Published in Billboard Magazine, May 20, 2006

Byline: Graham Henderson

Given the insatiable appetite for music in Canada, where broadband penetration is among the highest anywhere, the development of a strong digital music marketplace would seem to be a given.

Yet this is far from today's reality in Canada.

For the past six years, Canadians have developed another insatiable appetite-for freely downloaded movies, books and music using Web-based file-swapping programs. Creators and those who invest in their careers have been left out in the cold.

Canadians with home Internet access are far more likely to have used a peer-to-peer network (25%) than a paid service (9%) to download a music or movie file. By comparison, 11% of European Internet users swap files on P2P networks and only 6% download regularly.

In Canada, digital music sales account for less than 1% of total recorded music revenue. Elsewhere, it accounts for 6%.

Like a frontier town, Canada's digital market is a place with few rules. This state of affairs exists despite the fact that Canada signed the World Intellectual Property Organization Treaties, designed to protect creators and those who invest in them during the Internet age. Canada stands apart from most signatories in that it has failed to enact the WIPO rules (countries that have enacted the rules include 23 of 26 European Union members, the United States, Japan and Australia).

Canada has become a global pacesetter for movie, music and software piracy. The chances that a given piece of business software has been stolen is more than one in three there, while in the United States and United Kingdom, the ratio is one in four.

During the past six years, Canada's music industry has declined $586 million in retail sales. This has dramatically influenced investment and adversely affected many artists' careers.

Take Jully Black, a critically acclaimed new voice on Canada's music scene. Coincident with the release of her debut album, putative fans requested her tracks 2.8 million times over file-swapping sites within two weeks. Yet her CD barely sold 15,000 units.

Canadian sales figures for many emerging recording artists are appallingly low. Some artists are indifferent to this. For them, the sale of digital music files or CDs is unimportant-ancillary to live performance and merchandise sales. But for each one of these artists, there are thousands more creators (musicians, songwriters, inventors, software designers, authors, film producers and so on) who want to earn a living from the sale of their intellectual property.

The idea that recorded music can only be a promotional tool for live performances is very shortsighted. It means that artists will have no equity in their careers. The whole point of copyright law is to give them just that.

Fortunately, the WIPO rules provide for flexibility that respects both views. That means Canada can fulfill its treaty obligations without taking away anyone's right to give his or her property away for free.

But the current scenario offers no choice: Honest citizens who want their private property protected and their wishes respected are out of luck.

For this, Canada is gaining unwanted worldwide attention.

According to the Organisation for Economic Co-operation and Development, weighted by population, Canadians seem to be the most intensive users of P2P among OECD nations. The U.S. State Department has maintained Canada on the Special 301 Watch List, a list of countries with egregious track records in protecting intellectual property rights. It is a source of national embarrassment that Canada finds itself on this list.

Canadians are ready for rules. According to recent research, more than 90% of Canadians agree that the work of musicians, artists, authors and others should be protected by copyright to ensure they get paid for copies of their work.

The experience outside Canada suggests that this approach works. In countries where there are rules, the digital market is booming.

Already, 3 million people have either reduced or stopped illegal file swapping in Europe. Today, legal buying is more popular than P2P in Europe's two major digital markets, Germany and the United Kingdom.

Last year, Canada almost crossed the threshold into a new era. The Liberal government proposed new copyright legislation. But that bill died when the government fell. Canada's new Conservative government has announced its intention to bring forward its own version of digital copyright. Rights holders large and small look forward to this.

In the absence of modern, market-oriented rules, Canadians will continue to steal other people's property. But with the right balance, a future in which Canadians respect the rights of others in the digital age is close at hand.

Billboard Magazine

Graham Henderson is the president of the Canadian Recording Industry Association (www.cria.ca) and a music lawyer who has represented some of this country's top musicians.