front costs and
reduced marketing expenses. If consumption of American music in Canada continues to
increase, foreign-controlled labels’ efficiency should also increase over the long-term. A
review of the effectiveness of specific management and trends in market share should be
taken into account when choosing investment vehicles in this sector.
Proportion of Money
Mobile music shows the opportunity for highest growth potential, and is backed
by consistent sales of ringtones, emerging smart phone technologies and penetration, five
consistent years of revenue growth, and a younger generation more inclined to adopting
new services. As such, it is recommended to attribute the highest percentage of our
funding, thirty-five percent, to this sector for long-term investment. (While closely
monitoring the success of new technologies) Digital music will continue to grow through
the next several years, though at a decelerating rate. A short-term investment of thirty
percent will capture the short-term high growth potential, with less implied risk. Musical
Products Retailers show steady growth, but the lowest prospective return on investment.
Twenty percent of funding should go to this sector. Finally, foreign-controlled labels are
the most risky of all, since their success is determined by a myriad of factors including
the success of digital and mobile music. Since these sectors appear to be growing, an
investment of fifteen percent of funding is recommended.
Summary
Mobile – 35% (long-term)
Digital- 30% (short-term)
Musical Products Retailers- 20% (long-term)
Foreign Controlled Labels- 15% (short-term)
CONCLUSION
Sectors of Canada’s music industry are markets of high growth potential for
prospective investment; though said investment should be monitored extremely
cautiously. Digital and mobile music have experienced several years of consistent high-
growth, and look to continue this trend. Other sectors, like Musical Products Retailers
and Foreign Controlled Labels are directly benefitting from new digital technologies and
also expect to experience growth over the next several years. Throughout the past fifty
years, Canada’s music industry has had a major impact on global music culture;
producing some of the most prolific and well respected icons. In conclusion, I highly
recommend prospective investors to review this report and attribute a percentage of funds
to the growing sectors of the Canadian music industry.
APPENDIX A
Total Canadian Revenues from Recorded Music
409
409 The 2009-2014 World Outlook for Recorded Music
APPENDIX B
Canadian Cities by Population
APPENDIX C
Top Worldwide Democracy Rankings
410 “Index of Democracy” The Economist 2007
APPENDIX D
CRIA Album Certification Chart
411
411 “Gold and Platinum Certification” Canadian Recording Industry Association
APPENDIX E
2009 Sales Statistics
2009 Top Physical Sales Title/Artist Units
Sold 1 I Dreamed A Dream/ Susan Boyle 313,0002 Fame/ Lady Gaga 289,0003 Crazy Love/ Michael Buble 276,0004 E.N.D. (Energy Never Dies)/ Black Eyed Peas 273,0005 Fearless/ Taylor Swift 223,0006 My Christmas/ Andrea Bocelli 222,0007 Fais-Moi De La Tendresse/Ginette Reno 207,0008 Dark Horse/ Nickelback 182,0009 Relapse/ Eminem 180,00010. Movie Soundtrack/ Hannah Montana
Movie 178,000
412
2009 Top Digital Album / Artist Sales Title/Artist Units
Sold Artist Units
Sold 1 Only By The Night/ Kings Of Leon 33,400 1 Black Eyed Peas 856,0002 E.N.D. (Energy Never Dies)/Black Eyed Peas 28,400 2 Lady Gaga 845,0003 Fame/ Lady Gaga 25,800 3 Taylor Swift 569,0004 No Line On the Horizon/ U2 22,200 4 Flo Rida 478,0005 Soundtrack/ Twilight 21,600 5 Michael Jackson 464,0006 Fantasies/Metric 20,900 6 Britney Spears 459,0007 Fearless/ Taylor Swift 19,800 7 Beyonce 456,0008 Number Ones/ Michael Jackson 19,300 8 Miley Cyrus 416,0009 Dark Horse/ Nickelback 17,000 9 Nickelback 415,00010. Relapse/ Eminem 15,700 10
. Eminem 333,000
413
2009 Top Track / Song Sales Title/Artist Units
Sold Title/Artist Units
Sold 1 I Gotta Feeling/ Black Eyed
Peas 342,000 1 I Gotta Feeling/ Black Eyed
Peas 344,000
2 Right Round/ Flo Rida feat. Ke$ha
260,000 2 Right Round/ Flo Rida feat. Ke$ha
263,000
3 Boom Boom Pow/ Black Eyed Peas
251,000 3 Boom Boom Pow/ Black Eyed Peas
261,000
4 Fire Burning/ Sean Kingston 201,000 4 Poker Face/ Lady Gaga 206,0005 Tik Tok/ Ke$ha 190,000 5 Sexy Chick/ David Guetta feat.
