in 2003, 68.3% higher than 1999 levels,

The Impact of the Sales Slump

according to SOCAN.

5

In fact, 2002 and

2003 are the first years in SOCAN's history

A turnaround may come too late for some

that royalties revenues from international

in the industry. Staff layoffs are reported 

sources have exceeded royalties paid out to

to have occurred over the past year, partic 

foreign songwriters, composers and pub 

ularly as a result of restructuring at the

lishers. In 2003 more of SOCAN's distri 

larger labels. Although detailed statistics

butions of domestic collections went 

on industry employment are unavailable,

to its own membres than to non SOCAN

the Canadian Recording Industry

members in addition to virtually all of

Association (CRIA) estimates that 20%

the incoming international revenue.

of industry jobs have been cut in the 

past year. Some also fear that the 2004

merger between the Sony Music Group 

2002 and 2003 are the first years 

and BMG could lead to further job losses.

in SOCAN`s history that royalties

revenues from international sources

Falling music sales have also led to some

have exceeded royalties paid out 

turmoil at the retail level. Following 

to foreign songwriters, composers

consumer trends, retailers have devoted

and publishers. 

more shelf space to DVD movies and

computer games while reducing their music

As for the Canadian retail market, there

inventory, leading to tension between

are signs the worst may be over. The retail

retailers and distributors. The most notable

value of music may have declined 2.9%

fallout came in early 2004, when EMI

in 2003, but this was the lowest drop in

decided to withdraw its volume discounts

five years, and less than half the fall 

from retail leader HMV, claiming sales 

in value of global music sales. And by

of its product at HMV had dropped 25%

September 2004 there were signs of a

in 2003. HMV responded by raising the

possible recovery, as unit sales in the first

price of EMI distributed albums, including

nine months of the year grew 5.0% over

those of many Canadian independent

the same period last year.

6

Similar growth

labels, and relegating them to the back 

has been noted in the US and UK, pointing

of the store.

8

to a possible larger global recovery. But

that recovery may take time: at least one

forecaster does not expect Canada's sales

to return to growth until 2006.

7

5