Solutions Research Group

by Lynn Saxberg
The Ottawa Citizen
Mar 1, 2003

Attendance is up at Canadian Music Week's 20th annual event this year as 2,000 delegates focus on ways to save the declining music industry.

"There's been a lot of head-in-the-sand, ostrich-stuff going on, a lot of denial," said CMW president Neill Dixon. "We've been talking about these issues for five years. Finally people are dealing with them."

Hot-button issues that have emerged halfway through the three-day conference include dire predictions of the death of the CD, the unstoppable rise of illegal downloading, and the fact that young people have no respect for the value of music.

Depending on which visionary consultants' speech you heard, it could take five, eight or 10 years for CDs and record stores to disappear, or it could happen within 18 months.

The statistics don't look good. Music sales are down 6.4 per cent in Canada. Canadians have downloaded one billion songs illegally, which industry consultant Julie Ann May estimated was a loss of $900 million.

The rumours are even worse. One big U.S retailer is said to be cutting back its stock to feature just 60 CD titles in each store instead of thousands, while it devotes more space to computers and wireless electronics. Another major music retailer is rumoured to be getting most of its revenue from the sale of DVDs now, not CDs.

"Five years from now, there may not be record stores, but there will still be great music and we have to figure out a way to put money in people's pockets," said artist manager Peter Jenner, one participant in a panel called "Daddy: What's a CD?"

But the promising news is that the various sectors of the industry are working together. University student Darryl Ballantyne, a fan of downloaded music, who showed off his MP3-CD player during one panel, was encouraged to hear that online subscription services are close to launching in Canada.

What's holding them up are copyright issues, which came up in nearly every discussion of the future of music. Licensing is the big concern for music publishers, but Neville Quinlan of Peer Music Canada Inc., was one of many publishers committed to working out the problems.

To buy time until online downloading becomes legal and profitable, the Canadian Recording Industry Association is launching a "value of music" program aimed at young people. Instead of telling kids not to download the campaign will encourage them to keep buying music.

Another stalling tactic being used by at least one label is to throw resources behind artists who don't appeal to the younger, download-happy demographic. For example, the top priority for BMG Records in Canada at the moment is a new album by Canadian oldie Gino Vanelli.

On the retail end of the business, U.S. retailer Michael Dreese, CEO of Newberry Comics Stores, foresees an "absolute collapse of retail," partly because of bad management. Some are calling this a period of transition in the industry. Despite the doomsaying there are some encouraging signs coming from the rise of DVD sales, and from online retailers.

In the U.S., CDbaby.com is making money selling CDs by independent artists while in Canada, Maple Music is becoming an Internet player by selling CDs, concert tickets and merchandise ranging from Tragically Hip rolling papers, to rings just like the ones worn by Headstones frontman Hugh Dillon. The company's mandate is to support the artists, said Maple Music's Jamie Stanley. That's one area that observers speculate could grow, to the point that artists and managers call the shots instead of major record companies.

Any legal online activity is a step in the right direction says San Francisco copyright lawyer Tuhin Roy, a digital media consultant.

In fact he added online retailing may be one way to train consumers to buy digital products. The education process could start with some digital content thrown in as a bonus to the purchase of a regular CD. Still, many in the industry are putting their faith into the burgeoning DVD market. Kaan Yigit of the Solutions Research Group said his research shows that 48 per cent of Canadian households already have a DV player, a saturation point that took 12 years to reach with CD players.

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