SUISA communicates its cooperation with the US American collective management organisation SESAC at the beginning of August 2016. What are the plans of the two societies?
Andreas Wegelin: SUISA and our US American sister society SESAC intend to cooperate in the online music business. More specifically, they want to provide international licensing of music offers which are available online. To this end, we will create a Joint Venture with SESAC: Mint Digital Licensing. The new enterprise is going to issue licences to providers of music streaming and download services for the repertoire of SUISA and SESAC for all of Europe. The Joint Venture is also going to offer its services to third parties; for example to major publishers which can assign their online rights in Europe directly, or other collective management organisations which are not in a position to carry out international licensing themselves.
SUISA and SESAC will jointly negotiate with the online service providers within the remit of the Joint Venture. And the negotiations in this case will not just be with providers with which SUISA already has agreements. Agreements with new providers are also going to be part of the negotiation process.
How did the cooperation between SUISA and SESAC come about?
SESAC was looking for a reliable partner for the markets outside of the USA in order to license its repertoire successfully in those territories. During this process, the US American sister society approached SUISA and asked to enter into a cooperation.
Which advantages does the Joint Venture have for both societies?
Both collective management organisations have the aim to create financial benefits for their members from online exploitation of their works. The Joint Venture represents repertoire of more than 11.5 million works of SESAC and 4.5 million works of SUISA, of more than 110,000 composers, lyricists and publishers in total. Thanks to the size and relevance of the joint repertoire both societies strengthen their negotiation position vis-a-vis the online service providers. As a consequence, the most important benefit of the Joint Venture is to be able to represent the interests of the SUISA and SESAC members in the negotiations with Spotify, Apple, YouTube and others with more gravity. The fair remuneration of authors and publishers for online music uses is therefore the main concern.
Specifically from SUISA’s perspective, another aspect is important: We have invested some of our resources into the modernisation of our IT infrastructure in the past years. We did this to create a good starting position for us regarding the online music business. It is now possible for us to offer our IT services to other societies and publishers against payment, and to use the full capacity of our systems. Another effect will be that we will generate higher secondary income. Half of the profit from Mint Digital Licensing goes to SUISA, for example. Higher secondary income helps us to keep the cost deductions for the distributions to SUISA members at a lower level. Taking the supplementary distribution into consideration, the deduction we took in 2015 was an average of 6.76%.
A low administration cost rate will remain an important issue for us in future. It is possible that, in a few years, a competitive situation arises regarding the management of broadcasting rights, as we already experience it for online rights today. In a worst case scenario, part of the income from the administration of broadcasting rights might fall away. This would mean that we have less income, but more or less the same expenditure. Higher cost deductions from the settlements paid to our members would be the consequence. Said higher secondary income counteracts such measures.
Thanks to the cooperation with SESAC in the Joint Venture, SUISA can thus not only strengthen its market position in the online business, but also generate secondary income simultaneously, helping to keep cost deductions low – all of which is a benefit to SUISA members.
SUISA members will also have a simple access to controlling and managing their catalogues, licences and royalty settlements via the Joint Venture in future.
What changes for SUISA members following the Joint Venture?
The cooperation with SUISA remains the same for members, be it concerning the range of services offered by SUISA or the scope of rights management. There are no plans for a new rights administration agreement or changes to the distribution rules as a consequence of the Joint Venture. The member services of SUISA will continue to look after the members – there won’t be any changes regarding our members’ contact partners. The fact that licensing is now being executed by the Joint Venture does not entail a duplicate admin process for members; just like before, the cost deductions are only carried out once. Only the online service providers will be affected by the main changes: The SUISA repertoire will be licensed to online music services via the Joint Venture.
How many staff will be employed by the Joint Venture and where will the company be located?
The exact structure of the Joint Venture as well as the choice of the company location is still being defined at this stage. We intend to keep the organisational structure of Mint Digital Licensing as lean as possible. Both SUISA as well as SESAC have the aim to work together efficiently and to keep admin costs low.
What is the ownership structure of the Joint Venture? Are you going to sell a part of SUISA?
No. SUISA will remain 100% independent. It will provide its own services to the Joint Venture. Furthermore, both companies [SUISA and SESAC] will contribute a six-digit amount in order to cover the initial costs of the joint enterprise. SESAC and SUISA own 50% each of Mint Digital Licensing. This also means that both companies are equal partners within the Joint Venture.
What implications does the Joint Venture have for SUISA employees? Is a reorganisation or a staff reduction planned?
Personnel cutbacks are not going to be made at SUISA as a consequence of the Joint Venture. It might even lead to a slight increase in job positions. With regards the company organisation, some employees who already work for the online licensing area will continue their work in the name of Mint Digital Licensing from now on. A reorganisation at SUISA due to the Joint Venture is not going to take place.
The Joint Venture marks an important development for SUISA as an organisation: As mentioned before, cross-border competition exists regarding the rights assignment in the online music market in Europe. SUISA can now directly manage the online rights for its members across the whole of Europe. Vice versa, this also applies to international sister societies. As a consequence, relating to its online business, SUISA is in direct competition with collective management organisations such as SACEM, GEMA, PRS or the Swedish STIM. This competition in the online area is a new experience for SUISA. We are ready thanks to our range of specific services. Exciting times are ahead of us.
Christian Fighera, co-founder of Two Gentlemen and Board members of SUISA, comments on the Joint Venture:
“I am very happy about the step SUISA has taken to enter into this Joint Venture with SESAC. In a world where the online distribution has been completely liberalised, it is an advantage that our members are treated as equals to famous international composers. Thanks to the Joint Venture, we can license a comprehensive and attractive repertoire on a worldwide basis. At the same time, we can strengthen our competences and our relationships with new partners. New authors and well-established artists alike will be able to benefit from this Joint Venture. It also shows that SUISA can make progress and develop itself further while offering member and customer-oriented high-quality services.”
|Who is SESAC?
SESAC is one of the three big US American collective management organisations for performing rights. The company was founded in 1930 and its legal form is subject to private law. John Josephson has been CEO and Chairman of SESAC for the last two years. He is pursuing an innovative strategy with its organisation in order to absorb the fast structural and technological change in the music business and to continue developing SESAC to an integral music rights organisation – a one stop shop.
As a consequence, he invested in state-of-the-art IT systems and made sure they were brought to cutting-edge technology levels. They are comparable to the SUISA systems. In 2014, SESAC bought and incorporated Rumblefish, a company specialised in micro-licensing. Last year, SESAC bought the Harry Fox Agency (HFA), a big organisation for mechanical rights. HFA represents about 48,000 US American music publishers.
SESAC looks after music creators such as Bob Dylan, Neil Diamond, Beyoncé, Green Day, Mariah Carey and many other globally successful artists. Among the film composers looked after by SESAC are Christophe Beck, Jeff Beal, Danny Lux, Jon Ehrlich, Dennis C. Brown or Bruce Miller. SESAC also represents SESAC TV shows such as Grey’s Anatomy, How I Met Your Mother, Parenthood, Dateline NBC, Dr. Phil, Seinfeld or The Doctors.On the Harry Fox Agency:
HFA has been looking after the mechanical rights of music publishers in the USA since 1927. For years, HFA has grown to become one of the biggest licensor of mechanical rights, representing about 48,000 music publishers and thus a repertoire of more than 6.7m compositions as of today. After the takeover by SESAC, the repertoires were merged and are now managed by the SESAC systems.