Tag Archives: Administration costs

Income and expenditure, investments and an anniversary

A wide-ranging list of topics was on the agenda for discussion at the meetings of the SUISA Board on 28 and 29 September 2020. For the first time after the disruption caused by corona, a part of the meeting participants met in Lausanne while respecting the protective measures in person, while some members of the Board of Directors joined via videoconferencing from their home office. Report from the Board of Directors by Andreas Wegelin

Report from the Board: Income and expenditure, investments and an anniversary

Snapshot of the Label Suisse Festival 2020 in Lausanne. The rights management monopoly of SUISA has a central significance for the cultural development and promotion of music in its entire diversity in Switzerland; that is the persuasion of the SUISA Board of Directors. (Photo: Tabea Hüberli & Dirk Hoogendoorn)

The Board of Directors took note of the fact that the situation regarding the collections in the crisis year have, so far, remained stable compared to the assumptions made in April. Expectations made in the corona budget that had been created in the spring during lockdown were even slightly exceeded on the collections side. Nevertheless, it is very likely that SUISA will close its 2020 financial year with a decrease in income of about 25% compared to the previous year. The expenditure so far is also within the economy budget, and at 12.7% less expenses even better than anticipated.

Christoph Trummer, Head of Political Projects at the Professional Association of Freelance Musicians, Sonoart, informed the Board members about the current state of affairs and the future development of the support measures for music creators. It shows that the cultural associations managed during the covid-19 crisis to take a joint and persistent stance vis-à-vis Parliament, but also offices and authorities, to speak with one voice and to obtain the support for creators and artists that is so urgently needed.

Expenses per tariff from collections to distribution

A rather pleasant result of the cost unit calculation was presented. Said calculation shows how high the expenditure per tariff is from collection to distribution. As a matter of fact, expenses are not the same for all tariffs, depending whether we must issue invoices to many individual customers or just a few, and whether the market survey and coverage is costly.

The costs for the collections and the distribution of copyright remuneration for concerts are, for example, lower than for events held by clubs or associations. In the former case, we often deal with professional event organisers and promoters who usually are aware of their duties when it comes to authors. In the case of events held by associations, sports clubs or office parties the people in charge organising these events often have to be made aware of their obligations.

Cost shares overall did, however, fall per tariff in the survey year 2019. This is because higher secondary income from securities income could be used to cover a large part of the costs. The SUISA Executive Committee is going to continue to explore all possibilities to process collections and distributions in a more cost-effective way. An important element for this shall be the continued automation of the licensing process: Event organisers and promoters shall be able to send online notifications for their events, in an uncomplicated manner. If they do not do so, the system is set to find events on the basis of key word searches and initiate the collection process.

Financial affairs

For the subsidiary Mint Digital Services, the SUISA Board of Directors approved the hypothecation of a securities depot as a guarantee, instead of the guarantee of surety planned for the summer for the licensing of large publishing catalogues.

The Board of Directors is, pursuant to the Articles of Association, responsible for the financial matters of SUISA. In general, the monies are supposed to be invested for the period which lies between the time of receipt of payment from the licensees until the distribution work has been finished and the payments have been made to rights owners. The investments are made on the basis of regulations. Due to the initiative of a member of the Board of Directors, this set of regulations including “security” and “reasonable return of investment” was extended by the criterion “sustainability”.

Past and future

SUISA turns 100 in 2023. The first preliminary preparations and planning work for the anniversary were launched. Inspired by a suggestion of the SUISA Communications Department, deliberations were made how the round birthday of the cooperative could be celebrated adequately. Possible jubilee projects are set to be worked on further.

Furthermore, the Board took note of a legal expert opinion on SUISA’s monopoly position and its future on a licensing market for copyright which has begun to open up. The rights management monopoly has already disappeared in the online rights sector. Latest developments show that SUISA is also facing increased competition in other rights management areas such as by foreign agencies which directly license concerts that take place in Switzerland. In the meantime, SUISA remains, due to the statutory provisions, obliged to a large degree to manage the rights belonging to its field of activity as comprehensively as possible, the expert opinion states.

The Board of Directors holds the view that the rights management monopoly of SUISA needs to be strengthened because it has a central significance for the cultural development, the promotion of music in its entire diversity in Switzerland for authors, music promoters and for consumers. The Executive Committee was tasked to take the necessary measures to inform the authorities and the public.

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A wide-ranging list of topics was on the agenda for discussion at the meetings of the SUISA Board on 28 and 29 September 2020. For the first time after the disruption caused by corona, a part of the meeting participants met in Lausanne while respecting the protective measures in person, while some members of the Board of Directors joined via videoconferencing from their home office. Report from the Board of Directors by Andreas Wegelin

Report from the Board: Income and expenditure, investments and an anniversary

Snapshot of the Label Suisse Festival 2020 in Lausanne. The rights management monopoly of SUISA has a central significance for the cultural development and promotion of music in its entire diversity in Switzerland; that is the persuasion of the SUISA Board of Directors. (Photo: Tabea Hüberli & Dirk Hoogendoorn)

The Board of Directors took note of the fact that...read more

Brave new world

There is hardly any other technical development that has turned the music business upside down as much as the success of platforms such as YouTube. And hardly any technical development has been as remiss in the treatment of authors’ rights as the internet. In this interview, SUISA CEO Andreas Wegelin explores opportunities and difficulties of this rather young business sector. Interview by guest author Silvano Cerutti

Brave new world

“If I compare SUISA with other organisations that are still in their early days when it comes to online, we are already well underway”, SUISA CEO Andreas Wegelin is convinced. (Photo: Günter Bolzern)

Andreas Wegelin, the distribution of online royalties is affected by delays which caused disappointment in some members. Can you empathise with that?
Andreas Wegelin: It is our job to get as much collected on behalf of our members as possible, not just online but for all usage categories. If there is a cause for criticism, we take it seriously and examine it. There is, however, also the aspect that some members have received more than before, and they are not disappointed.

Maybe the question needs rephrasing?
Well, maybe the level of expectation is too high. Today, music is consumed in much smaller units, there are possibly one or two songs from a CD and that is reflected in the turnover, of course.

