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Report of the task force of the SUISA Board of Directors – end of June 2020

In April 2020, SUISA’s Board of Directors set up a working group to respond as quickly as possible to the negative financial impact of the Covid-19 crisis on SUISA and to identify cost-saving measures together with the Executive Committee.

In view of the expected negative economic consequences of the lockdown on SUISA, initial cost-saving measures were taken and a corona budget was drawn up. (Photo: Yuttapon Busu / Shutterstock.com)

Several meetings were held for this purpose, and we would like to share with all SUISA members the main points arising from these ongoing discussions.

The Executive Committee estimates that the losses in connection with the Covid-19 crisis currently amount to around 25% of budgeted revenues for 2020. Initial cost-cutting measures have already been taken to reduce costs, provided that negative impacts on SUISA’s regular operations and important development projects (e.g. online access to “My Account” for members, self-service portal for clients) are avoided.

The issue of short-time work was discussed as a possible solution to reduce costs. SUISA’s Executive Committee drew the attention of the task force to the fact that short-time work would currently have a negative impact on the collection of royalty income, especially in the area of smaller performances, and on SUISA’s regular operations. Although almost all concerts between the end of March and the end of May were cancelled, the work of SUISA’s staff has not yet decreased significantly, partly because additional services such as the emergency support fund are now being provided for members.

The Executive Committee drew up a corona budget, which now serves as a reference basis (the budget for 2020, which was adopted in autumn 2019, is no longer realistic due to the crisis). In the corona budget, the reduction in collections is offset by using the funds normally released for our supplementary distributions to cover costs. For this purpose, an upper limit was set for the use of the released totals. It is therefore unlikely that there will be any supplementary distribution next year.

The task force clearly spoke out against an increase of the current maximum deduction of costs of 15% in the distributions to members. The Executive Committee is therefore urged to undertake all reasonable cost savings.

The task force and the Executive Committee are well aware that the economic consequences of the lockdown and especially the ban on events in spring 2020 may linger on for longer and that they are not yet immediately visible: It will therefore examine all realistic savings measures not only in the short but also in the medium term. In this context, it is also important to consider which services could then no longer be provided to members for cost reasons.

All the above items were approved by the Committee for Finance and Controlling and the Board of Directors.

The task force will continue to meet monthly with the Executive Committee to discuss further developments. It will report to the full Board of Directors at every opportunity so that the latter can take decisions quickly if the situation so requires.

The task force:

Xavier Dayer
Marco Neeser
Rainer Bischof
Roman Camenzind

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In view of the expected negative economic consequences of the lockdown on SUISA, initial cost-saving measures were taken and a corona budget was drawn up. (Photo: Yuttapon Busu / Shutterstock.com)

Several meetings were held for this purpose, and we would like to share with all SUISA members the main points arising from these ongoing discussions.

From forte to pianissimo in just a few beats

In 2019, SUISA recorded its best results in its 96-yrear history, with total revenues of CHF 171 million. Moreover, thanks to the excellent investment year in 2019, its investment performance also attained record heights. After deducting an average cost-coverage contribution of 13% from total royalty revenues of CHF 155.2 million, SUISA will be able to distribute CHF 135 million to rightholders in Switzerland and abroad. And yet, three months on, everything has changed. By Andreas Wegelin, CEO

Three months after SUISA’s gratifying 2019 financial statements, instruments in concert halls fell silent. (Photo: VTT Studio / Shutterstock.com)

No sooner had SUISA announced its best results in its 96-year history, than a general ban was imposed on all public events, and all venues were shut down in March 2020, triggering an unprecedented negative record: one after the other, concerts, shows and dance events were cancelled. Overnight, bookings were struck from musicians’ calendars. In concert venues, musical instruments fell silent.

