News

Music and the Market

In case you missed it, last week CRIA was back in the news claiming that Canadian copyright law is in need of reform, arguing that Canadian digital download sales have not met expectations. The copyright lobby group chose to focus on sales of Gwen Stefani's Hollaback Girl.  In the U.S., the song has become the first to reach one million paid downloads.  By comparison, in Canada it has hit 20,000 paid downloads.  CRIA argues that based on population and broadband penetration rates, the Canadian figure should be 150,000.

I find this argument rather remarkable.  CRIA is obviously hoping to convince Canadian Heritage Minister Bev Oda and Industry Minister Maxime Bernier that the Canadian digital music market has been hurt by the absence of anti-circumvention legislation, yet the notion that music sales are a function of population size and broadband access is certainly subject to challenge.
Canada trails behind the U.S. in online sales in many sectors – clothes, jewelry, toys – to name three.  Why?  To start, broadband access is a minor factor in e-commerce.  Far more important is choice.  In the U.S., the market for clothes, jewelry, and toys is far more developed with consumers enjoying much more choice and competition.  With better choice, consumers are more willing to buy online.

The same is true for online music sales.  The Canadian online music market was slower develop, with services such as iTunes taking months to establish a Canadian version.  Indeed, Canadian sales have followed a similar path to that experienced in the U.S. as it always takes time for new products and services to find their market.  The similarities exist despite the fact that the U.S. version of iTunes has more than two million songs along with videos and television shows.  The Canadian iTunes has half as much music (a paltry Canadian content selection with virtually no French language music) and no television shows.

In the broader online music market, the industry's own website lists six Canadian services offering 1.2 million songs.  In the U.S., there are 38 services offering 22.1 million songs.  This is not a legal issue.  With Apple, Napster, and Bell's recent purchase of Puretracks, there are big names involved in the Canadian market, however, the smaller market has clearly left consumers with a much less choice and correspondingly fewer sales.

Moreover, the focus on a foreign artist such as Stefani is truly puzzling.  Canadian cultural policy is full of initiatives to promote Canadian music.  The notion that Canadians should buy the same music as people in the U.S. runs counter to everything that Canadian Heritage is trying to achieve.  In fact, Canadian tastes in music are not the same as those in the U.S.  Consider the top downloads on Apple iTunes.  As of Friday, there were only three songs that appeared on both lists, reflecting the different cultural choices between our two countries.

Governments should always be skeptical when they are told what sales should be since this typically amounts to little more than one industry seeking government assistance to intervene in the free market.  The Canadian online music market could be better but it should be up to the industry, not government, to get that done.

More Music and Markets: In my haste to simply respond to CRIA's obviously flawed analysis, I neglected to add an important point.  No doubt some may argue that the weak Canadian online music services (any service that offers half as much as its American cousin and neglects the Quebec music market as iTunes does can hardly be considered good) is a result of the absence of anti-circumvention legislation (ie. competitors will not enter the market without additional legal protections).  While the same argument was made by CRIA years ago when Brian Robertson claimed that no one would enter the market without copyright reform, history has clearly shown that to be false.  The delays in entering the Canadian market were due to licensing issues, not the law.

Moreover, if there is a problem with the Canadian online music market it is not the lack of anti-circumvention legislation but rather the debilitating effect of SOCAN, CMRRA, and the copyright collectives who are demanding at least 40 percent of the gross revenues of such services.  As I wrote nearly a year ago, "the true threat to that future [the development of an economically viable download market] does not come from peer-to-peer downloads that is already subject to compensation through the private copying levy but rather from collectives that seem determined to receive a very large share of a very tiny market."  The full effect of the collective cash grab is beginning to emerge as some music services have dropped out of Copyright Board proceedings.  If the government really wants to address the online music market, addressing the copyright collective problem would be a good place to start.

7 Comments

  1. Hollaback Girl?
    It could just be that Canadians have much better musical taste than to download that particular song 1/10th as many times as it has been downloaded in the States.