But members should receive a settlement four times per year. That did not quite work out in 2019. Why?
That’s right. One of the reasons for this is that the payment of one major customer was late. The amounts in the June distribution would thus have been far too small: On the one hand, the settlement would have fallen under the so-called payout threshold, they would therefore have received nothing. On the other hand, the administration costs would have been too high. We subsequently decided to postpone the settlement. Our goal, however, remains to pay out on a quarterly basis.

So, you don’t have a problem with the data volume you received that you need for the calculation of the online royalties?
No, we don’t. Yes, the data volume we receive is rather huge and requires complex processing with respect to many countries and currencies, but our systems have proved to be extremely efficient in this regard.

I can now upload my work on platforms such as iMusician, from where it is distributed to various service providers (Spotify etc.) and I can see how much my work is used, and where. Can SUISA also do that?
These are two different business models. iMusician monitors where an individual recording is played. That is, of course, much easier to track than having to simultaneously trace dozens, if not hundreds of recordings of one single work. What’s more, music providers know exactly who the artists of a recording are, but don’t have information on the composers of the song.

So SUISA’s job is more complex?
Of course. Add to that the obligation to provide clear information on the rights whenever you upload a song to such a distribution service. At our end, however, we also get notifications of works which have been uploaded by a fan without any details at all. If I do compare our administration costs with the fees that a service such as iMusician charges, I think to myself: we can keep up very well. But – such distribution services show us how we could improve our service in future and what is in demand on the market.

Which is?
The key word is tracking. I give you an example: If commercials with music of Swiss authors are broadcast abroad, the best way for me to get information on the number of broadcasts is via a tracking system. Today, not least on the grounds of cost, we have a system where the broadcasters deliver the information to us. Which could be something like “Nivea spot”. Well, which one? If I already have the melody as a sound file, I can track that. That is our future, even if it is not the most pressing measure we need to take for the online sector.

Automation is therefore only as good as the data that are available to it?
Exactly. And they are often incomplete.

What about monitoring service providers such as Utopia Music which can track songs across the internet?
Monitoring is a huge topic. We follow this very closely and are also planning a pilot project. Yet again, this is a matter of the relevant cost-benefit ratio. That ratio may well be good for an international hit producer but when it comes to an overall repertoire such as ours, the expense can push the administration costs up to silly levels.

The ‘rucksack of completeness’ has been around for the offline sector for many years and the distribution works rather well in that area. In the online sector, however, where everything could be measured, things are complicated.
That is annoying, yes. The offline system has been functioning well for nearly 100 years. But we only cover Switzerland and Liechtenstein for that. Online, we need to take a global approach and are also facing competition, because, according to the EU, each rights holder can choose who they are represented by.

What are the consequences?
In the past, rights holders assigned their rights to SUISA via so-called reciprocal representation agreements for the perception of their work in Switzerland and the Principality of Liechtenstein. Based on that system it was possible to pass on the relevant share from Switzerland to any composer, whether English or American, and one subsequently received the relevant shares from abroad for Swiss authors.

Online, on the other hand….
…. it is only possible for a society to collect for the rights holder whom it represents directly, even though this can be done at a global level. All of a sudden, the documentation must be more accurate and also completed for other countries since it otherwise won’t match. One collective management organisation might declare that their share of a work amounts to 80 percent, another organisation claims to hold 40 percent, which adds up to 120. Such cases happen all the time.

And what’s the consequence of this?
The provider says: As long as you do not know who sends an invoice for what, I won’t pay you. Or we do not get any money, but the info: I have already paid someone else!

How do disputes among rights representatives arise?
Let’s take an example: I have a work with a composer, a lyricist and a publisher. The latter, however, has an agreement with a sub-publisher and has, for another territory, instructed a third publisher, and now all of these entitled parties can choose their own collective management organisation for the online exploitation. This means that there might be four or five collective management organisations which are then in charge for their respective part of the work. Now, I have to agree exactly which part belongs to me. This is where the “disputes” start, because the entry may be different at their end.

Is there no regulation among the copyright management organisations how you can proceed in such situations?
The societies are trying to coordinate their collaboration better in technical working groups. Due to the new competition situation among the organisations, a complete solution for these difficulties has not been found yet.

Music is consumed in small units, the rights representation happens at an even smaller scale, international competition and no smooth processes – doesn’t that frustrate you?
No, that is what makes this job so interesting! Changes such as the internet come to you from outside. You can either put your head in the sand or try to make the most of it. If I compare SUISA with other organisations that are still in their early days when it comes to online, we are already well underway.

But you do understand that authors are stressed out by such a situation?
Of course, it stresses us, too (laughs). We are building a new service here, which will hopefully be profitable and in demand and which gets the most out of it for our members. This can only happen in small steps and with setbacks, but there is also progress: We were able to improve the agreements, modernise infrastructure and the duration between the usage date and the distribution date could be halved since 2012. I am very optimistic.

To the second part of the interview: “Penny-pinching in digital music distribution”

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There is hardly any other technical development that has turned the music business upside down as much as the success of platforms such as YouTube. And hardly any technical development has been as remiss in the treatment of authors’ rights as the internet. In this interview, SUISA CEO Andreas Wegelin explores opportunities and difficulties of this rather young business sector. Interview by guest author Silvano Cerutti

Brave new world

“If I compare SUISA with other organisations that are still in their early days when it comes to online, we are already well underway”, SUISA CEO Andreas Wegelin is convinced. (Photo: Günter Bolzern)

Andreas Wegelin, the distribution of online royalties is affected by delays which caused disappointment in some members. Can you empathise with that?
Andreas Wegelin: It is our job to get as much collected on behalf...read more

Outlooks and insights

In its meetings on 10 and 11 December 2019, the Board focussed on the budget for 2020 and SUISA’s strategy for the next five years. Report from the Board by Andreas Wegelin

Report from the Board: Outlooks and insights

Advertising revenues have shifted from the TV towards the online sector. This shift has led to a negative impact on copyright collections. (Photo: Olivier Le Moal / Shutterstock.com)

The budget for the year 2020 had already been discussed in advance on 27 November 2019 at the meeting of the Executive Committee for Finance and Controlling. The Committee and the Board had to establish that the investment and staff requirements remain high. This is due to the fact that SUISA has taken on new tasks.