This cannot fail to impact SUISA’s business. Owing to the coronavirus pandemic, we are currently assuming that SUISA’s total revenues – and therefore the amount available for distribution – will fall by up to 25% by the end of 2020. Nobody can tell for sure today, much will depend on how the epidemic develops here and abroad, but a hefty recession seems imminent. It will take time to get back to normalcy, and we expect recovery to be no more than hesitant next year too.

In this crisis, SUISA is determined to prove itself a reliable partner both for music creators and music users. Appropriate measures have been put in place to support musicians, and an accommodating approach has been adopted towards customer payments. Meanwhile, new online forms of music performance are becoming more important as a source of royalties. Streaming may be the technology of the hour, but it only brings authors and music publishers a fraction of the revenues generated by live concerts.

“In this crisis, SUISA is determined to prove itself a reliable partner both for music creators and music users.”

SUISA has remained and remains active during the corona crisis. We are the hub for inquiries from members and customers. Although there are fewer events, we intend to maintain and even expand our services through automation. Unfortunately, the Board and the Executive Committee will not be able to welcome members personally to the General Meeting in Bern this year. To have a say in SUISA’s affairs, members will have to send in their vote by post. We encourage you to make use of this opportunity.

In any event, the employees at our three offices in Zurich, Lugano and Lausanne remain at your disposal. When work is slow, staff will be able to attend training courses; moreover, we are working full speed to develop online self-service services to give you more time to focus on your strengths. Making music, innovating, promoting. Despite the corona crisis, I wish you a challenging and productive summer.

SUISA matters: SUISAinfo 3.20, digital only
This autumn, the News for SUISA members will be sent by e-mail in digital format only. To contain costs in this difficult year, the hardcopy printed version will not be produced. SUISA provides regular news updates via www.suisa.ch, www.suisablog.ch, and SUISA Music Stories on Instagram, Facebook and Youtube. (Manu Leuenberger)

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Three months after SUISA’s gratifying 2019 financial statements, instruments in concert halls fell silent. (Photo: VTT Studio / Shutterstock.com)

Income from performing rights set to rise in 2019

SUISA’s December Board meetings usually focus on the figures for the coming year. Budgets, staffing plans and cost coverage deductions for business year 2019 were thus the central discussion point. Report from the Board by Dora Zeller

Neuchâtel Reggae band Moonraisers, shown on the main stage of the Label Suisse Festival in Lausanne in September 2018; the event is co-supported by SUISA. Regarding the income from performing rights, including concerts, SUISA expects an increase during business year 2019. (Photo: Anne Bichsel / Label Suisse)

For the second time in SUISA’s history, the Board inspected the group budget of SUISA on top of its regular inspection of the budget of SUISA, the Cooperative Society and parent company. The latter comprises the numbers of the parent company, the 100% subsidiary company SUISA Digital Licensing (SUISA Digital) and the 50% share in the Joint Venture Mint Digital Services AG. The budgets of SUISA Digital and Mint are approved by the respective administrative boards of the two companies; the relevant numbers are then incorporated into the group accounts.

Increase in income thanks to performing rights

SUISA’s budget for 2019 provides for an increase of the income from the exploitation of copyright in Switzerland and Liechtenstein, especially due to the income from performing rights (more events, higher admission charges). The decline in mechanical/reproduction rights is set to continue. In the case of compensation claims, growth is expected; the same applies to online usage income. Foreign income has been calculated analogously to 2018, secondary income has been set higher.

For business year 2019, a total turnover of CHF 166.5m has been budgeted (2018: CHF 152m). Costs are expected to rise from CHF 29.5m in the previous year to CHF 32.5m. This is due to higher staff costs required for collections regarding Tariff CT 3a (background entertainment) and additional positions in the IT department.

Cost deductions, Articles of Association, Regulations

With respect to the cost deductions, the Board sets a percentage each year in relation to the distribution of the income that is to be deducted in the following year. For 2019, the percentages of the previous year will be retained in the offline sector. Cost deductions in the online business, however, are subject to change; the reason for this is the outsourcing of licensing and partially distribution activities to the subsidiary companies.

