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Canadian sound recording and music publishing industry

The Canadian sound recording industry experienced a 5.0% decline in its combined operating revenues from $831.3 million in 2010 down to $789.7 million in 2011. However, this was also accompanied by a 5.9% decrease in combined operating expenses from $739.8 million in 2010 to $695.8 million in 2011. This resulted in an increase of the operating profit margin from 11.0% in 2010 to 11.9% in 2011.

The largest industry group, record production and integrated record production and distribution, accounted for 66.3% of the total operating revenue, followed by music publishing at 19.3%, sound recording studios at 13.2% and all other sound recording industries at 1.2%.

Record production and integrated record production and distribution

The record production industry experienced a decline in operating revenues of 5.2% from $552.7 million in 2010 to $524.0 million in 2011. With a 6.3% drop in operating expenses from $492.1 million in 2010 to $461.1 million in 2011, the operating profit margin increased from to 11.0% in 2010 to 12.0% in 2011.

Ontario accounted for 81.9% of the operating revenues, followed by Quebec with 14.9%, an increase for both provinces compared to 2010 with 81.6% and 14.8% respectively.

In 2011, royalties, rights, licensing and franchise fees were the largest operating expense at 30.4% of the total operating expenses compared to 28.7% in 2010. This is a change from 2010 where cost of goods sold was the largest operating expense at 31.4% compared to 28.9% in 2011.

Foreign-controlled firms generated the majority of industry operating revenues at 71.3% in 2011. Their operating profit margin increased to 14.6%, up from 12.9% in 2010. Canadian-controlled firms did not fare as well as the foreign-controlled firms in terms of operating profit margin which fell to 5.6% in 2011 from 5.9% in 2010.

Sales revenues of digital musical recordings climbed by 16.9% to $92.4 million in 2011; up from $79.0 million in 2009. Nevertheless, this did not offset the drop in sales of compact discs over the same period. Compact disc sales fell to $195.1 million in 2011 from $290.3 million in 2009.

Total sales of recordings declined by 19.8% from 2009 to 2011, reflecting significant drops in sales by Canadian and non-Canadian artists.

Music publishing

The music publishing industry posted $152.1 million in operating revenues in 2011, along with $136.4 million in operating expenses. At 10.3%, the operating profit margin remained unchanged from 2010.

Sound recording studios

In 2011, sound recording studios’ operating revenues decreased to $104.6 million from $118.7 million in 2010. Operating expenses also decreased to $89.9 million from $105.3 million in 2010. The profit margin increased to 14.0% in 2011 from 11.3% in 2010. The reported breakout of revenues for sound recording studios showed that 22.5% of the revenues came from studio recording services for music clients providing, for instance, mixing and recording for production. A further 48.9% of the revenues came from studio recording services provided for other purposes such as sound editing and design services of audiovisual works.

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