Ontario's music industry is made up of a wide range of participants in all parts of the value chain involved in the creation, writing, production, publishing, distribution and presentation of original music. The industry includes musicians, songwriters, record labels, managers, agents, music publishers, concert promoters, presenters and more. The sound recording and music publishing landscape in Canada is dominated by large foreign-owned companies but has a strong independent sector comprising mainly small- to medium-sized companies. The vast majority of Canadian content is commercially released by Canadian-owned and controlled independent music companies.
Ontario's sound recording and music publishing industry is the largest in Canada. In 2015, Ontario record producers and distributors generated 79% of Canadian record production and distribution operating revenues.1
Industry Size and Economic Impact
The following information on revenue, employment, and the consumer market should be considered a snapshot of activity in the industry based on the best available information.
Employment and wages
- According to Statistics Canada, the salaries, wages, commissions, and benefits associated with Canada's recorded music industry accounted for $140.4 million in 2015. In 2015, Canada's record production and distribution industry paid out a total of $55.3 million in salaries, wages, commissions, and benefits, $37.7 million of which was paid out by Ontario companies. In 2015, music publishers in Canada spent $50.7 million and sound recording studios paid out $33.3 million in salaries, wages, commissions, and benefits.2
- Ontario's sound recording and music publishing sector generated 4,600 jobs in 2016 (from the product perspective), nearly half the 9,800 jobs created nationally.3 This figure does not include the live music sector.
- The employment impact of Ontario's live music industry was measured at 7,300 direct FTEs and $152.4 million in direct labour income in 2013. When considering direct, indirect and induced impacts, the estimates grew to a total of 10,500 FTEs resulting in $305.5 million in labour income.4
Revenues and related figures
- According to Statistics Canada, between 2013 and 2015, the Canadian sound recording and music publishing industry experienced a 3.0% decrease in total operating revenues. The largest segment in the industry, recording production and integrated recording production and distribution, generated 48.9% of total operating revenue. Ontario's share of national record production and distribution operating revenue was 78.7%. Overall sales of recordings declined by 8.7% in the country to $309.0 million.5
- Ontario generated $328.9 million in record production and integrated record production and distribution revenues in 2015, with a corresponding 14.1% operating profit margin. Sound recording studios are responsible for $55.6 million in operating revenues, with an operating profit margin of 9.4%.6 Music publishing revenue data is not available at the provincial level.
- According to data collected through the Culture Satellite Account, Ontario's sound recording cluster (from the product perspective) generated $379 million in GDP in 2016. Between 2015 and 2016, sound recording saw the highest growth of all culture domains in its contribution to GDP, both on a national level (+7.3%) and provincial level (+11.9%).7
- In 2015, the Canadian sound recording and music publishing industry generated $148.1 million in total music publishing royalties and rights. From this amount, $72.1 million was generated from performing rights (48.7%), with $21.1 million (14.2%) earned from mechanical rights (15.3%) and $19.8 million (12.9%) coming from synchronization rights.8
- A Music Canada study found that live music companies in Ontario generated $628 million from live music related activities in 2013, with almost 40% of those revenues generated via ticket sales.9 Ontario's over 550 live music festivals sold almost 16 million tickets in 2013.10
- In 2015, sales of musical recordings in Canada were estimated at $309 million, down 8.7% from 2013. Most of that figure was attributed to the sale of compact discs ($137.1 million), followed by digital singles with $71.2 million, and digital albums ($65.0 million). The sale of other formats of musical recordings, including vinyl and DVD audio, were estimated to have generated $35.7 million in revenues in 2015, a 160% increase over 2013.11
- A recent report published by the Worldwide Independent Network (WIN) highlights that the market share of the global independent record label sector as of 2016 is 38.4%, and that this segment is worth $6.0 billion, an increase of 6.9% from 2015.12 In terms of Canada-specific data, the report values the Canadian independent market share of recorded music revenues at 20%, with their share of digital market revenues at 21%.13
- In 2017, 93% of Canadians listened to recorded music, up from 89% in 2016, with some of the growth likely due to increased mobile consumption of music via smartphones and tablets. Radio listening (both satellite and over-the-air) remains significant, and over half of Canadians (59%) are attending live events (at large and small venues, at festivals), with the rate being higher for millennials (70%).14
