This article concludes our four-part series exploring the effect of new technology on cultural products. This instalment looks at the music industry.

McCarthy Tétrault Notes:

No industry has suffered more from illegal downloads than the music industry. So it is difficult to say anything positive about new technology to people in the music business — sales of CDs have plummeted in the last five years and digital sales have not made up the difference.

Nonetheless, there are a few positive points to be made about the music industry.

The first is that we have a remarkable success story to celebrate. If you look at the top 200 albums sold in Canada in 2006, more than 25 per cent were albums by Canadian artists.

That’s very impressive. But it’s interesting to note that only about 16 per cent of overall record sales were by Canadian artists. So here’s an interesting paradox. In the music field, Canadian musical performers do better in the bestseller lists than they do in the long tail. What’s going on here?

There are two equally plausible explanations. The first relates to airtime on Canadian radio stations. Radio broadcasters in Canada are required to devote at least 35 per cent of their playlist to Canadian recordings. But they tend to focus their Canadian airplay on the stars and don’t give much airplay to the Canadian talent in the long tail. So the result is that we do better on the music bestseller list than we do in the long tail.

That’s one explanation. But there is another. If you look more closely at the sales in the long tail, it includes a lot of older records — classic records of US and UK pop music stars from the past — and there, Canadian artists just don’t have the depth of inventory. So that may explain why we do well in current sound recordings that show up in the top 200 albums, and why we do less well in the long tail, where we’re competing with the extensive US and UK catalogues of older recordings.

A second point to make about the Internet is that digital download sales are gradually increasing. This is definitely the wave of the future. As we have seen, bricks-andmortar- retail stores have limited inventories; this is particularly noticeable to those who try to get their CDs onto, say, Wal-Mart shelves. Sales of CDs in Canada were estimated to be about $650 million in 2006. That’s a new low, and less than half what they were in 1999.

However, digital downloads have increased. In 2005, they amounted to $20 million.

In 2006, digital sales in Canada reached an estimated $57 million. There are real teething problems with the proliferation of rights and confusion as to clearances. But this is where the future is.

The advent of Internet downloads does have a negative impact on the sale of albums, since music buyers can focus on the single songs they want. And some indie groups have argued that users should not be sued for illegal downloads, presumably on the thesis that touring and live performance fees will be more reliable and sustainable than sales of recordings in the future. Needless to say, however, the record labels are not prepared to give up on sales revenue. Although they have been criticized for appearing to lack a coherent digital strategy, they are beginning to respond with user-responsive downloading options. An important first step, however, will be to strengthen Canada’s copyright legislation in this area.

Looking at new technology from the perspective of Canadian artists, the question is, “How can they benefit from the Internet?” It is clear that they need more than availability — they need promotion.

One element of that can and should come from Canadian radio. And the CRTC decision on commercial radio policy does require radio stations to provide enhanced support for emerging Canadian talent.

The second element needs more creativity. This involves:

  • creating websites for Canadian musical artists to build a fan base;
  • integrating those websites with touring schedules and new releases; and
  • including in these websites inside gossip about the band, daily news bulletins, moderated discussion groups where you gently remove the offensive fans and welcome the real supporters, places where you can buy tickets, and links to MySpace.

This can be done. Take a look at This is a website managed by a company called The Official Community. It is an example of a sophisticated website that not only builds support, but makes money for the band.

What, then, can we conclude?

First, the Internet can be the friend of smaller titles. It is unlikely to kill existing broadcast media, or to jeopardize our ability to regulate conventional media. And the long-tail effect can increase sales for the smaller title. In the end, however, the long tail will not eliminate the horrendous economics of Canadian content production. Regulation of private broadcasters and government support will continue to be required if we want our film, television and music sectors to give us the quality and diversity of Canadian content that we want.

As for regulation of the Internet itself, the cultural tool kit would have to be reinvented to deal with it. Obviously, program schedules cannot be regulated where everything is downloaded from a file server. But nations have other ways of ensuring that their citizens have a choice of local cultural products and that their creators enjoy shelf space for their work. In Canada, for example, video-on-demand services are licensed under the Broadcasting Act. Five per cent of the available titles in English must be Canadian, and a small levy on this revenue goes to a fund to subsidize Canadian drama.

The relationship of the Internet with conventional media can also be supportive instead of combative. If you look at the most popular sites on the Internet, guess who operates them? The answer is the conventional media. And this includes the public broadcasters, who have some of the best sites available. So to the extent that the tool kit of cultural diversity maintains pluralism in conventional media, the choices, range and varieties of expression are likely to carry through to the Internet. That is what is happening today.

To quote again from the CRTC presentation to the Standing Committee on March 20, 2007:

At the present time, there is a healthy Canadian presence in new user-generated content as well as in new media programming in short format, such as news and sports clips. For the expensive, long-form programming, such as drama and nation-building events, we found that the same challenges exist for Canadian content in new media as in broadcasting.

So that is our challenge — and our opportunity.