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Paid Digital Downloads are Throwing Pirates Overboard

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The IFPI, the global recording industry association, recently released its Recording Industry in Numbers 2012, which provides detailed sales data from countries around the world. Years ago, the Canadian Recording Industry Association would promote its annual sales data, but it no longer does. Perhaps that is because the data tells a far different story from the one CRIA (now Music Canada) seeks to promote. While CRIA talks about "rebuilding the marketplace," the industry's own data indicates that Canada already stands among the global leaders in digital music sales.

The most obvious metric (and one relied upon by IFPI) is paid digital music downloads. According to the IFPI data, Canadians purchased 94.2 million single track downloads in 2011, making it the third largest market in the world (trailing only the U.S. and U.K.). The Canadian numbers represented a 39 per cent increase in sales, far ahead of the U.S. (eight per cent growth) and U.K. (10 per cent growth). The data shows Canadians purchased more single track downloads than Germany or Japan, and more than double the sales in France, despite the fact that each of those countries has far larger populations.

In fact, Canadian sales were larger than all the sales from Austria, Belgium, Croatia, Finland, France, Greece, Ireland, the Netherlands, Portugal, Spain and Sweden combined. Moreover, given the current growth rates, Canada seems likely to pass the U.S. on per capita single track downloads in about 18 months (not coincidentally Apple's iTunes entered the Canadian market 18 months after it debuted in the U.S.).

A comparison between Canada and France is particularly noteworthy since the IFPI often points to the French three strikes and you're out approach (HADOPI) as a model for copyright enforcement. Yet in 2011, the first full year with HADOPI in place in France, Canadian digital downloads grew faster than the French market (39 per cent compared to 29 per cent) with 34 million Canadians buying 94.2 million single track downloads, while 65.3 million French bought 43 million single track downloads.

Not only is the Canadian digital market far larger than virtually every European market, it continues to grow faster than the U.S. digital music market as well. In fact, the Canadian digital music market has grown faster than the U.S. market for the past six consecutive years.

The latest data on digital music sales growth is also notable because growth accelerated after declining for several years. Canadian overall music sales growth was also positive, growing by 2.6 per cent. By comparison, among the top 20 global markets, the U.S., Japan, Germany, U.K., France, Netherlands, Italy, Spain, Switzerland, Belgium, Austria, Norway and South Africa all declined. It goes without saying that all of this growth and global leadership has occurred without copyright reform or digital lock rules.

While the news is obviously a very good one for record labels (despite their seeming desire to hide it), it is worth noting that the share of Canadian artist revenues from Canadian sales is lower than most other countries. According to the IFPI's statistics of repertoire origin (for physical sales), Canadian artists garner only 30 per cent of sales. By comparison, countries such as the U.S. (93 per cent), Finland (67 per cent), France (65 per cent), Germany (46 per cent), Italy (54 per cent), UK (42 per cent), Brazil (63 per cent), and South Africa (48 per cent) domestic artists all generate far more sales. Language is certainly a factor (Australia has a similar 31 per cent rate), but the data highlights why foreign record labels have been so aggressive in lobbying the Canadian market as benefits accrue disproportionately to labels representing foreign artists rather than Canadian ones.