In the case of the new task fields which entail a higher demand for staff, it is particularly the collection of remuneration for background music and the reception of broadcasts in offices outside the domestic and private circle or home life that are affected. Said collections had been linked to the BILLAG collection of the fees for the reception of commercial broadcasts. Since 2019, SUISA has been carrying out this type of collection directly. Another sector where investments into additional staff resources need to be made is the IT sector. This is because self-service options for customers and members on the SUISA web platform “my account” are due for major enhancements. Expanding activities in terms of global licensing of online music distribution via the subsidiary, SUISA Digital Licensing AG and the Joint Venture for services with SESAC also require more staff.

Budget approved, future discussed

On the income side, the shift of the advertising revenue in the TV sector towards the online sector are noticeable. Revenues from broadcasting rights are stagnating while online usage does not increase proportionally. The Board has therefore approved a budget for 2020 which has a slightly worse cost/income ratio. Executive Management has also been asked to plan measures for 2021 to lower the cost/income ratio again.

The strategic alignment of the company has been discussed further on the basis of a re-defined strategy paper from the October meeting. Strategic focal points for the next years are described by keywords such as services, income/cost ratio, competition and innovation. To this end, the Board determined a roadmap for 2020 in its December meeting.

On top of that, the Board listened to updates on the personal changes at executive level of subsidiary SUISA Digital Licensing AG and Mint Digital Services, the Joint Venture with SESAC and discussed further development steps in the category of licensing of music in online services that is no longer limited per territory.

Distribution rules and by-elections

The Committee for Tariffs and Distribution and the entire Board subsequently decided on two changes to the distribution rules, namely an adaptation of the weighting of music in the case of sales broadcasts in advertising windows of foreign TV channels and the dissolution of distribution category 4A. These decisions are subject to the approval by the IGE (IPI), our supervisory authority. Furthermore, the Board determined the cost deductions for the distributions in 2020. They are to remain the same as in 2019.

After the election of Grégoire Liechti into the SUISA Board by the General Meeting in 2019, a seat in the Distribution and Works Committee has become available and needs to be filled. We are looking for a music publisher. The Board is going to propose Michael Hug, owner of the publishing house Ruh Musik AG, at its General Meeting in 2020.

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In its meetings on 10 and 11 December 2019, the Board focussed on the budget for 2020 and SUISA’s strategy for the next five years. Report from the Board by Andreas Wegelin

Report from the Board: Outlooks and insights

Advertising revenues have shifted from the TV towards the online sector. This shift has led to a negative impact on copyright collections. (Photo: Olivier Le Moal / Shutterstock.com)

The budget for the year 2020 had already been discussed in advance on 27 November 2019 at the meeting of the Executive Committee for Finance and Controlling. The Committee and the Board had to establish that the investment and staff requirements remain high. This is due to the fact that SUISA has taken on new tasks.

In the case of the new task fields which entail a higher demand for staff, it is particularly...read more

To be continued: Our success story, spanning more than 90 years

The General Assembly of our Cooperative Society will take place on Friday, 23 June 2017, in Zurich. Members will have the opportunity during the General Assembly to co-determine the destiny of their cooperative society. Apart from the positive results of the annual accounts for 2016, SUISA is also going to report on the Joint Venture Mint Digital Services, co-founded with SESAC, plus on the developments regarding the copyright revision and the debate on the ‘service public’. By Andreas Wegelin, CEO

To be continued: Our success story, spanning more than 90 years

SUISA founded the Joint Venture Mint Digital Services together with US authors’ society SESAC. The project helps improve the competitiveness of SUISA in the online music market. Shown in the picture: Andreas Wegelin, SUISA CEO (on the left), and John Josephson, Chairman and CEO of SESAC Holding. (Photo: Hannah McKay)

SUISA can look back on a successful financial year 2016. Thanks to the positive year-end result, we are able to pay out more than CHF 128m to those who are entitled to receive a payment. That is more than ever before in the successful history of the Cooperative Society SUISA, spanning more than 90 years.

We are also doing well in terms of our costs. An average cost coverage deduction of 12.37% shows that we have the costs under control. If you take the reoccurring supplementary distribution of 7% into consideration as a contribution to the costs, the actual percentage amounts to 6.75% of the pay-outs to those entitled to receive a payment.

SUISA improves its competitiveness in the online market

Members will have the opportunity during the General Assembly to co-determine the destiny of their cooperative society. Apart from the positive annual accounts, we are also going to present the newly founded project for the improvement of SUISA’s international competitiveness in the online music market.

Together with the US authors’ society SESAC, we have founded Mint Digital Services as a Joint Venture back in February 2017. The JV enterprise offers services in relation to the administration and processing of online music licences. With this JV, we emphasise our strategic direction, i.e. to offer rightsholders an efficient and cost-effective administration.

Wanted: Active participation of our cooperative members

There will also be news on the legal framework conditions. AGUR12 II has passed a compromise for the attention of the Head of the Ministry in the EJPD (Federal Department of Justice and Police, FDJP); we are now waiting for it to be substantiated in a legislative draft.

Please do take part in our General Assembly. Only your active participation ensures that SUISA will be there for its members as a Cooperative Society in future.

See you on 23 June 2017 in the Kaufleuten Zurich.

