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How SUISA distributes fees collected for background entertainment

More than 100,000 companies in Switzerland use music, TV and films for background entertainment purposes. For these usages, the companies pay a fee based on Common Tariff 3a to authors, publishers, performers or producers. How and to whom are these revenues paid? Text by Giorgio Tebaldi

How SUISA distributes fees collected for background entertainment

Considered by many to be part of the pub atmosphere just like teak furniture or dartboards: premier league games on the telly. Producers of the broadcasts have the right to receive a remuneration for usages outside domestic and private circles or home life. (Photo: Nomad_Soul / Shutterstock.com)

Just like lighting or decoration, suitable background music is an important contributing factor to make customers and guests feel good in a shop, hairdresser or restaurant. Plus, live transmissions of a football or cricket match are equally part of the interior décor of a pub, just like dark furniture, wooden shields and the dartboard.

Similar to the obligation to pay makers of the furniture, the decoration or the lighting, composers, lyricists, performers, scriptwriters or producers are entitled by law to receive a remuneration for the use of their works and performances outside the private circle. The five Swiss collective management organisations Pro Litteris, SSA, SUISA, Suissimage and Swissperform are responsible for this task. SUISA collects the remuneration for the use of music, films and TV broadcasts pursuant to the Common Tariff 3a (CT 3a) on their behalves.

What does SUISA do with the collected money from background entertainment?

The first step is that the collected money is split among the five Swiss collective management organisations based on a fixed distribution key. The SUISA share for the coverage of music contents is slightly more than half of the income. Each society is then responsible in a second step to pay out these collected fees to authors and artists, publishers and producers.

In the case of SUISA, 88% of the above-mentioned fifty percent is distributed to the rightsholders. This means that of the CHF 100 that were collected, CHF 88 are paid out to creators and their publishers.

How and to whom are these revenues paid? SUISA usually knows three different possibilities of distribution: direct distribution, blanket distribution with programme material and blanket distribution without programme material (see box). Programme material consists of lists with the works which were performed or broadcast.

In the case of the CT 3a, the money is nearly exclusively paid by way of a lump-sum without programme material. Submitting and processing the work lists in this category would be linked to an enormous effort for customers and SUISA alike, and they would be in no proportion to the actual benefit. Instead, SUISA uses the programme material already available from various sources to allocate the collections made on the basis of the CT 3a. SUISA ensures during this process that lists and/or usages are considered for this allocation, enabling that the remuneration is distributed as fairly as possible.

A distribution which is as fair as possible – even without a list of the performed works

Based on empirical data there are cases where it is assumed that a major part of the companies, shops, restaurants etc. uses works which are also broadcast on the radio, resp. TV. Accordingly, a major part of the income from CT 3a is allocated on the basis of the programme material for the use of music, TV broadcasts and films from radio and TV transmissions. SUISA also takes into account that not just pop, rock or urban is played but also other genres such as traditional or folk music and even church music. A part of the collections is thus also distributed on the basis of programme lists for church performances, brass music or yodelling clubs.

In order to distribute the money to the creators and artists, it is thus allocated to other similar distribution categories for performing and broadcasting rights (see distribution rules, Art. 5.5.2).
Should a member receive a payment from one of these distribution categories, it also receives a share from the income for background music entertainment from CT 3a.

In some exceptional cases in background entertainment, there is a direct accounting process for the distribution of collected fees. This happens, for example, for music which is used in a museum for an exhibition, or music which is used in a company’s phone loop for a longer period. In such cases, the music in question is usually commissioned.

SUISA distributes four times a year. In 2018, more than CHF 132m were paid out to composers, lyricists and publishers of music.

