The Canadian Recording Industry Association (CRIA) reports today that shipments of CDs, music DVDs and other physical music formats fell an unprecedented 35% in the first quarter of 2007 compared with the same period in 2006.

This follows the largest-ever annual decline in Canada's music market -- a 12% drop from 2005 to 2006.

"We've experienced sizeable short-term drops before, but nothing compares to the drastic numbers we're seeing so far this year," says CRIA president Graham Henderson.

The net value of wholesale physical music shipments fell 35% in the first quarter of 2007 to $68.7 million, from $105.6 million a year earlier. Statistics for digital sales are not yet available for the period.

This sharp fall comes on top of an almost unbroken string of declines since 1999. Digital music shipments, accounting for about 6% of the Canadian market in 2006, according to CRIA, are falling far short of replacing lost CD and DVD shipments.

According to CRIA, the two principal factors behind the sales decline are unabated Internet file-swapping and the widespread availability of counterfeit CDs and DVDs. These factors, it says, loom larger in Canada than many other developed nations because of Canada's relatively lax laws and enforcement against both digital and physical piracy.

CRIA is calling upon the federal government to update the Copyright Act to protect artists and other creators of intellectual property from the unauthorized dissemination of their work on the Internet.

CRIA's initiative is supported by the Canadian Chamber of Commerce and organizations representing the book publishing, software and movie industries.