- Across Canada, recorded music consumption (including albums, songs and on-demand audio streaming) is up 13.6% in 2017 compared to 2016. On-demand audio streaming increased by 70.6%, surpassing 900 million tracks per week for the first time. This offset decreases in album sales and digital track sales, which were down 17.4% and 18.8% respectively over the prior year.15
- In 2017, the fastest-growing music genre in Canada was R&B/Hip Hop. The level of streaming consumption of this genre increased 86% from 2016. Seven of the 10 most streamed artists in Canada were in this genre as were three of the year's top four albums including Canadian artists Drake's More Life and The Weeknd's Starboy.16
- In 2016, 55% of Canadians' expenditure on music was dedicated to live events (including live music concerts, admission to music festivals, small live music sessions, and DJ events), compared to 51% in 2015.17 Nielsen's data suggests that more Canadians (59%) attended live events in 2017 compared to 2016. The rate is higher (70%) among those aged 18-34.18
- The growth of streaming services globally has been well-documented, with 45% of users globally now engaging in licensed audio streaming (up from 37% in 2016).19 IFPI estimates there are 176 million users of paid music streaming subscription accounts worldwide.20
- In Canada, on-demand audio streaming now accounts for 53% of total audio consumption, while 22% is attributed to physical albums, 13% is digital album downloads, and 12% is digital track sales. However, the format in which music is consumed varies quite significantly by genre. For example, 45% of jazz audio consumption, and 43% of hard rock consumption is via physical albums, compared to just 7% of electronic/dance music and 9% of rap music consumed via physical albums.21
- For the seventh year in a row, vinyl sales increased in 2017, with a 22% increase to 804,000 units sold. Of these, 59% were catalogue titles.22
- The growth in subscriptions to paid, licensed music services is considered to be a major opportunity for the Canadian and global music industry, with paid streamers considered to spend 2.7 times as much on music as consumers who utilize ad-supported, free-to-consumer streaming services.23
- IFPI estimates that 39% of Canadians streamed audio from a licensed service in the past 6 months. This is a relatively low rate of audio streaming, compared to consumers in jurisdictions such as Mexico (where 75% engaged in licensed audio streaming), Sweden (66%), and France (46%). Canadians' rate of smartphone usage for listening to music is also relatively low compared to other countries at 52% (compared to a high of 91% in Mexico). Conversely, Canadians' propensity to use YouTube to listen to music is relatively high at 84%.24
- YouTube remains the most popular music service globally, with 85% of those using YouTube doing so to access and consume music content. In Canada, 84% of YouTube users access music content. Notably, YouTube's use is more prevalent as an on-demand music platform, and less so for discovery purposes, with 76% of YouTube music users preferring to listen to music that they already know.25
Trends and Issues
This section provides information on industry growth rates, trends, and burgeoning issues for the Canadian music industry.
Growth rate and industry trends
- PwC predicts that the global music market (including live and recorded music, performance rights and synchronisation revenues) will see steady gains at a compound annual growth rate (CAGR) of 3.5% from 2016-2021, growing from US $47.17 billion to US $56.15 billion over this period, with growth driven by both recorded and live music sectors. Rates of growth will be highest in Latin America and North America.26
- Global recorded music growth was up 8.1% in 2017 over 2015 to US $17.3 billion. This represents the third consecutive year of global growth for the industry, and the fastest rate of growth since IFPI has been tracking the market (1997). However, these gains should be seen in the context of an industry which had 15 years of significant revenue decline between 1999 and 2014; today's revenues are just over two thirds that of the market peak in 1999. Streaming is driving growth and makes up the majority of digital revenue. In 2017, streaming was also the single largest revenue source for the first time, contributing 38% of recorded music revenues. Digital (including streaming, digital downloads and mobile music) now accounts for 54% of total recorded music revenues, while physical sales make up 30%, performance rights 14% and synchronization 2%.27
- The Canadian music market is expected to see a modest CAGR of 1.8% between 2016-2021. The national music market is forecast to be worth US $1.27 billion by 2021, up from US $1.16 billion in 2016. Anticipated growth segments in the Canadian music market over the next five years are: Digital music streaming (21.8% CAGR), synchronisation (6.0% CAGR), and live music revenues (3.2% CAGR). Segments expected to experience declines in revenue are: digital music downloads (-18.3% CAGR), mobile music (-15.8% CAGR), physical recorded music (-11.5% CAGR) and performance rights (-5.6% CAGR). Live music revenues represent a strong proportion of overall revenues: in 2016, live represented 59.4% of revenues. By 2021, live sponsorships and ticket sales are expected to be worth 63.6% of the Canadian music market.28