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The General Assembly of our Cooperative Society will take place on Friday, 23 June 2017, in Zurich. Members will have the opportunity during the General Assembly to co-determine the destiny of their cooperative society. Apart from the positive results of the annual accounts for 2016, SUISA is also going to report on the Joint Venture Mint Digital Services, co-founded with SESAC, plus on the developments regarding the copyright revision and the debate on the ‘service public’. By Andreas Wegelin, CEO

To be continued: Our success story, spanning more than 90 years

SUISA founded the Joint Venture Mint Digital Services together with US authors’ society SESAC. The project helps improve the competitiveness of SUISA in the online music market. Shown in the picture: Andreas Wegelin, SUISA CEO (on the left), and John Josephson, Chairman and CEO of SESAC Holding. (Photo: Hannah McKay)

SUISA can look...read more

Commentary on SUISA’s annual results for 2016

SUISA can report a very successful financial year 2016. The result reflects an all-time high regarding the income from domestic copyright exploitation. In the Cooperative Society’s history of more than 90 years, this is a record sum in terms of remuneration that is due for distribution. The average cost coverage deduction remains low – about CHF 88 per CHF 100 of the income collected can be paid out to authors and publishers that are entitled to receive such remuneration. Text by Andreas Wegelin

Commentary on SUISA’s annual results for 2016

SUISA is going to pay authors and publishers remuneration totalling CHF 128.9m for financial year 2016. That is the highest ever distributable amount in the Cooperative Society’s history which spans more than 90 years. (Photo: Manu Leuenberger)

The best business yield achieved by SUISA previously, in 2008, has thus been topped by the results of 2016. The income from the usage of copyright in musical works in Switzerland and the Principality of Liechtenstein have never reached such high levels before. As a consequence, more than CHF 128m can be paid out to domestic and international authors and publishers entitled to receive such remuneration. That is the highest amount in our Cooperative Society’s history which spans more than 90 years.

Several reasons contributed to this record result. Broadcast and retransmission rights’ collections, in particular, (Tariff CT S, broadcasters except SRG, CT Y, pay TV, and CT 1 & 2), and the time-shift usage of broadcasts (Tariff CT 12, rental of set-top-boxes) could be increased. The licensing of music performing rights, in particular for concerts (Tariff CT K) and film screenings(Tariff CT E, cinemas) also saw a sustained increase.

Regarding the licences for the distribution of music recordings, the trend continues to move away from physical sound recordings towards online exploitation. Regarding online music exploitation, downloads are increasingly replaced by streaming. Remuneration for private copying, regarding Tariff CT 4, has also grown. The latter can be attributed to the expansion of the storage capacity of devices (smartphones, tablets).

Cost coverage deductions remain low

While the costs for rights management have slightly increased, the proportion of this increase compared to the income remains low. The result is that the applicable cost deductions for settlements to rightsholders entitled to receive a payment are a very reasonable 12.37%. About CHF 88 per CHF 100 will therefore be paid out by SUISA to authors and publishers.

Furthermore, there will be a supplementary distribution on top of all regular settlements, at a level of currently 7%. This consists of monies for which the parties entitled to receive a payment could not be traced. After a period of 5 years, such income will be paid out by SUISA as a supplementary distribution on top of all settlements.

Successful negotiations – still a lot of work to do for SUISA

Such positive annual results are a proof of successful negotiations for tariffs and terms and conditions of use, and of reliable customers and business partners. It also shows that music exploitation is on the rise and SUISA can negotiate and enforce licences for music in relation to new technologies accordingly.

Particularly with regards to internet usage, there is still a lot of work to do. SUISA is increasingly managing online rights for cross-border usage directly. This sector is expected to turn into an important pillar of our work for our members.

Further information:
«SUISA 2016 results: CHF 128.9 million for authors and publishers», Press release, 30 May 2017

SUISA’s annual report 2016 is available as pdf for download. For the third year running, the annual report is published together with the brochure “Where the music is new”. It contains portraits of five SUISA members from different music genres. SUISA focusses on musical diversity. A collective management organisation is putting itself at the service of its members and thus promotes and supports music creatives such as the five personalities portrayed in the brochure. The brochure “Where the music is new” can also be downloaded as a pdf. It is also possible to order printed versions of the brochure and the annual report.
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SUISA can report a very successful financial year 2016. The result reflects an all-time high regarding the income from domestic copyright exploitation. In the Cooperative Society’s history of more than 90 years, this is a record sum in terms of remuneration that is due for distribution. The average cost coverage deduction remains low – about CHF 88 per CHF 100 of the income collected can be paid out to authors and publishers that are entitled to receive such remuneration. Text by Andreas Wegelin

Commentary on SUISA’s annual results for 2016

SUISA is going to pay authors and publishers remuneration totalling CHF 128.9m for financial year 2016. That is the highest ever distributable amount in the Cooperative Society’s history which spans more than 90 years. (Photo: Manu Leuenberger)

The best business yield achieved by SUISA previously, in 2008, has thus been...read more

Sustainable growth for members

Cooperative societies excel by their solid economic activities. This is also true for SUISA. The cooperative society for composers, lyricists and publishers of music has slightly increased its income in 2015. SUISA pays out approx. 88% of its income to the rightsholders. That’s a total of CHF 125m. The cooperative society thus makes a substantial contribution to the financial livelihood of its members. Below is an analysis of the annual result. Text by Andreas Wegelin, CEO

Composers and lyricists don’t always perform on a stage. This is why it is even more important for them that they receive their copyright royalties from their cooperative society. (Photo: Dreadek / Shutterstock.com)

SUISA has published its annual results for 2015, and the numbers are good news: The cooperative society for authors and publishers of music could slightly increase its collections in Switzerland and the Principality of Liechtenstein. Thanks to the continued large demand for music in this country, SUISA collected CHF 132.7m in these territories. Together with the income generated by usage of the SUISA repertoire abroad, the net amount for the exploitation of copyright was a total of CHF 142.7m.

Important income for composers, lyricists and publishers

Approx. 88% of the income collected by SUISA is distributed to rights holders. That’s CHF 125m that are being paid out to the creators of music. Such income is especially important for composers, lyricists and publishers. Many authors don’t perform on stage and therefore don’t receive fees or shares in the income generated from merchandise. The remuneration yielded via the collective management of the exploitation of works composed or lyrics written by these authors are a part of their income.

