Canada's recording industry in 2003 faced bleak sales thanks to illegal Internet downloading of music product, Statistics Canada reported Oct. 26.

TORONTO (The Hollywood Reporter) -- Canada's recording industry in 2003 faced bleak sales thanks to illegal Internet downloading of music product, Statistics Canada reported Oct. 26.

The government statistics agency reported revenue of CAN$708.7 million for around 300 large and small record companies in 2003, the last year surveyed by Statscan.

That compares with revenues of CAN$891.6 million in 2000, or 17.7% higher than in 2003, as the Canadian industry faced a corresponding plunge in profits.

"This overall decline in sales raises questions about factors such as illegal file downloads and swapping song files," Statscan said.

The picture painted by the latest Statscan survey represents a low point for the industry here as more recent figures from the Canadian Recording Industry Assn., representing major record labels, pointed to a slight rebound in music product sales in 2004 at the retail level.

But CRIA pointed to the Statscan study as illustrating the continuing commercial harm the industry and Canadian artists here face from illegal music downloading.

Statscan said the sharpest declines in music sales were coming from the rock and popular music categories, underlining how most illegal downloading was done by young Canadians.

The survey said Canadian consumer tastes were shifting "slightly" to classical, country, jazz and blues, traditionally favorites with older music listeners.

Canadian music labels have long complained that young Canadians increasingly buy less music as they download more product from the internet without compensating rights holders.

Most of the product sold in Canada by major recording companies represents the work of foreign, mostly American artists.

But Canadian artists also face harm from illegal downloading, according to Statscan. The survey indicated sales of music by homegrown artists plunged 20% between 2000 to 2003 to just under CAN$110.4 million. By contrast, sales by foreign artists slipped 17.3% over the three years to 2003, to CAN$598.4 million.