To properly understand the issue, it is appropriate to first recall the advantages of collective rights management, especially with regard to concerts.
Advantages for rightholders
Firstly, collective management means sharing costs. SUISA’s services are funded by a deduction on the royalties paid to rightholders. Those who earn more therefore pay a larger share of the costs than less well-known artists and smaller publishing houses. In this way, SUISA can provide its services to all rightholders, irrespective of their celebrity status or economic power.
Collective rights management organisations also manage social insurance funds designed to pay pension benefits to retirees and their surviving spouses and children. Moreover, these organisations have established cultural foundations channeling financial support to numerous projects that enrich Switzerland’s cultural life. These funds and foundations are financed through a deduction on royalty settlements. Again, the more successful rightholders contribute to a greater extent than those with more limited income.
Finally, collective management rests on the concept of strength in numbers. It is precisely because SUISA represents a large number of very diverse entitled parties, famous or unknown, that it can negotiate good licensing revenues on their behalf.
To put it in a nutshell, collective rights management maximises the advantages of solidarity for creators and publishers.
Advantages for concert organisers
Since it manages the rights of a large number of persons, SUISA acts as a one-stop shop for concert organisers, a place where they can acquire all the necessary rights under a single roof. This is all the more true thanks to the reciprocal representation agreements signed with foreign collective rights management organisations operating in the music sector. Relying on these agreements, SUISA exercises the rights to virtually the entire world repertoire of protected music.
Considering its dominant position, SUISA can only charge remuneration based on tariffs negotiated with the associations of organisers and then approved by the Federal Arbitration Commission for the Exploitation of Copyrights and Related Rights (Article 46 CopA). The rulings of the latter Commission may be appealed, first before the Federal Administrative Court and finally before the Federal Supreme Court. Accordingly, federal supervision ensures that the tariffs applied by SUISA are in conformity with the law.
In a nutshell, collective rights management ensures legal certainty and budgetary predictability for organisers, protecting them against excessive rates.
The issue
Article 40 CopA provides that the management of rights in music performed in concert is subject to federal supervision. This means that an authorisation must be obtained from the Federal Institute of Intellectual Property (IPI, see Article 41 CopA); in general, the latter only grants authorisations to a single collective rights management organisation (see Article 42(2) CopA). The exploitation of rights without the required authorisation is a criminal offense pursuant to Article 70 CopA.
By way of exception, the CopA provides that personal exploitation of exclusive rights by the author or his or her heirs is not subject to federal supervision (Article 40(3)). In its ruling of 5 May 2023, the IPI found that this reserve also allows rightholders to be represented by an agency. This ruling opened the door a bit wider to direct licensing.
Direct licensing may be motivated by a variety of reasons: some rightholders believe that collective rights management is too expensive, some do not want to contribute to the social and cultural foundations of any management organisation, and yet others wish to demand higher royalty rates than those foreseen by the official tariffs. Whatever the case, direct licensing is problematic because it undermines solidarity between rightholders, and jeopardises legal certainty and budgetary predictability for concert organisers.
Solutions
To counteract this phenomenon, SUISA’s rights administration of major concertshas to become more appealing for rightholders.
As a rule, it deducts 15% from concert revenues to cover administrative costs and 10% to fund its social and cultural foundations. However, the rightholders whose works are performed in concert receive additional amounts when royalty settlements are distributed. These additional amounts stem from other areas where remuneration cannot be accurately allocated for want of precise information about the entitled parties. Globally speaking, we can assert that entitled beneficiaries receive over 85% of the amounts SUISA collects from concert organisers. But that is insufficient compared with the commissions applied by the direct licensing agencies. Therefore, in autumn 2024, SUISA’s Board of Directors introduced new terms for certain big concerts, bringing this ratio to over 95%. SUISA also signed an agreement with GEMA, its German sister society, with a view to jointly approaching major international stars and showing them the advantages of collective rights management in practice. This will be done through a common platform designated “One Arena”.
The purpose of these measures is to ensure that major international rightholders remain within the ambit of collective rights management, which is more safe and more lucrative for them, and by the same token, benefiting less well-known artists and concert organisers. To attain this objective and secure the future, we need help from the legislative. Article 40 CopA should be amended to reduce the number of direct licensing cases to a minimum. Since it is truly in the public interest to support aspiring artists and facilitate respect for copyright by concert organisers, it would be reasonable for political authorities to address the problem.
In this case, SUISA and the association of event organisers (SMPA) will jointly intervene with the legislator.