- Digging deeper into the phenomenon of streaming in the Canadian music market, Nielsen highlights that music consumption patterns are increasingly shifting towards mobile, particularly for millennials. In 2017, 93% of Canadian consumers listen to music, with an average listening time of 32 hours per week. Specifically, 79% of millennials aged 18-34 listened via smartphones in a typical week, compared to 53% of Canadian music consumers.29
- Despite the increasing popularity of streaming services, radio remains the primary driver for music discovery in Canada (52% using over-the-air AM/FM radio for discovery, and 21% listening to AM/FM radio online). Moreover, online AM/FM radio is the most popular discovery tool for millennials, though discovery via online streaming services is growing.30
- Export continues to be a critical business activity for music companies in Ontario, Canada, and beyond. A recent study commissioned by CIMA suggests that export activities are a key part of the business plans for 87% of Canadian music companies, with 50% of companies viewing exports as necessary to their survival. Moreover, conducting export activities, including performance tours, showcases and festivals, radio and press promotional tours, and business meetings, often cost over twice as much as comparable activities undertaken in domestic markets. Despite the barriers posed by the high costs of export initiatives, companies spend 21 times as much per breakthrough artist as other artists they represent, due to the potentially lucrative and time sensitive returns on that investment.31
- The Music in Motion report notes that the United States, Europe and the United Kingdom form the top three export markets for Canadian companies32, while recent export market research undertaken by the Canadian Association for the Advancement of Music and the Arts (CAAMA) has explored the opportunities offered by France, Italy, Ireland, and the United Kingdom.33
- The export business is also an increasingly important activity for music publishers in particular. The highest priority market is again the United States, with Europe and Australia also being desirable due to their strong copyright frameworks and high royalty rates. Emerging markets such as China, India and Africa are also of interest but can be challenging to access due to language and the strength of their domestic markets, although copyright protection issues remain an obstacle.34
Global and domestic issues
- Ontario's Live Music Working Group launched a Vision for Ontario's Live Music Industry, a document designed to raise awareness and guide continued growth of the industry. It identifies actions, principles and priorities to inform government policy, including the Ontario Live Music Strategy, currently in development.35
- Bill 166, Strengthening Protection for Ontario Consumers Act, passed at the Fall 2017 sitting of the Ontario Legislature. This act creates a new law, the Ticket Sales Act, which bans the use of ticket bots and sale of tickets through a bot, caps the resale price of tickets to 50% above face value, and establishes new enforcement measures. Music Canada Live applauded most of the changes but issued a statement expressing concern about the price regulation aspect of the legislation, which they contend will be difficult to enforce, driving illegal and fraudulent activity further underground.36
- Gender disparity in the music industry is a documented concern. Women in Music Canada conducted its most recent survey in 2014, which found annual salaries for women employees of music companies earned less on average than their male colleagues and noted that many of the surveyed companies had no women in executive positions. Ontario's Canadian Music Week and North By Northeast Music Festival are among the Canadian music festivals who have joined the international Keychange movement, which pledges to achieve gender parity in festival lineups by 2022.37 Music industry representatives met in March 2018 to discuss sexual harassment and how to improve workplace safety, with plans underway to create an industry-wide policy against workplace harassment.38
- Accessing international markets for export and export-related activities continues to be a challenge to the Canadian music industry. In particular, the immigration and tax policies adjudicating entry into the United States have been identified as an obstacle for Canadian music industry professionals and artists who wish to conduct business in the United States. A report from CIMA identified the two main obstacles as: the administrative costs associated with crossing the border (including the cost of P2 visas) and the cost of compliance with the American withholding tax regime.39 Small music publishers experience obstacles in growing their exports when it comes to accessing sufficient capital to acquire catalogue, for high quality staffing and technological infrastructure, and for advances to attract and retain songwriters.40
- Copyright remains a critical issue for the Canadian music industry. Recent copyright-related developments include the mandated 5-year review of the Copyright Act, currently underway, and a consultation on reform of the Copyright Board of Canada, a regulatory body which has received significant criticism from music industry trade organizations for several issues, one being the length of time taken to come to decisions.41