Cooperative societies run their operations sustainably in the interest of their members

In Switzerland and Liechtenstein, SUISA is tasked with this duty as the cooperative society of its members. Cooperative societies are mainly self-help organisations of the members. They do not undertake speculative financial transactions or try to yield the highest possible wins for shareholders. Instead, they work in the interest of their cooperative members. In the case of SUISA, these are the music authors and publishers. As the year end for 2015 shows, SUISA is on the right track: The cooperative society’s income has continuously increased over the last three years. The main drivers of this positive development have been concerts and digital TV in particular.

Concerts are flourishing

The biggest increase during 2015 has been thanks to continuously flourishing concert and festival activities in Switzerland. Approx. CHF 20.3m have been collected by SUISA by means of copyright licence fees from the concert tariffs CT Ka and CT Kb in the last year; in 2014, the respective sum was CHF 18.7m. These two concert tariffs thus make up nearly half of the total income for performing rights. Last year, CHF 46m were collected in total for performing rights (compared to CHF 44.1m in the previous year). A main influence on the increased collections last year were some disputes which could be resolved and therefore led to a retroactive payment of licence fees.

Digital TV continues to grow

The income from broadcasting rights slightly increased from CHF 64m to CHF 64.6m last year. The increase stems from higher income for TV advertising windows on the one hand; On the other hand, the increasing popularity of digital TV has a positive effect for authors and publishers: Both the dissemination of broadcasts via cable as well as the rental of set top boxes and therefore the possibility to enjoy time-shift television led to higher collections in 2015.

Online flop, sound recordings top?

SUISA’s annual results for 2015 in the sectors online and sound recordings, however, do not correspond with current developments at all. The trend in the market clearly shows: More and more music is being used via internet and especially by means of streaming, whereas the public has been buying less and less sound recordings for years. Nevertheless, the SUISA collections for sound recordings have risen slightly last year, while the results for the online sector exhibited a falling trend. Special case Switzerland? No.

In the case of the collections yielded for sound recordings, a major production of one single customer was the reason for the plus compared to the previous year. The drop in online income in 2015 is due to the invoicing procedures. Due to the rapidly increasing data volume that SUISA has to process for streaming exploitation, the distribution procedures for online income had to be re-engineered. As a consequence, some streaming operators’ income from last year could not be invoiced before January 2016. Irrespective of this seasonal time shift in terms of invoicing, it also has to be mentioned in the context of online collections that further efforts are needed to negotiate fair payments for authors and the dissemination of their music on the internet.

“The remuneration collected from the most used gratuitous channel YouTube is too low for authors and has to be given a special mention from a point of negative impact.”

In the course of its second quarter distribution in June 2016, SUISA is going to distribute income from online business to rightsholders. The distributable amount, however, will remain at a low level just like in the previous year. One reason for this are illegal offers and gratuitous services which are financed by advertising. They compete with the legal fee-based offers by e.g. Spotify, Apple Music, Google Play and others.

The remuneration collected from the most used gratuitous channel YouTube is too low for authors and has to be given a special mention from a point of negative impact. The licence fees collected from online providers continue to remain an important subject for SUISA in 2016: Composers, lyricists and publishers of music must receive a fairer payment for the exploitation of their works via downloads and especially streaming.

Keep admin costs low

Another important (ongoing) subject are the costs. SUISA is doing well in that regard: The admin costs were 2.5% lower in 2015 at CHF 27.4m compared to the previous year (CHF 28.1m). SUISA thus confirms the results of a cost analysis that had been carried out on behalf of the Swiss Federal Institute of Intellectual Property (IPI) at the five Swiss collective management organisations. The result of the analysis showed: The Swiss collective management organisations work economically and their costs are adequate.

For SUISA members, this means: You can count on the fact in future that your cooperative society will run sustainable operations in order to provide a substantial contribution to your livelihood.

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Cooperative societies excel by their solid economic activities. This is also true for SUISA. The cooperative society for composers, lyricists and publishers of music has slightly increased its income in 2015. SUISA pays out approx. 88% of its income to the rightsholders. That’s a total of CHF 125m. The cooperative society thus makes a substantial contribution to the financial livelihood of its members. Below is an analysis of the annual result. Text by Andreas Wegelin, CEO

Composers and lyricists don’t always perform on a stage. This is why it is even more important for them that they receive their copyright royalties from their cooperative society. (Photo: Dreadek / Shutterstock.com)

SUISA has published its annual results for 2015, and the numbers are good news: The cooperative society for authors and publishers of music could slightly...read more

SUISA is working cost-consciously

Last year, SUISA and the other Swiss collective management organisations (CMOs) have invested time and money into a cost analysis which had been requested by the federal government. The results of the study are now available. At hardly anyone’s surprise, study reveals that the Swiss CMOs work efficiently and have their costs under control. Nevertheless, the Federal Council demands a stronger control of the collective management organisations in its proposal for the copyright law revision. This is not just unnecessary, but actually absurd, as a closer look at the study results reveals. Text by Andreas Wegelin, CEO

SUISA is working cost-consciously

A study of the IPI confirmed that SUISA and the other Swiss collective management organisations have their costs under control (Photo: Giorgio Tebaldi)

What is the study about?
The supervisory authority of the Swiss CMOs, the Swiss Federal Institute of Intellectual Property (IPI), has, upon the recommendation of the Swiss Federal Audit Office (SFAO) commissioned an in-depth study in early 2015 with the objective to investigate whether the costs of the CMOs are adequate. The study was conducted between February and December 2015 by experts of the Fernfachhochschule Schweiz (distance learning technical college, FFHS), the consultancy firm SERVUS GmbH and the Zürcher Hochschule für Angewandte Wissenschaften (University of Applied Sciences in Zurich, ZHAW).

In the study, the administration costs of the five Swiss CMOs ProLitteris, SSA, SUISA, Suissimage and Swissperform were compared to non-profit organisations (NPOs), insurances and foreign CMOs. Furthermore, the salaries within CMOs were compared to those of public administration, insurance and banks.

The basis for the study were publicly available data from annual / financial reports of the organisations, on the one hand. On the other hand, detailed finance and organisational data were evaluated that had been provided by the CMOs or obtained via surveys among the organisations. The analysis covered material from the years 2008, 2012 and 2014. The costs for this exhaustive study was carried by the CMOs.