Akon 202,000
6 Poker Face/ Lady Gaga 188,000 6 Fire Burning/ Sean Kingston 201,000
412 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 2413 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 2
7 Sexy Chick/ David Guetta feat. Akon
178,000 7 Tik Tok/ Ke$ha 190,000
8 Bad Romance/ Lady Gaga 158,000 8 I Know You Want Me/ Pitbull 182,0009 I Know You Want Me/ Pitbull 154,000 9 Bad Romance/ Lady Gaga 160,00010. Party In The U.S.A./ Miley
Cyrus 153,000 1
0 Party In The U.S.A./ Miley Cyrus
153,000
414
APPENDIX F
2009 Radio Airplay Top Songs / Artists
Title/Artist Detections Artist Detections 1 You Belong With Me/
Taylor Swift 51,600 1 Nickelback* 150,000
2 Love Story/ Taylor Swift 49,800 2 Taylor Swift 144,000 3 Use Somebody/ Kings Of
Leon 49,600 3 Lady Gaga 108,000
4 I Gotta Feeling/ Black Eyed Peas
42,200 4 Beyonce 105,000
5 Africa/ Karl Wolf feat. Culture*
40,800 5 Pink 100,000
6 I’m Yours/ Jason Mraz 38,700 6 Black Eyed Peas
98,000
7 Beautiful U R/ Deborah Cox*
36,300 7 Kelly Clarkson
96,000
8 If Today Was Your Last Day/ Nickelback*
35,900 8 Keith Urban 86,000
9 Please Don’t Leave Me/ Pink
35,900 9 Britney Spears
83,000
10. Right Round/ Flo Rida 35,800 10.
Katy Perry 82,000
415
414 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 2415 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 4
APPENDIX G
Sales Records
Most Domestic Album / Artist Sales in Soundscan Era Title/Artist Units
Sold Artist Units
Sold 1 Come On Over/ Shania Twain 1,926,000 1 Celine Dion 7,115,0002 Let’s Talk About Love/ Celine Dion 1,490,000 2 Shania Twain 4,245,0003 Big Shiny Tunes 2/ Various Artists 1,233,000 3 Backstreet Boys 4,128,0004 Romanza/ Andrea Bocelli 1,123,000 4 U2 3,641,0005 Beatles 1/ Beatles 1,103,000 5 Beatles 3,263,0006 Up!/ Shania Twain 1,092,000 6 Sarah
McLachlan 3,193,000
7 Aquarium/ Aqua 1,086,000 7 Eminem 3,171,0008 Surfacing/ Sarah McLachlan 1,076,000 8 Tragically Hip 3,056,0009 Millennium/ Backstreet Boys 1,073,000 9 Andrea Bocelli 3,034,00010. Backstreet’s Back/ Backstreet Boys 1,048,000 10
. Diana Krall 2,820,000
416
Most Digital Song / Album Sales Title/Artist Units
Sold Title/Artist Units
Sold 1 I Gotta Feeling/ Black Eyed
Peas 344,000 1 Viva La Vida/ Coldplay 60,300
2 Poker Face/ Lady Gaga 318,000 2 Only By The Night/ Kings Of Leon
44,600
3 Just Dance/ Lady Gaga feat. Colby O’Donis
287,000 3 Fame/ Lady Gaga 34,000
4 Right Round/ Flo Rida feat. Ke$ha
263,000 4 Soundtrack/ Twilight 30,700
5 Boom Boom Pow/ Black Eyed Peas
261,000 5 Reminder/ Feist 29,200
6 Hot N Cold/ Katy Perry 245,000 6 E.N.D.(Energy Never Dies)/Black Eyed Peas
28,400
7 Low/ Flo Rida 226,000 7 Fearless/ Taylor Swift 28,1008 I Kissed A Girl/ Katy Perry 211,000 8 Dark Horse/ Nickelback 26,1009 Apologize/ Timbaland feat. One
Republic 207,000 9 Number Ones/ Michael Jackson 22,600
10. Disturbia/ Rihanna 206,000 10.
Back To Black/ Amy Winehouse 22,600
417
Most Digital Artist Sales Artist Units
416 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 5417 Canada’s 2009 Music Report from Neilsen Soundscan 2010; Pg 5
Sold 1 Rihanna 1,183,0002 Black Eyed Peas 1,178,0003 Lady Gaga 1,160,0004 Britney Spears 959,0005 Nickelback 949,0006 Kanye West 805,0007 Beyonce 793,0008 Taylor Swift 790,0009 Flo Rida 771,00010. Madonna 766,000418
SOURCES (Divided between ‘Articles and Websites’ and ‘Documents and Reports.’)
