The Copyright Board of Canada has ruled that SOCAN (Society of Composers, Authors and Music Publishers of Canada) can collect a 3.1 percent tax on the sale of each downloaded song (and 1.5 cents per song on an album purchase). The ruling is retroactive to 1996.
While SOCAN is obviously pleased, online music retailers now face an additional pressure on what is already thin profit margins. Industry resources report that the profit margins for online music retailers are about 10 percent at most for most songs. And with competition (Amazon, Wal-Mart, Puretracks in Canada) heating up, there will be further pressure. Should this cause prices to go up, it is likely that we will see more people turning to piracy.
I was surprised at how small the online music download business is in Canada. Nielsen SoundScan Canada projects that about 225,000 songs will be downloaded legally in Canada this year, netting SOCAN about CAD$7,000. In 2005, the first year that such numbers were tracked, some 67,000 songs were legally downloaded.
Is CAD$7,000 really worth putting this nascent industry in jeopardy? I guess it depends on which side of the fence you sit on.