What were the conclusions of the study with regards to the administration costs?
The in-depth analysis confirms that the administration costs of the CMOs are generally adequate and are within the range of comparable sectors. There is a similar picture with regards to salaries: They are in a similar range or even lower than those of the public administration and insurance sector. The study concludes: “Based on the analysis undertaken there is no cause for concern that there are significant shortcomings related to the cost management of the collective management organisations.”

The study also reveals the sometimes rather major differences between the CMOs in terms of the relevant administration cost and salaries, and explains those further. The reasons for this are, for example, due to the fact that the business activity and the legal mandate varies from CMO to CMO. Furthermore, the CMOs differ in terms of work repertoire processed, licences granted and tariff bases.

Last, but not least, the study offers valuable information regarding room for improvement to the CMOs. There is, for example, room for savings in cases where newly negotiated tariffs are structured in a simpler manner and processes can thus be automated. In order to achieve this, the help of negotiating partners is required, as the tariffs are agreed upon after negotiations with the relevant user associations. The study also recommends to evaluate potential synergies for an even closer cooperation. The CMOs intend to consider these recommendations and derive suitable actions from them.

SUISA looks good in terms of its administration cost and salaries. Does this mean there’s no need for any further action?
There is always room for improvement – this applies to every enterprise. SUISA also constantly aims to keep its costs low, to improve its efficiency and thus to be able to pay out as much as possible to its members – composers, lyricists and publishers of musical works. As a consequence, cost control and raising efficiency are central points in SUISA’s strategy. SUISA constantly evaluates and streamlines its business processes. IT forms one important aspect: By means of online registration and information platforms, processes can be simplified and costs can accordingly be saved. Last year, the introduction of an online portal for SUISA members constituted an important step in that direction; the portal continues to be expanded in terms of its functionalities. Similar projects have been launched in the customer area.

There is also potential for savings with regards to tariffs. On the one hand, SUISA seeks to standardise its tariffs as much as possible. SUISA can, however, only implement this step to a limited extent due to the fact that the tariffs are not devised unilaterally by SUISA but are subject to negotiation with the user associations. In the case of tariffs where such a simplification is feasible, SUISA is seeking to implement this as much as possible.

The study confirms that the five CMOs ProLitteris, SSA, SUISA, Suissimage and Swissperform work well from a general perspective. Is the stricter control on the CMOs as requested by the Federal Council therefore appropriate at all?
No, there are three reasons why the requested stricter control is unnecessary and incomprehensible. First of all, the administration cost analysis shows that the CMOs look good in terms of their cost and salaries. A stricter regulation would be appropriate if the organisations in question would run their businesses badly and to the disadvantage of their members and customers.

Secondly, the Swiss CMOs are cooperative societies under private law, resp. in the case of Swissperform, an association under private law. They belong to their members. It is the members who decide and vote at general / delegates’ assemblies – the respective highest organisational bodies – how the societies carry out their work correctly and adequately. As the cost analysis has shown, members are well placed at exercising their autonomy. The plans of the Federal Council represent a case of members, i.e. Swiss creatives, being patronised and a gross disregard of their autonomy.

The working group on copyright (AGUR12) – and this is the third reason – has already concluded that a stricter supervision over the CMOs is not necessary. In said working group, consumer, producer and user associations took part alongside representatives of creators and artists. The proposals of the Federal Council on the copyright revision are largely based on the final report of this working group. The Federal Council has, nevertheless, ignored the recommendations of the AGUR12 concerning the issue of supervision and decided that a stricter control is required. Particularly with a view on the results of the study, this decision is not just very hard to comprehend but quite simply wrong.

So what are the next steps for the copyright law revision?
The CMOs and other parties have time until the end of March to take a stand in relation to the proposals of the Federal Council. This does not just affect the plans for a stricter control but also other suggestions e.g. how to combat internet piracy or with regards to remuneration models for private copying. We are going to give our view within said deadline and inform you about this in due course.

What’s really important for SUISA and the other CMOs is that after the presentation of this study, a sense of calm returns to the discussion on the control and supervision of CMOs. AGUR12 had already explained in its recommendations that a control of the CMOs which exceeded today’s statutory regulations, was not necessary. The discussion for the impending copyright law revision now needs to be de-emotionalised in our opinion. The focus for the next months must be re-directed to solutions which guarantee a fair remuneration for authors when it comes to the usage of their works, especially in the digital distribution sector.

“IPI study confirms cost-consciousness of Swiss collecting societies” (Press release)

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  1. Luka Pitschen says:

    Hier ist Lukas Pitschen
    sehr geehrte Muskschaffende
    Ein Inländer Vorrang ist das A und O
    Cover Freaks sollen verboten werden
    Wenn der Staat fungiert wird alles verfälscht
    Wir brauchen Arbeitgeber sodass CH Kompo
    nisten überhaupt existieren können…
    Musik komponieren und produzieren ist eine
    Wissenschaft und verdient höchsten Respekt
    Neider sind Gift und sind zu ignorieren.
    Es lebe das 12 Ton System !!
    Den Komponisten wünsche ich genug Umsicht und genug Zeit für unsere Sicherheit.
    Liebe Grüsse aus der Ostschweiz von
    Lukas Pitschen ( Musik Eigenproduzent )

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Last year, SUISA and the other Swiss collective management organisations (CMOs) have invested time and money into a cost analysis which had been requested by the federal government. The results of the study are now available. At hardly anyone’s surprise, study reveals that the Swiss CMOs work efficiently and have their costs under control. Nevertheless, the Federal Council demands a stronger control of the collective management organisations in its proposal for the copyright law revision. This is not just unnecessary, but actually absurd, as a closer look at the study results reveals. Text by Andreas Wegelin, CEO

SUISA is working cost-consciously

A study of the IPI confirmed that SUISA and the other Swiss collective management organisations have their costs under control (Photo: Giorgio Tebaldi)

What is the study about?
The supervisory authority of the Swiss CMOs, the Swiss...read more

The freedom of SUISA members is at stake

Dear members, did you know that your collective management organisation invested time and money into a cost analysis requested by the Federal Government during the summer of 2015? Why, you ask? Well, just read on … By Vincent Salvadé, Deputy CEO

The freedom of SUISA members is at stake

Deputy CEO of SUISA: Vincent Salvadé. (Photo: Juerg Isler, isler-fotografie.ch)

The cost analysis had been requested because the Swiss Federal Institute of Intellectual Property, SUISA’s supervisory authority, had also been subjected to an audit, namely by the Swiss Federal Audit Office. The latter had asked the IPI to not just determine the legitimacy of the expenditure of the collective management organisations under review, but also their appropriateness …

Why don’t we put it bluntly: That’s absurd. Because to manage your rights, dear members, is not particularly popular. Collective management organisations are repeatedly criticised of being bottomless pits and too expensive for the general public.