Types of distribution and distribution categories

SUISA distributes the collections from authors’ rights in three different ways:

  1. In a direct accounting scenario, copyright remuneration can be allocated directly across the available lists of works that have been performed. This is also possible for concerts, for example: If songs of five co-authors are performed during a concert, these five rightsholders receive the fees collected for this concert.
  2. In the case of a blanket distribution with programme material, copyright remuneration is calculated on the basis of a point value. For SRG broadcasts, for example, SUISA receives a lump-sum payment on the one hand and detailed broadcast reports on the other hand. The broadcast reports include details on how many seconds of music have been transmitted in total, plus the exact duration of each work. A point value per second is determined based on these details and the remuneration is paid to authors and publishers of the played works.
  3. A blanket distribution without programme material takes place when it comes to collections based on tariffs where there is no information provided on the works that have actually been used, or if that information cannot be established. The distribution of such income is made on the basis of available programme material from several sources. The exact allocation of the money is specified in the SUISA distribution rules in detail.

The collected revenue is distributed on the basis of distribution categories. The latter correspond to various usages, e.g. music in concerts, on radio and TV channels of the SRG, or private broadcasters, in churches etc.

Details can be found in the SUISA distribution rules.

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More than 100,000 companies in Switzerland use music, TV and films for background entertainment purposes. For these usages, the companies pay a fee based on Common Tariff 3a to authors, publishers, performers or producers. How and to whom are these revenues paid? Text by Giorgio Tebaldi

How SUISA distributes fees collected for background entertainment

Considered by many to be part of the pub atmosphere just like teak furniture or dartboards: premier league games on the telly. Producers of the broadcasts have the right to receive a remuneration for usages outside domestic and private circles or home life. (Photo: Nomad_Soul / Shutterstock.com)

Just like lighting or decoration, suitable background music is an important contributing factor to make customers and guests feel good in a shop, hairdresser or restaurant. Plus, live transmissions of a football or cricket match are equally part of the...read more

Changes to the distribution of collections for internet use

New distribution keys will be used for the distribution of collections for internet use (audio and video on demand offers). For downloads, a new key of 25% for performing rights and 75% for reproduction rights shall be applied. For streaming, the split shall consist of 75% performing rights and 25% reproduction rights. Text by Irène Philipp Ziebold

Changes to the distribution of collections for internet use

SUISA changes its distribution keys for the income from streaming and downloads. (Photo: Rawpixel / Shutterstock.com)

For years, the distribution split between authors and publishers in terms of the allocation of the collections from performing and broadcasting rights on the one hand, and reproduction rights on the other hand has been agreed separately. SUISA has accordingly provided for different distribution keys in its distribution rules for the two rights categories.

For online uses, there is no separate distribution key which could be directly agreed on by the contracting parties. As a consequence, the collections from online uses are on the one hand distributed in analogy with the performing rights distribution key and on the other hand in accordance with the reproduction rights distribution key (cf. item 2.1.2 of the distribution rules).

Up to now, SUISA has been distributing 100% of collections from streaming in accordance with the distribution key for performing rights and 100% of collections for downloads in accordance with the distribution key for reproduction rights. This meant, however, that SUISA held a special position internationally and, at the same time, this practice no longer met the latest developments in the online sector.

New distribution keys for downloads and streaming

Apart from taking a look at the usual rules applicable abroad, technical procedures were also evaluated with a view to the analysis that led to the determination of the new distribution ratios of the distribution keys for download and streaming. Technically speaking, the making available of a work is based on the creation of a copy of the work on the server of the provider, the transmission of the copy to the consumer as well as the performance resp. potential storage on the terminal device of the consumer.

During discussions among the various committees (Distribution and Works Committee andBoard) with respect to the proposed changes, various views regarding the performing and reproduction rights shares existed with respect to the weighting of the distribution keys.

In particular the question arose how the aspect of transitoriness resp. repeated playback of a work should be considered for streaming, and which percentage should reflect this for the weighting of the performing share.

In the end, the following split was agreed:

  • Download: 25% of collections shall be allocated to the performing rights distribution key and 75% to the reproduction rights distribution key.
  • Streams: 75% of collections shall be allocated to the performing rights distribution key and 25% to the reproduction rights distribution key.

Distribution of the collections from video on demand (VOD)

At the same time, the provisions regarding the distribution of collections from video on demand were adjusted. The respective revenues shall now be distributed in analogy to download and streaming “per file” (per work). Prior to that, the revenues from video on demand had been supplemented to the remuneration for broadcasts of pay TV. The change now also permits in this sector that collections are distributed in a more exact and pinpointed manner.

