Despite a 73% gain in single digital track sales in 2007, the Canadian Recording Industry Association says digital sales still lag woefully behind that of the U.S.

Graham Henderson, president of the Canadian Recording Industry Association, said jumps in sales of both digital tracks and albums last year do not off-set the continued decline of physical CD sales. Compact disc sales dropped by 5.9 million last year, versus an increase in digital sales of 4.5 million (counting 10 single digital tracks on average as a single album). That led to an overall decline of 1.4 million albums, Henderson says, adding revenue for Canada's major recording companies fell further than those numbers indicate.

"The problem is that current CD and digital sales aren't producing the same revenue as in the past because of the added marketing dollars needed to deal with an increasingly fragmented market," he says.

Henderson says in the U.S., digital sales account for 29% of the overall market, compared to just 12% in Canada.

"I think the reporting on the year-end numbers to date has not observed the true state of the music industry in Canada," Henderson says. "The portrayal of our industry as healthy is far from correct. In order to truly confront the problems we face, we have to be honest about what is going on."

CRIA has been actively supporting an effort by the Canadian government to revamp the country's outdated Copyright Act in the hope that new legislation would cut down on digital downloading and the proliferation of online peer-to-peer and bit torrent sites, which its says has contributed to an overall revenue decline in the Canadian music industry. Critics have argued the new copyright legislation could mirror that of the U.S. Digital Millennium Copyright Act and unduly impact Canadian consumers. The legislation is expected to be introduced in February.