“The operating costs of SUISA are neither paid by music users nor by tax payers but exclusively by the authors and publishers themselves via deductions on their royalties.”

What is usually forgotten is the fact that SUISA’s operating costs are exclusively paid by authors and publishers via a deduction from the royalties that are paid out to them. Neither users of music nor tax payers finance SUISA’s rights management activities.

It has been a while now that a Federal Agency, the Federal Arbitration Commission for the Administration of Copyright and Neighbouring Rights has been in control of the licence fee tariffs. This kind of control is legitimate, as the collective management organisations are not subject to the general competition regulations.

Each misuse of a predominant position has to be prevented which is what the Federal Arbitration Commission is committed to do. It determines the “fair price of music” and takes into consideration several legal criteria, whereas any inadequate expenses of the collective management organisations do not influence the amount of the payable licence fees.

“Only SUISA members have the right to audit our costs. Not the civil servants in Berne, and not the politicians either.”

In other words: The ones that suffer from an administration which is too expensive are not the music users but solely our members. The amount taken from the collected licence fees to cover the administrative expenditure only reduces the pay-outs to the members. Therefore it is only you, dear members, who have the right to audit our costs. Not the civil servants in Berne, and not the politicians either.

The worry is that this governmental supervision of collective rights management could influence the copyright revision. What would this imply? Either that the legislator has given in to the siren call of populism and puts a muzzle over your mouth, or that it feels you are unable to decide for yourself which costs are necessary in order to satisfy your requirements.

Neither of the above are acceptable.

We will therefore, with your assistance, engage ourselves in defending your autonomy. So that you continue to have the sole right to decide on the services offered by your collecting society and to decide on their price, too. And, finally, that you can continue to act in the very way you deem right, in case we were wasting your money. At the end of the day, your freedom is at stake …

More information: “Cost analysis for collective management organisations”

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  1. Il s’agit effectivement d’une dérive invraisemblable de la part de l’administration d’un état de droit.
    Ce que je regrette dans ce message alarmant mais utile, et par ailleurs parfaitement formulé, c’est que les responsables de cette dérive ne sont pas clairement identifiables. Quelles sont ces sirènes du populisme? Qui est derrière le Contrôle fédéral des finances? Mme Widmer-Schlumpf et ses fonctionnaires fédéraux? Si c’est ce département, n’avons-nous pas le droit de savoir quels sont les personnages qui agissent ainsi?
    En tout cas, selon le message clair de Monsieur Vincent Salvadé, l’autorité fédérale a largement outrepassé ses droits et mérite, pour cette nouvelle atteinte à la liberté et au droit, une réplique publique et véhémente de la direction de la SUISA, au nom de ses membres,.
    On sait aussi que l’administration fédérale devient un gouffre financiers et que la moyenne des salaires de ses fonctionnaires (dont le nombre ne cesse d’augmenter) est largement au-dessus de celle des entreprises privées. C’est peut-être aussi pour assurer son (auto-)financement que cette administration entre dans des dérives de ce genre.
    Jean-Pierre Mathez, Editions Bim, membre SUISA

    • Comme indiqué, la dérive provient à l’origine du fait que le Contrôle fédéral des finances a demandé à l’Institut fédéral de la propriété intellectuelle de vérifier l’opportunité des coûts des sociétés de gestion collective. Le Contrôle fédéral des finances est l’organe suprême de surveillance financière de la Confédération. Il est indépendant et est assujetti seulement à la Constitution et à la loi.
      Comprenons-nous bien: il est normal que cette instance contrôle l’Institut fédéral de la propriété intellectuelle, qui est un établissement de droit public de la Confédération. Mais, dans cet exercice, elle doit aussi tenir compte de la nature privée des sociétés comme SUISA. Nous avons cependant accepté de nous soumettre à une analyse de nos coûts, dans l’idée qu’un tel audit pourrait démentir certaines idées préconçues sur la gestion collective et nous aider à améliorer le rapport entre nos coûts et nos prestations (ce qui est l’une de nos préoccupations constantes). Mais cela doit s’arrêter là.
      Il ne serait pas admissible que la révision de la loi sur le droit d’auteur, actuellement en cours, soit l’occasion d’instaurer des possibilités supplémentaires et inappropriées d’immixtion des pouvoirs publics dans les affaires privées des membres de SUISA. C’est donc le législateur lui-même qui ne doit pas céder aux sirènes du populisme, c’est-à-dire s’incliner devant ceux qui critiquent la gestion collective sans connaître son fonctionnement. Malheureusement, ils sont nombreux et de tout bord politique. La Direction de SUISA défendra les intérêts des membres de SUISA dans le cadre de la consultation publique concernant la révision du droit d’auteur.
      Vincent Salvadé, Directeur général adjoint SUISA

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Dear members, did you know that your collective management organisation invested time and money into a cost analysis requested by the Federal Government during the summer of 2015? Why, you ask? Well, just read on … By Vincent Salvadé, Deputy CEO

The freedom of SUISA members is at stake

Deputy CEO of SUISA: Vincent Salvadé. (Photo: Juerg Isler, isler-fotografie.ch)