Articles and Websites
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“Home Page” 7digital Canada<http://ca.7digital.com/>
“Home Page” EMusic<http://www.emusic.com/>
“Home Page” Exclaim<http://exclaim.ca/>
“Home Page” Government of Canada<http://canada.gc.ca/home.html>
“Home Page” Jamster<http://www.jamster.ca/>
“Home Page” Parliament of Canada<http://www.parl.gc.ca/common/index.asp?Language=E>
“Home Page” Puretracks<http://us.puretracks.com/content/viewer.aspx?cid=GlobalNav_Home>
“Home Page” Supreme Court of Canada<http://www.scc-csc.gc.ca/home-accueil/index-eng.asp>
“How do I register a Business?” About.com
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“Immigration to Canada” Wikipedia <http://en.wikipedia.org/wiki/Immigration_to_Canada>
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“International Visas and Taxation” Australia Council 2010 <http://www.australiacouncil.gov.au/__data/assets/pdf_file/0004/79672/International_visa_and_taxation_resource_vfinal.pdf>
“Internet Radio May Stream North to Canada” Michael Geist<http://www.michaelgeist.ca/content/view/1864/135/>
“Investing in Canada” Money Morning 2010 http://moneymorning.com/2010/09/10/investing-in-canada-2/
“iPhone Has a Huge Market Share in Canada” GoSammy 2010 < http://www.gosammy.com/2010/09/12/iphone-has-a-huge-market-share-in-canada/>
“IsoHunt Lawsuit Send Message to CRIA, RIAA, MPAA & More” Web TV Wire2008 http://www.webtvwire.com/isohunt-sues-cria/>
“Jamboree attendance hits almost 87,000” Jam Canoe 2006 http://jam.canoe.ca/Country/2006/08/07/1722886.html
“Juno Awards” Juno Awards http://junoawards.ca/
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“Labour Market Opinion Basics” Citizenship and Immigration Canada
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“Mechanical Licensing and other Mysteries” Docstoc.com <http://www.docstoc.com/docs/23841974/Mechanical-Licensing----and-other-Mysteries>
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“Media Giants Join Forces” Vevo 2010< http://www.vevo.com/media-room/press-releases/98/2010-06-04/media-giants-join-forces-ctvs-much-mtv-group-and-vevo-strike-exclusive-canadian-partnership-deal>
“Microsoft and Gorillaz come together to Launch Internet Explorer 9” EMI 2010 <http://www.emimusic.com/news/2010/microsoft-and-gorillaz-come-together-to-launch-internet-explorer-9-beta/>
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“Mobile Music Service Rejects Canada, blames Fees” CBC News 2010 <http://www.cbc.ca/arts/music/story/2010/09/22/mobile-music-service-woes-canada.html>
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“Temporary Foreign Workers” Citizenship and Immigration Canada
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“The Budget Plan” Budget 2010 <http://www.budget.gc.ca/2010/plan/toc-tdm-eng.html>
“The Canadian Judicial System” The Supreme Court of Canada <http://www.scc-csc.gc.ca/court-cour/sys/index-eng.asp>
“The Canadian Music Industry” Canadian Heritage 2007 <http://www.pch.gc.ca/pgm/em-cr/evaltn/2007/2007-04/105-eng.cfm>
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“The Hits Charts” BDS<http://jam.canoe.ca/Music/Charts/BDS_1.html>
“The Impact of Music Downloads and P2P File-Sharing on the Purchase of Music: A Study for Industry Canada” Industry Canada 2008 <http://www.ic.gc.ca/eic/site/ippd-dppi.nsf/eng/h_ip01456.html>
“The Music Market” Canadian Heritage 2008 <http://www2.pch.gc.ca/pgm/fmusc-cmusf/pubs/prfl_08/102-eng.cfm>
“The Private Copying Tariff, 2010” Canadian Private Copying Collective
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“Ticket Resellers snap up best Concert Seats” CBC News 2007 <http://www.cbc.ca/canada/manitoba/story/2007/03/01/ticket-scalping.html>