For further information see the distribution rules of SUISA.

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New distribution keys will be used for the distribution of collections for internet use (audio and video on demand offers). For downloads, a new key of 25% for performing rights and 75% for reproduction rights shall be applied. For streaming, the split shall consist of 75% performing rights and 25% reproduction rights. Text by Irène Philipp Ziebold

Changes to the distribution of collections for internet use

SUISA changes its distribution keys for the income from streaming and downloads. (Photo: Rawpixel / Shutterstock.com)

For years, the distribution split between authors and publishers in terms of the allocation of the collections from performing and broadcasting rights on the one hand, and reproduction rights on the other hand has been agreed separately. SUISA has accordingly provided for different distribution keys in its distribution rules for the two rights categories.

For online uses, there is no separate...read more

Changes in relation to the distribution of Tariff CT 1 and CT 2 collections

In the last few years, cable network providers switched their offerings from analogue to digital. In order to take these changes into consideration, the distribution of the collections arising from Tariffs CT 1 (cable networks), CT 2a (retransmitters) and CT 2b (IP based networks) was aligned. In item 5.5.1 of the distribution rules the calculation basis of the reference parameter “number of subscribers” was changed to “daily reach”. Text by Irène Philipp Ziebold

Changes in relation to the distribution of Tariff CT 1 and CT 2 collections

Even though there is a plethora of digital TV programmes available, only a few of them fill TV screens for a longer period. (Foto: Zeber / Shutterstock.com)

Cable network providers have carried out a migration of their offerings from analogue to digital in the last few years. The number of the radio and TV programmes on offer is now many times higher than before. Until recently, the number of subscribers acted as the calculation basis for the distribution of income from Tariffs CT 1, CT 2a and CT 2b. As a consequence, the distribution depended on the receptability, i.e. on how many subscribers of a cable network provider had the option to receive a specific channel.

With the increase of the broadcaster offerings, the significance of the subscriber numbers regarding the actual work usage has decreased remarkably. This is due to the fact that of the multitude of channels that consumers have at their fingertips today, they only use a few in reality. With the switch of the calculation basis to the reference parameter “daily reach”, what counts in terms of distribution now is what consumers actually watch.

The daily reach corresponds with the share of people who have watched or listened to a specific programme on an average day for at least 30 seconds. The relevant usage is thus registered which goes above and beyond a mere channel hopping.

Distribution more exact based on actual usage

Due to the daily reach as a calculation basis the actual usage is now taken into consideration more: The copyright royalties now flow to those channels that have really been watched or listened to. Channels which were not selected by the consumer or where consumers merely hop through, are not taken into consideration for the allocations into the three broadcaster groupings (SRG SSR, Swiss private channels, foreign channels).

The switch to the reference parameter of the daily reach will entail that more money is going to be distributed to Swiss channels. In the case of the calculation based on subscriber numbers so far, many foreign channels were taken into consideration which are in fact only used by a very small portion of subscribers. This will no longer be the case with a calculation basis in accordance with the daily reach.

IGE (Institute of Intellectual Property) decision dated 26/07/2017 (PDF 1.47 MB, only in German) in relation to “Review of item 5.5.1 distribution rules: Distribution of collections from CT 1, 2a and 2b”
Further information on the distribution keys of SUISA

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All comments will be moderated. This may take some time and we reserve the right not to publish comments that contradict the conditions of use.