The cost analysis had been requested because the Swiss Federal Institute of Intellectual Property, SUISA’s supervisory authority, had also been subjected to an audit, namely by the Swiss Federal Audit Office. The latter had asked the IPI to not just determine the legitimacy of the expenditure of the collective management organisations under review, but also their appropriateness …

Why don’t we put it bluntly: That’s absurd. Because to manage your rights, dear members, is not particularly popular. Collective management organisations are repeatedly criticised...read more

Cost analysis for collective management organisations

A cost analysis has been carried out among the collective management organisations on behalf of the IPI. The figures reflect how diverse and different the business of issuing licences and distributing royalties to rights holders actually is. At SUISA, cost awareness is already established due to the cooperative members exercising self-control and the right to participate in the decision making process; additional supervision by third parties is therefore not necessary. Text by Andreas Wegelin

Cost analysis for collective management organisations

The results from the cost analysis will help to save further costs where necessary. SUISA’s cost control is, just like at any other private association mainly the duty of its members. (Photo: Lenetsnikolai / Fotolia.com)

Since early summer this year, financial experts have been busy with an analysis of the five collective management organisations’ costs: SUISA, Suissimage, Swissperform, ProLitteris and SSA. Under the guidance of experts from the Fernfachhochschule Schweiz (distance learning technical college), the ZHAW (University of Applied Sciences in Zurich) and the consultancy firm SERVUS, they are tasked with presenting a report to our supervisory authority, the Swiss Federal Institute of Intellectual Property (IPI) before the end of this year. The report focusses on the use of the collected remuneration which are intended to be first and foremost paid to authors and publishers, performing artists and producers.

The purpose of this exercise is to provide a more thorough insight into the cost arising for our activities as a collective management organisation. Together with the cost analysis, a report on how useful these expenses are, where there might be areas with saving potential and why certain areas cost significantly more than others.

Diverse and different licensing business

SUISA welcomes this cost analysis, especially the comparison with the other four Swiss collective management organisations and CMOs abroad. Furthermore, while collating the numbers, it has become obvious to us how diverse and different the business of issuing licences and distributing royalties to rightsholders actually is.

SUISA, for example, has about 30 different tariffs as it holds rights on the music in nearly all usage areas. The collected monies are – where possible – distributed on a work basis, i.e. per performed work, to many domestic and foreign authors and publishers.

In comparison to this, the activities of Suissimage are mainly based on the five tariffs related to cable (re)transmission, internal use at schools / for educational purposes or time-shift TV. The umbrella organisations for communication networks supports our sister society for authors’ rights on audiovisual works with its collection activities. The outsourcing of parts of the tariff process and collection activities to such associations reduces the entire effort in some cases, and the administration costs of the collective management organisation acting as the collection centre.

Inflexible rules governing administration costs make no sense

It is therefore clear that the costs Suissimage incurs in terms of collecting for these tariffs are disproportionately lower than the expenses SUISA incurs when issuing licences to approx. 50 importers based on 4 different sub-tariffs for blank media levies. It is thus quite clear that collecting levies for photocopying from all companies in Switzerland requires even more effort for ProLitteris.

Those differences continue when it comes to distributing the collected money. The costs are higher if – as is the case at SUISA – all distributions are split down to work-level and if payouts are not just made to own members but also worldwide to about 100 sister societies.

The cost analysis is going to show such differences and therefore also provide good reasons, just like the AGUR12, the copyright review working group, had already determined: It doesn’t make any sense to impose inflexible rules relating to the levels of their administration costs. The societies just differ too much from one another in their activities.

Cost control is a matter of the cooperative members

SUISA’s cost control is, just like at any other private association mainly the duty of its members. The General Assembly elects a Board among the members which directs the business and is responsible for adhering to the budget and the accounts. Members also run the financial matters of their cooperative by approving the annual accounts. They decide, for example, whether SUISA should offer its members gratuitous legal advice or whether they wish to finance pension scheme or a cultural foundation.

There are signs that political forces intend to change this. They wish to introduce an increased supervision over the collective management organisations. There is no need for that: The cost analysis is going to show that, in most cases, the organisations are handling the authors’ and publishers’ money carefully.

Regrettably, there has been one unfortunate single case where executives of a collective management organisation had been paid high amounts for their own pension with the approval of the relevant committees of that CMO. Such an individual case does, however, not justify to intensify the supervision to such a degree that the autonomy of our cooperative society, in other words, the ability of each individual member to contribute to the decision on the business and fate of SUISA, should be restricted.

Fair payment for the use of music

It seems that some politicians have little idea that the usage of music actually incurs a cost. They consider licence fees raised by SUISA to be a pain and forget that these fees are the basis for a fair payment to thousands of creators, musicians and lyricists, in Switzerland, too.

In order to be able to defend themselves against such a self-service mentality, authors have created their collective management organisations in the form of cooperative societies. Through these cooperative societies they are willing to provide the necessary means for their rights to be managed effectively. This is really not the place for a political intervention.

The results from the cost analysis will help to save further costs where necessary. In that sense, it is a welcome instrument for analysis for business activities. The plan that all costs incurred by collective management organisations should be controlled by the supervisory body, however, has to be clearly rejected. Members wish to and can control their own private cooperative society. They are the first to be interested in a well-functioning and cost effective society. After all, everything that would be expended senselessly would be lost to their own personal income. SUISA members neither want to lose the remuneration they are due nor their personal right to decide on their own, private collective management organisation.

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A cost analysis has been carried out among the collective management organisations on behalf of the IPI. The figures reflect how diverse and different the business of issuing licences and distributing royalties to rights holders actually is. At SUISA, cost awareness is already established due to the cooperative members exercising self-control and the right to participate in the decision making process; additional supervision by third parties is therefore not necessary. Text by Andreas Wegelin

Cost analysis for collective management organisations

The results from the cost analysis will help to save further costs where necessary. SUISA’s cost control is, just like at any other private association mainly the duty of its members. (Photo: Lenetsnikolai / Fotolia.com)

Since early summer this year, financial experts have been busy with an analysis of the five collective management organisations’ costs: SUISA, Suissimage, Swissperform, ProLitteris...read more