- A critical concern for the global music industry is the persistence of the "value gap", defined as a market distortion where there is a "dramatic mismatch between the volume of music streamed globally and the rewards that this has generated for rights holders."42 This phenomenon is reflected in the fact that there are an estimated 900 million global users of ad-supported streaming services generating a total of US $634 million, while the 68 million global users of subscription-based streaming services are responsible for generating US $2 billion for rights holders.43 In its latest report, IFPI argues that this problem has arisen due to the misapplication of safe harbour provisions.44 Music Canada released its own study on this issue and the significance for Canada in 2017.45
- There is a growing focus on the economic and socio-cultural potential associated with cultivating ‘music cities'. The concept, defined by Music Canada in their The Mastering of a Music City: Key Elements, Effective Strategies and Why it's Worth Pursuing report, is a city or community of any size with a vibrant music economy. By developing these music cities and allowing them to reach their potential, it is possible for communities at the city level to drive economic growth, job creation, increased spending, greater tax revenues, as well as cultural development. Examples of music cities include Austin (TX), Melbourne (AUS), Berlin (GER), and Toronto.46 Moreover, the concept of music cities (and how to grow them) has been picked up by the private sector, including the Canadian Chamber of Commerce, resulting in the publication of The Music Cities Toolkit.47 A recent SOCAN report found that young urban Canadians professionals prefer to live in vibrant neighbourhoods with a local scene that includes live music.48
- Bell Media formally ended its music video grant program MuchFACT in August 2017, following a CRTC decision that removed the requirement for the company to fund it. Music industry representatives lamented the loss of the program in an open letter to the federal government which urged them to create a visual content funding model for the music sector to fill the gap left by MuchFACT's end.49
- In early 2017, music retailer HMV went into receivership and by April had closed 100 stores across the country. It was reported that the company owed its leading suppliers $56 million. Ancaster-based retailer, Sunrise Records expanded from 12 locations by taking over 70 former HMV stores nation-wide and now employs about 800 full and part-time staff. Sunrise was pleased with its first year; the company sold nearly 500,000 vinyl records, supported indie acts by taking on consignments locally, and has plans to expand both bricks and mortar and online presences in 2018.50
- The Ontario Music Fund (OMF) is a $15 million fund administered by OMDC and designed to strengthen the Ontario music industry and to enhance Ontario's position as a global music leader. The OMF has four streams: Music Company Development, Music Industry Development, Music Futures, and Live Music. In addition to direct company support, OMDC also provides assistance for export development initiatives for the music industry, such as CIMA's international music missions, as well as support to Canada Stands and showcasing activities at major markets including SXSW (USA), Reeperbahn (Germany), and The Great Escape (UK).
- At the federal level, support to the sound recording industry comes through the Canada Music Fund, administered by the Department of Canadian Heritage, as well as through the Canada Council for the Arts. The Federal government recently committed to the modernization of the Canada Music Fund to support a range of music formats and live and digital performances. Program changes will be announced over the next year with revised guidelines expected to be in place for the 2019-20 fiscal year.52
- Other organizations and funds such as FACTOR, the Radio Starmaker Fund (private, non-government support), and provincial arts councils, including the Ontario Arts Council, provide a variety of assistance programs to the Canadian music industry.53 In 2017, FACTOR cancelled its loan repayment policy, announcing that going forward it would exclusively provide funding in the form of grants.54
- Ontario's music industry produces a number of critically acclaimed and best-selling artists, labels, and events:
- Ontario's Alessia Cara won Best New Artist at the 2018 Grammy Awards, the first time the category has been won by a Canadian artist. The Weeknd received a Grammy for Best Urban Contemporary Album for Starboy, while recording engineer Charles Moniz won four Grammy awards for his work on Bruno Mars' album 24K Gold.
- At the 2018 Juno Awards, Ontario's Jessie Reyez won Breakthrough Artist of the Year and Daniel Caesar won an award for R&B/Soul Album of the Year.
- Toronto-based Lido Pimienta won the 2017 Polaris Prize for her album La Papessa. Past Polaris Prize winners represented by Ontario labels include Buffy Sainte-Marie (True North Records), Feist (Arts & Crafts), and Tanya Tagaq (Six Shooter Records).
- The Prism Prize is a national juried award established in 2013 to recognize artistry in Canadian music videos. Among the 2017 winners were Ontario's July Talk (Sleepless Records), which received the Hi-Fidelity Award. The Audience Award went to Winston Hacking, who directed Andy Shauf's music video for "The Magician" (Arts & Crafts). Toronto's Revolver Films, a production company with a distinguished track record in music-based film and video, received the Special Achievement Award.