    Basing a call for copyright law “reform” — there’s that word again — on the relative popularity of a single song in Canada as compared to the artist in question’s country of origin, is a new logical, factual, and sensical low, even by CRIA’s very flimsy intellectual standards.

  2. miss moose says:

    yeah nice song choice
    Perhaps we Canadians don’t buy songs like Hollaback Girl – since it is already shooved down our throats on tv and radio all the time I don’t feel that I need to spend more money to get to listen to the repetitive song even more times. I’d rather cruise to all the great Canadian talent – Arcade Fire, Broken Social Scene, Stars, Ladies and Gents, Death Cab and on and on.
    I just think about my view on the Grammy’s – the “best” of American music, which doesn’t even remotely compare to my music collection – so maybe the CRIA should compare the sales of a good Canadian song from Canada and US before our Heritage Minister decides to listen to their whining.

  3. David Fedoruk says:

    Quebecers LOVE for recorded music
    I have worked in music retail for quite a number of years, though I am not now employed there. But it is a well known fact that the Quebec music market is one of the hottest music markets in world. The last time I heard anything, Quebecers love their music, they have a unique market with lots of purely made in Quebec groups. The groups are actually quite wonderful.

    If online music stores choose to ignore this market they should question their own sanity. The only reason that they would miss this is that they didn’t look at it closely enough with the assistance of someone IN Canada who knows about the Quebec market. This is purely an issue of online music stores like iTunes simply not understanding the Canadian music market. What sells massive quantities in Vancouver may not sell in Toronto and what’s hot in Montreal may not be in Toronto. Canada is far from homegenous in its musical tastes.

    Why are all these people who are so ignorant of the industry now poking their noses into it? It is really quite annoying and a bit insulting that these self appointed experts get the amount of press they do. I fear that (once again) the people who make the laws governing things as disparate as music and the Internet will be novices and not have the slightest inkling of what the real issues are. Certainly the Canadian (or any other county) Press does not adequately cover the issues. When it does, it is usually badly done.

    cheers,

    David Fedoruk
    B.Mus, UBC
    Internet Systems Administration Certificate, UBC Continuing Studies
    http://recordjackethistorian.blogspot.com

  4. India next on list
    Yeah, I heard India, with just over 1 billion people, is the RIAA’s next target. Apparently, that many people should’ve downloaded that song just over 4.5 million times, but barely hit 10,000! Clearly music pirating must be rampant in India… what a bunch of idiots. I hope our minister is skeptical of their ridiculous argument.

  5. lyle howard seave says:

    addendum for David
    I think David is a little optimistic about Quebec music tastes.
    The anglo charts are identical in their blandness. …. same boy bands, bimbos, Idol rejects and syrupy Elton-like pop as the US or ROC.
    The french music scene is fabulous, that you are right. But the situation is even worse than the english side. 50% of airplay in a day comes usually from the same top 10 artists. Even with over a thousand new albums every year, there is never more than 60-70 new french songs out every year on the commercial stations. (French stations ALWAYS ask the CRTC to get rid of french content requierements)
    So what you are left is the sad raspy voice d rockeur cliche like Lapointe, the Bimbo du jour, the rockeuse in the marjo/france damour/mc toupin mold and pop rockers who share the same songwriter. The rest is muzak pop and covers.

    The greatest Quebec band (not best, just bigggggg) is les Cowboys Fringants who are really nothing special but are a phenomenon like Phish and the Dead were in the US and the commercial stations finally had to start playing some of their stuff because it was impossible to avoid.
    There are some truly amazing talents like Syncop which play a reggae-rai hybrid which is sung in berber and french, Tomas Jensen, an argentinian who grew up in france and has a kick as band, Grimskunk, the godfathers of the alternative scene and the ones who showed local bands that the way to go is not the big label route and my faves la Chango Family, world-gypsy- reggae-ska-latino funk sung in french, english, spanish and wolof. These kids have been to Montreux Jazz fest twice, once winning the People choice award and the second time closing off the festival, have a spanish song on a compilation cd of France’s best bands
    and a french song on a Barcelona compilation along with such stars as Manu Chao and Fermin Muguruza. Needless to say that even with over 500 shows in canada and success in europe, they get very little publicity. (by far the most accesible of all french bands)