SUISA members had agreed to various changes to the Articles of Association at the General Assembly in June 2018. The revision of the Articles of Association also took place in the context of the alignment with the Liechtenstein Collecting Societies Act and the EU Directive on Collective Rights Management (CRM Directive). As a consequence, the division of powers and the organisational policies had to be adapted, and rules of procedure for the newly created Complaints Committee had to be drawn up. The Board has ratified all of these policies.

FONDATION SUISA and Revision of the Swiss Copyright Act

The SUISA Board Committee for Organisation and Communication and the responsible parties of the FONDATION SUISA have established an “annual dialogue” which takes place at the end of the year. This time, Marc Savary, President of the Foundation Board of the FONDATION SUISA reported on the amendments in the respective Statutes and regulations/policies. He also provided an overview on the activities of SUISA’s foundation for music promotion and answered questions of the Committee members.

Furthermore, the Board was concerned about the news that the National Council intends not to adhere to the compromise by the Working Group on Copyright (AGUR12) in its deliberations on the Copyright Revision and plans to provide for an exception regarding TV reception in guest rooms in the law. As a consequence, the new law would be worse than the previous one. The Board has instructed Management to undertake measures so that the Council of States corrects the decision of the National Council.

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SUISA’s financial year 2018: an outlook

In the Committee and Board meetings towards the end of the year, framework conditions for the following financial year are set. As such, the meetings of the SUISA Board in December 2017 continued to be characterised by budgets, cost rates, staffing plans, roadmaps, politics and quite a bit more. Report from the Board by Dora Zeller

During the meetings of the SUISA Board in December 2017, the focus was on the figures for the next financial year. (Photo: Kemal Taner / Shutterstock.com)

For the first time in the history of SUISA, the Board presented two budgets in the December meeting: that of the Cooperative Society SUISA and that of the group of companies. The group of companies includes – apart from the parent company – the subsidiary company SUISA Digital Licensing (headquartered in the Principality of Liechtenstein). Furthermore, the group of companies holds a 50% share in the Joint Venture Mint Digital Licensing AG (headquartered in Zurich).

The Board members were given access to the budgeted figures of the affiliated companies. The definitive decision on their business lies, however, with the committees in charge of each society. A new point is therefore added to SUISA’s competency rules in terms of rights and obligations of the Board.

SUISA budget 2018

Back to the numbers: A modest increase is expected for performing and broadcasting rights and a continuation of the downward trend among the reproduction rights. The compensation claims, however, might see a steep rise compared to the 2017 budget (thanks to higher collections from the blank media levy, internal networks in businesses and the rental of set top boxes). Part of the online collections will be allocated to the subsidiary company for accounting purposes. Collections from online use for music on Swiss websites, online advertising campaigns and video on demand services remain in the SUISA budget.

SUISA’s overall turnover budgeted for financial year 2018 amounts to CHF 151.9m. Collections from the use of copyright in Switzerland are budgeted to reach CHF 136.6m. On top of that, net revenues of CHF 11m are expected from abroad. Furthermore, secondary income of CHF 4.3m shall contribute to the overall results.

Expenditure is probably going to increase compared to the previous year, mainly because of the collections of CT 3a (background entertainment). From mid-July, additional staff positions are budgeted to take over this business. The Board has approved the budget for 2018 knowing that it is based on the rejection of the No-Billag-Initiative. Should the voting populace reject the fee for the reception of broadcasts, the changed situation would be met with adapted scenarios.

Regulations and statutory provisions

The auditors regularly supply the governing bodies of SUISA a questionnaire on potential unlawful actions. With this statutory provision, the level of awareness among governing bodies for unlawful acts shall be determined. By way of their answers, management and Board estimate the risk levels and comment on the control procedures. The results were approved and passed on to BDO.

Cost coverage deductions

The Board also decided that the deductions in the off-line sector correspond to those of the previous year. For the online sector it approved slightly changed rates for domestic and international application.