- The Ontario Live Music portal promotes concerts occurring across the province. Ontario is home to many first-rate music festivals in a variety of genres, such as Ottawa Bluesfest, Hillside Festival (Guelph), Boots & Hearts (Oro-Medonte), Field Trip (Toronto), Niagara Jazz Festival (Niagara-on-the-Lake), and NXNE (Toronto).
Profile current as of April 24, 2018
2 ibid. Sound recording studios comprises establishments primarily engaged in providing the facilities and technical expertise for recording musical performances. Establishments in this industry may also provide audio production or post-production services for producing master recordings, and audio services for film, television and video productions. Excludes integrated record companies.
3 Statistics Canada, Table 387-0012 - Culture and sport indicators by domain and sub-domain, by province and territory, product perspective, annual (dollars unless otherwise noted), CANSIM (database). (accessed: 2018-03-22) The jobs measure refers to number of roles in the industry, whether full-time or part-time.
5 Statistics Canada, Table 361-0034.
7 Statistics Canada, Table 387-0012.
8 Statistics Canada, Table 361-0062, Sound recording and music publishing, royalties and rights, every 2 years (dollars x 1,000,000). CANSIM (database). (accessed: 2018-02-26).
9 Music Canada, Live Music Measures Up, p. 5.
11 Statistics Canada, Table 361-0065, Sound recording and music publishing, sales based on format of musical recordings, every 2 years (dollars x 1,000,000). CANSIM (database). (accessed: 2018-03-01).
12 Worldwide Independent Network (WIN), WINTEL Worldwide Independent Market Report 2017: The Global Economic & Cultural Contribution of the Independent Record Industry, October 23, 2017, pp. 12, 62-64.
13 ibid, p. 40-42.
15 Nielsen Canada, 2017 Year End Music Report, pp. 2,4,5.
16 ibid, p. 9.
17 Press Release, Nielsen Canada 360 Report, Nielsen Canada, June 16, 2016.
18 Nielsen Canada, Nielsen Music 360 Canada Report: Highlights, May 2017, pp. 5, 7.
20 IFPI, Global Music Report 2018: Annual State of the Industry, April 2018.
21 Nielsen Canada, 2017 Year End Music Report, p. 32.
22 ibid, p. 12.
23 ibid, p. 7.
24 IFPI, Connecting with Music.
25 ibid, p. 17.
26 PwC, Global Entertainment and Media Outlook 2017-2021, "Canada", June 2017. Revenues comprise consumer spend on music- physical, digital and live music and sponsorship revenue of live music. Revenue from merchandise or concessions at live music events is not included. Streaming includes revenue from subscription and advertiser-supported streaming services. PwC data represents consumer spending on music at the retail level and excludes music publishing activity.
27 IFPI, Global Music Report 2018.
29 Nielsen Canada, Nielsen Music 360 Canada Report 2017, p. 5.
30 Nielsen Canada, Nielsen Music 360 Canada Report: Highlights, July 2016, p. 5.
32 ibid, p. 13.
36 Press Release, "Strengthening Protection for Ontario Consumers Act," Ontario Ministry of Government and Consumer Services, December 13, 2017; Press Release, "Music Canada Live responds to passing of Ontario's Ticket Sales Act," Music Canada Live, December 13, 2017.
39 CIMA, Over the Border and into the Clubs: Canada's Music Industry and the U.S. Market, April 18, 2016. p. 6.
40 Canadian Music Publishers Association, Export Ready, Export Critical.
41 Quentin Burgess, "What was said: Senators Call for Urgent Review of Canada's Copyright Board", Music Canada, December 1, 2016.
42 Press Release, "Global Music Report: Music Consumption Exploding Worldwide," IFPI, April 12, 2016, p.8
43 ibid., p.22
44 IFPI, Global Music Report 2018, p. 26.
45 Music Canada, The Value Gap: Its Origins, Impacts, and a Made-in-Canada Approach, 2017.
46 Music Canada, The Mastering of a Music City, June 5, 2015.
47 Music Canada, Music Cities Toolkit, September 20, 2016.
51 The information included in this section is an overview of some of the government assistance to the music industry. This is not intended to be a comprehensive list of government assistance available.
53 FACTOR administers funds from the federal government, as well as from Canada's private radio broadcasters' contributions towards Canadian Content development. The Radio Starmaker Fund was established by the Canadian Association of Broadcasters, and is funded by contributions from Canadian private radio broadcasters.