    Where was I? Ah yes, Quebec is definitely a different country when it comes to culture. I would even go as far that quebec is far more diversified (except for the anglos who live like Hassidics, totally out of the loop culturally with 90% of the province) because of the english-french thing but also because the ethnic side is much more predominant (you cant shake a stick without hitting on some teens playing gypsy music or neo-trad) and quebec society is much more tolerant of a group like Syncop which won the biggest indie music festival in Quebec without singing in french.

    But when it comes to commercial music, it is just as bad if not worst here than in the ROC.
    The Idol clone here is a phenomenon of bad karaoke and covers and sells ungodly amounts through the Quebecor control over culture: largest newspapers, all the weeklies and old ladies mags, the cable company as well as cable internet, the largest record stores and TV network….total control of the market.

    I went to listen to Simon Jodoin last night, a musician who helped to save the local music scene in quebec and the artist most often found on the consumer side of the pirating debate/ Hearing him debate the pop bimbos who repeat the party line on online music is sad because this guy is smart, well prepared and his oppositions rarely is. If you ever need a reference point in quebec on this topic, this is your man: koolos.com

    lyle howard seave
    mtl,qc

  6. Bruce Chang says:

    We are not Amercians, we are Canadians!!
    I agree with Dr. Geist. CRIA is being stupid (my personal and very direct thought on the level of intelligence CRIA has). They obviously never took into consideration cultural differences between the United States and Canada. Personally, I think 20 000 paid downloads for some band I’ve never heard of before is good. I buy most of my music from Asia, the kind of things that are never taken into statistics by RIAA or CRIA. The movie and record industry always blames their customers when they never consider qualitative information such as culture and personal preference.

    It’s quite funny how the record and movie industry doesn’t recognize the advantages of p2p and torrents. I remember reading once from a news group (or forum?) about how the new Battlestar Galactica’s series sky rocket into the top sci-fi show in the United States, despite the large number of available copies of the series on the internet. When something is good, people will talk about it with their friends and they will watch it on TV, or in theaters.

    I hope Canada’s current copyright laws will remain as it is.

    Bruce Chang, Undergraduate Student
    Schulich School of Engineering – UofC
    bdchang@ucalgary.ca

  7. Derek K. Miller says:

    Humbug on the CRIA and IFRI
    I’m a musician who plays in cover bands and releases my own material free on the Web. I’m a member of SOCAN and the Musicians’ Union who takes issue with those organizations’ positions on digital music issues.

    Anyway, one should take the self-interest of the recording organizations with a grain of salt. Sure, music sales dropped 4%, but then:

    - What is the effect of a la carte per-single online purchases vs. “gotta buy the whole album” CD purchases?
    - How much did DVD sales increase?
    - How about video games?
    - How about satellite radio subscriptions?
    - Did we have podcasting a year ago? Not as we do now.

    Business models are changing. The CRIA and IFPI are, don’t forget, the _recording_ industry and _phonographic_ industry organizations. They’re not about music. They’re about selling recordings, i.e. physical products, for the most part. They want to preserve their business model.

    Fine for them. But that doesn’t mean that Canada’s legislators should agree, or follow the often misguided copyright policies of other jurisdictions. If they had always done that, we would have had a ban on player pianos, then on radio, then on television, then on home tape recorders, then on multi-track tape machines, then on synthesizers, then on VCRs, then on MP3 files themselves.

    Established industries have an interest in blocking changes to the way they do things. In general, the interest of the music-enjoying public runs in the opposite direction — and usually someone can find a business model that works with the changes, not against them. Humbug on the CRIA and IFPI.