“Timeline; Canada History” 2010 <http://canadahistory.com/sections/timelines/timeline.htm>
“Top 10 Most Popular Torrent Sites” Aimersoft < http://www.aimersoft.com/torrent-movies/top-10-most-popular-torrent-sites.html>
“Top 6 Canadian Electronic Music Festivals” Hubpages 2010 <http://hubpages.com/hub/topCanadianFestivals>
“Top Canadian Albums of 2009” Billboard Magazine<http://www.billboard.com/charts-year-end/top-canadian-albums?year=2009#/charts-year-end/top-canadian-albums?year=2009>
“Top Canadian Electronic Music Festivals” Suite101 2010 <http://www.suite101.com/content/top-canadian-electronic-music-festivals-a235064>
“Topography Map” Solar Navigator
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“Train Travel in Canada” Seat 61 <http://www.seat61.com/Canada.htm>
“Universal Canada” Mintglobal <https://mintglobal.bvdep.com.libproxy.usc.edu/version-20101017/Report.Build.serv?seqnr=0&context=GFE0EI&_cid=616>
“Universal Music Brand Partnership” Universal Music http://www.universal-music-strategic-marketing.de/brand-partnership/>
“Update Notice” Department of Justice < http://laws.justice.gc.ca/eng/I-3.3/page-1.html#anchorbo-ga:l_I-gb:l_A
“Warner Music Canada form New Digital Advertising Partnership” Profectio 2010 <http://profectio.com/rogers-media-and-warner-music-canada-form-new-digital-advertising-partnership>
“Warner Music Canada” Mintglobal <https://mintglobal.bvdep.com.libproxy.usc.edu/version-20101017/Report.Build.serv?seqnr=0&context=GFE0EI&_cid=178>
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“Wireless Box Office” Ur Music<http://tickets.urmusic.ca/>
“What We Do” Re:Sound <http://www.resound.ca/en/about_us/what_we_do.htm>
“Who’s Shopping Online in Canada?” by Carrie Johnson Forrester 2007 <http://www.forrester.com.libproxy.usc.edu/rb/Research/whos_shopping_online_in_
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“Withholding Tax” The Tax Issue <http://thetaxissue.com/tag/withholding-tax/>
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A Statistical Profile of the Canadian Music Publishing Industry; 2005 <http://www.musicpublishercanada.ca/userUploads/industry.English%20FINAL%20Report%20
An Overview of the Financial Impact of the Canadian Music Industry; <http://www.omdc.on.ca/AssetFactory.aspx?did=6245>announced-psa/>
Booking Agent Agreement <http://www.afmedmonton.ca/upload/bkagreei.pdf pg. 13>
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Canada Facts and Figures: Immigrant Overview 2009 <http://www.cic.gc.ca/english/pdf/research-stats/facts2009.pdf>canada/q/id/42717/t/2>
Canada’s 2009 Music Report from Neilsen Soundscan 2010http://ca.nielsen.com/content/dam/nielsen/en_ca/documents/pdf/news_releases/2010/NielsenMusic-Canada-2009-Yea-End.pdf
Canadian Direct Investment Abroad by Industry”; <http://www.international.gc.ca/economist-economiste/assets/pdfs/FDI-Outward-Stocks-by-NAICS-Industry-ENG.pdf>
Canadian Independent Music Association <http://www.cirpa.ca/Page.asp?PageID=376&ContentID=611>
Canadian Index of Wellbeing <http://www.ciw.ca/en/Home.aspx>
Classical Music Attendance in Canada <http://www.hillstrategies.com/docs/Orchestras_Canada_final.pdf
Commercial Radio Tariff; Pg 2 2010 <http://www.cb-cda.gc.ca/decisions/2010/20100709-FS.pdf>
Copyright Act of Canada<http://laws.justice.gc.ca/PDF/Statute/C/C-42.pdf>
Cost Recovery <http://www.cic.gc.ca/English//resources/manuals/ir/ir05-eng.pdf>
Currency Risk; Pg 1 <http://www.jpw.ca/Currency%20Risk%20to%20Investments.pdf>
Deloitte Media Prediction 2010 <http://www.deloitte.com/assets/Dcom-Canada/Local%20Assets/Documents/TMT/ca_en_tmt_tmtpredictions2010Media_011910.pdf>
Foreign Direct Investment in Canada <http://www.international.gc.ca/economist-economiste/assets/pdfs/FDI_stocks-Inward_by_Country-ENG.pdf>