Changes at Board level

Due to the limitation of the period in office, two members of the Board will step down in June 2019. The knowledge acquired over many years in office by the Board members who are now stepping down needs to be replaced and SUISA needs to prepare for future challenges. As early as autumn 2017, a working group has begun with a situational analysis regarding the imminent Board retirements. The Board was informed about the results and the next steps of this analysis.

Copyright Act Review

In November, the Federal Council has passed the message regarding the Copyright Act review together with the legislative proposal on to Swiss parliament. The matter is initially going to be dealt with at National Council level by the Legal Affairs Committee (LAC), and subsequently in the States Council’s Science, Education and Culture Committee (SECC).

The Board was informed about the developments by G. Savary, member of the Board and the SECC. At the same time, he learned from the Executive Committee that the collective management organisations are satisfied with the draft by and large. It corresponds to the compromise developed by the AGUR12-II.

Need for action continues to exist in the sector concerning the online usage of music. In the EU there has been a discussion on the transfer of value on the internet for quite some time. It is high time that this discussion also takes place in Switzerland and that measures are implemented to stop the shift of the value creation away from authors towards internet technology companies.

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During the meetings of the SUISA Board in December 2017, the focus was on the figures for the next financial year. (Photo: Kemal Taner / Shutterstock.com)

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

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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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

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

SUISA expects significant rise in streaming collections

At the top of the agenda for the SUISA Board meeting in December 2016 was the budget for the following financial year. It was with satisfaction that the Board established a continuation of the positive developments from the past years in relation to the collections (+3.2%). Expenditure remains stable and the distributable amount increases slightly (+2.91%). Report from the Board by Dora Zeller

The remuneration pot for streaming exploitations is expected to fill up for authors and publishers even more: In its budget for financial year 2017, SUISA expects an increase in the online sector income of +13.4% compared to the previous year. (Photo: Manu Leuenberger)

The budget for financial year 2017 includes higher collections arising from broadcast and performing rights as well as compensation claims. An increase of approx. 11% is expected from tariffs CT 4i (smart phones) and CT 12 (set top boxes rental). A significant rise is also expected in the online sector, especially streaming (+13.4%). Due to the market developments, it is expected that reproduction rights are due to decrease (-3.8%). Regarding income from abroad, the amounts in the budget are also lower than previously (-4.5%).

Board and Management of SUISA also plan long-term: Apart from the roadmap for 2017, financial planning and strategy until 2020 were discussed. The Board discussed and ratified the drafts presented by Management.

Cost deductions stay the same

Another recurring agenda item for the end of the year are the cost deductions. The Board resolves which deductions will be taken in the subsequent year from collections in the current year. For Switzerland and the online sector, the percentages are between 10 and 15% just like in the previous year. An exception are the cost rates for the reproduction sector, in particular tariffs PI and VI which are subject to the Cannes Agreement (7.025% and 9.025%).

Furthermore, the percentage deducted from income from abroad in the last few years on the basis of reciprocal representation agreements was examined. Since various sister societies apply higher deductions, the pros and cons of an increase were thoroughly considered. The Board members decided, however, to keep deduction levels at 4%.

Benvenuti a Lugano

For the autumn meetings 2017, the Board members of SUISA will not travel to Lausanne, as they did before, but to Lugano instead. Why not hold the General Assembly in the Italian-speaking part of Switzerland? In line with SUISA’s planning it could happen in 2021.

By-elections in the Distribution and Works Committee

Alex Kirschner, composer for advertising and film music, steps back from his post in the Distribution and Works Committee (VWK) in summer 2017. Jonas Zellweger – SUISA member since 2009 – applies for the vacant seat; he is active in the same music category. The Board is going to unanimously propose his candidature to the General Assembly for election.

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The budget for financial year 2017 includes higher collections arising from broadcast and performing rights as well as compensation claims. An increase of approx. 11% is expected...read more