With CD sales falling faster than digital sales rise and with layoffs at Canada's major labels, many executives in the country's music business are worried about the implications of a continued decline in the music industry.

Much of the concern centers on a drop in CD sales of 5.9 million last year. Despite an increase in digital album sales of 4.5 million (counting 10 digital tracks as one album), that still meant an overall decline of 1.4 million albums. Canadian Recording Industry Assn. (CRIA) president Graham Henderson also says revenue declines for the country's major labels outpaced sales drops.

While the Canadian music industry certainly will be upbeat during Canada Music Week activities March 5-8 in Toronto, sales trends are not encouraging. Major-label downsizing could leave Canadian artists facing difficult choices about whom to work with going forward.

Specifically, many are worried that if EMI Music decides to thin operations in Canada as the company cuts 2,000 employees worldwide, other major labels in the country may follow suit.

Attic Records founder/former president Al Mair says there is little doubt the industry will continue to evolve throughout the year. "The majors are going to continue to shrink, with the resultant job losses," he says.

These changes in the majors could also affect Canadian indie labels, Mair says, which may face losing major-label distribution if shifts in policy occur.
But Dale Peters, who runs Dale Speaking, an independent marketing and publicity firm in Toronto, says that while focus is on the sector's difficulties, plenty of opportunities are open to those willing to consider alternatives to the traditions of the music business.

Peters points to an act he works with, Your Favourite Enemies. The act from Montreal has sold more than 40,000 copies of its latest EP by utilizing the Internet and having direct contact with fans.

"I love the fact there are acts out there that want to promote themselves and build their talent over time," Peters says. "Things are changing, but those that are changing with them have plenty of opportunities."
Peters adds that an increasing number of artists are actively taking roles in the business of their careers and are seeking alternative methods of gaining attention.

"A lot of the acts I work with are treating this like a business, which is what they should be doing because that's exactly what it is," he says. "They are saying, 'I want to be an artist, but I want to have control over my career.' And that is exciting to see."

Although a band like Arcade Fire proves Canada's strength as a source of international talent, rising acts like Basia Bulat, Tokyo Police Club, State of Shock, Your Favourite Enemies and Cuff the Duke wait in the wings. As the Canadian Radio-television and Telecommunications Commission (CRTC) ponders enforcing an "emerging artist" provision as part of radio licensing, Canadian acts are finding difficulty being heard, says Jill Snell, president of Angeline Entertainment, a Toronto-based label imprint and marketing organization. Snell says it is often a case that an act is only deemed worth noticing if it has had success abroad.

"Radio won't support a debut Canadian act unless someone else first takes the plunge, in most cases, an international party who is willing to take the risk," she says. "Canadian radio has become about the song, not about the artist, but I guess long gone are the days when radio assumes any responsibility for Canadian artist development."

Canadian Independent Record Production Assn. president Duncan McKie agrees. "Getting new artists played is still a real concern," McKie says. "We have not yet seen any definition of new acts promised by the CRTC."

Additionally, the CRIA and CIRPA remain focused on altering Canada's copyright laws to limit free downloading on peer-to-peer sites. There was an expectation that a new law would emerge late in 2007 that would add clarity to the debate in Canada over file-sharing, but the government delayed the bill, which is now expected in the spring.

McKie says his labels need to be paid for the investment they are putting into developing new Canadian acts and stronger legislation is a necessity.
Canada's music retail industry also raises concerns. In 2007, music retailer Music World, owned by Pindoff Record Sales, went into receivership. The chain had 72 stores, and though a new owner has pledged to keep some of them open, there is increasing concern among many in the music business that too much of the retail market now rests with HMV Canada.

"The placement of music at a chain like HMV is increasingly becoming an issue, and we're being overshadowed by things like DVDs," says a major label-executive who asked to remain anonymous. "And I think catalog sales are becoming an issue just about everywhere."