Foreign Direct Investment in Canada by Industry <http://www.international.gc.ca/economist-economiste/assets/pdfs/FDI-Inward-Stocks-by-NAICS-Industry-ENG.pdf>
Foreign Worker Manual <http://www.cic.gc.ca/English//resources/manuals/fw/fw01-eng.pdf>
Global Market Information Database
<http://www.portal.euromonitor.com.libproxy.usc.edu/Portal/ResultsList.aspx>http://www.photius.com/rankings/economy/stock_of_direct_foreign_investment_at_home_2010_0.html>
IFPI Digital Music Report 2010 <http://www.ifpi.org/content/library/DMR2010.pdf>
Income Tax Act < http://laws.justice.gc.ca/en/I-3.3/>
Joint Authors by Robert Lesperance http://www.lmlaw.ca/pdf/joint_authors.pdf>
Ken Lopez Lecture, 10/28/10
Mark Goldstein, lecture 11/9/10
Mobile Media 200; Pg 37 <http://www.onlinereporter.com/docs/MobileMedia2008.pdf>
NAFTA; Chapter 21<http://www.sice.oas.org/trade/nafta/chap-21.asp>
SOCAN and SODRAC <http://www.adisq.com/pdf/politique/memoire_conjoint_adisq-apftq-arrq-sartec-sodrac-socan-uda_juillet2010.pdf>
Social Media Advertising Projections 2009 <http://www.marketresearch.com/search/results.asp?sid=57137785-494436359-505371262&query=Social+Media+Advertising+Projections+&cmdSubmitLt=Go>
Sound Recording and Music Publishing 2008 <http://dsp-psd.pwgsc.gc.ca/collections/collection_2010/statcan/87F0008X/87f0008x2010001-eng.pdf>
Sound Recording and Music Publishing pg. 2 2008 < http://dsp-psd.pwgsc.gc.ca/collections/collection_2010/statcan/87F0008X/87f0008x2010001-eng.pdf pg 2>
State of Consumers and Technology, <http://www.forrester.com/rb/Research/state_of_consumers_and_technology_benchmark_2009%2C/q/id/55020/t/2>
Statement of Royalties to be Collected by SOCAN, 2010 < http://www.cb-cda.gc.ca/tariffs-tarifs/certified-homologues/2008/20080322-m2-b.pdf>
Statement of Royalties to be Collected by SOCAN, Re:Sound, CSI 2010 <http://www.cb-cda.gc.ca/tariffs-tarifs/certified-homologues/2010/20100710.pdf>
Statements of Proposed Royalties to be Collected by CMRRA/SODRAC 2010 <http://www.cb-cda.gc.ca/tariffs-tarifs/proposed-proposes/2009/20090509-rm-b.pdf>
The 2009 Canada Economic and Product Market Datebook <http://www.amazon.com/Economic-Product-Market-Databook-Vancouver/dp/B00295FWH0>
The 2009-2010 Global Outlook on Music Recording, Page 86 <http://www.marketresearch.com/search/results.asp?sid=57137785-494436359-505371262&query=Global+Outlook+on+Music+Recording&cmdSubmitLt=Go>
The 2009-2014 World Outlook for Media Advertising < http://www.marketresearch.com/search/results.asp?sid=57137785-494436359-505371262&query=World+Outlook+for+Media+Advertising&cmdSubmitLt=Go>
The 2009-2014 World Outlook for MP3 Players
<http://academic.marketresearch.com.libproxy.usc.edu/product/display.asp?productid=1957878&curl=&surl=%2Fsearch%2Fresults.asp%3Fprid%3D964879073%26query%3Dmp3%2Bcanada%26cmdgo%3DGo&prid=964879073>
The 2009-2014 World Outlook for Music Instrument and Supplies Stores < http://www.marketresearch.com/search/results.asp?sid=57137785-494436359-505371262&query=World+Outlook+for+Music+Instrument+and+Supplies+Stores&cmdSubmitLt=Go>
The 2009-2014 World Outlook for Musical Instrument Manufacturing, < http://www.marketresearch.com/search/results.asp?sid=57137785-494436359-505371262&query=World+Outlook+for+Musical+Instrument+Manufacturing&cmdSubmitLt=Go>
The 2009-2014 World Outlook for Recorded Music<http://www.researchandmarkets.com/reportinfo.asp?cat_id=0&report_id=677263&q=world%20outlook%20for%20recorded%20music&p=1>
The 2009-2014 World Outlook on Mobile Music <http://www.ebooks.com/ebooks/book_display.asp?IID=365853>
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The Private Copying Tariff <http://cpcc.ca/english/pdf/Tariff-20100528.pdf>
Virgin Festival 2009 <http://www.virginfestival.ca/bc/>with%20covers.pdf pg 4>