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In the last few years, cable network providers switched their offerings from analogue to digital. In order to take these changes into consideration, the distribution of the collections arising from Tariffs CT 1 (cable networks), CT 2a (retransmitters) and CT 2b (IP based networks) was aligned. In item 5.5.1 of the distribution rules the calculation basis of the reference parameter “number of subscribers” was changed to “daily reach”. Text by Irène Philipp Ziebold

Changes in relation to the distribution of Tariff CT 1 and CT 2 collections

Even though there is a plethora of digital TV programmes available, only a few of them fill TV screens for a longer period. (Foto: Zeber / Shutterstock.com)

Cable network providers have carried out a migration of their offerings from analogue to digital in the last few years. The number of the radio and TV programmes on offer is now many...read more

New distribution key for performing and broadcasting rights

The SUISA distribution key for performing and broadcasting rights will be changed from 01 January 2017 onwards. For works with an original publisher, the share of the author shall be 66.67% and that of the publisher 33.33%. The distribution rules are thus adapted to the CISAC key which is applied at international level. Text by Irène Philipp Ziebold

8/12 for authors, 4/12 for publishers: SUISA will adapt its distribution key for performing and broadcasting rights to European standards again. (Photo: Manu Leuenberger)

The majority of SUISA’s European sister societies apply the so-called “CISAC key” when it comes to originally published works in the performing and broadcasting rights sector. CISAC is the international umbrella for collective management organisations (Confédération Internationale des Sociétés d’Auteurs et Compositeurs). The shares of the distribution key recommended by the umbrella organisation for performances and broadcasts amount to 66.67% for authors and 33.33% for publishers.

SUISA’s distribution key

SUISA’s distribution key had deviated from the internationally established CISAC standard in the past. Up to now, SUISA distribution rules provided that the shares for originally published works for performing and broadcasting rights was 65% for authors and a maximum of 35% for publishers. Regarding the production of sound and audio-visual recordings, the composers receive 60% and the publishers 40%.

In the case of works with a sub-publisher, the author has an entitlement as per the distribution rules to receive 50%, and the publisher and sub-publisher to claim the remaining 50% for performances and broadcasts. Regarding the production of sound and audio-visual recordings, the composers receive 40% and the publisher and sub-publisher share the remaining 60%. In this context, it is worth mentioning that SUISA usually adopts the contractually agreed split between the publisher and the sub-publisher in the case of sub-published works. Only in the absence of such agreed splits will SUISA apply the keys established by the distribution rules.

Alignment with the European CISAC standard

The distribution keys by SUISA will now be adapted in the case of originally published works in the performing and broadcasting rights to European standards. The keys relating to the production of sound and audio-visual recordings (mechanical reproduction rights) shall remain unchanged in the distribution rules. Strictly speaking, the application of the CISAC key of 67% for authors and 33.33% for publishers is nothing new, but rather a re-introduction of a previous provision.

The key applied on a Europe-wide level is actually expressed in fractions 8/12 (author’s share) resp. 4/12 (publisher’s share). When SUISA began working with IT systems back in 1962, the aim was to avoid decimal places after the decimal point. As a consequence, SUISA changed the key, and rounded it to 65%, resp. 35%. The majority of the other European societies kept the translated fractions i.e. 66.67% and 33.33%.

Effects of the changed distribution rules

Thanks to the adaptation of the distribution keys, authors will be remunerated with the share that is deemed as standard in the European area. While the publisher share will be decreased by 1.67%, they will, together with the authors, benefit from positive effects which the changes bring about.

Apart from the harmonisation with other European societies, the (re)introduction of the CISAC key for originally published works entails further significant advantages:

  • Important increase in efficiency during work registration: Processing of SUISA works with international contributors will become simpler. Difficult conversions in the case of joint productions with international authors become redundant.
  • Processing distributions of the sister societies will be significantly simplified: The matching distribution keys will facilitate the processing of distributions by international sister societies to a great extent.

Validity of the changes to the distribution rules

Both the SUISA Board of Directors as well as the Swiss Federal Institute of Intellectual Property (IPI) have agreed to this change. The new distribution keys will come into force from 01 January 2017 without any retroactivity. This means, that all works declared after 01 January 2017 will be registered with the new distribution key. In the case of works that had been registered before that date, the distribution key in place shall remain valid. These works will not be changed.

The decision of the IPI dated 28 July 2016 is published at the SUISA website.

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All comments will be moderated. This may take some time and we reserve the right not to publish comments that contradict the conditions of use.

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The SUISA distribution key for performing and broadcasting rights will be changed from 01 January 2017 onwards. For works with an original publisher, the share of the author shall be 66.67% and that of the publisher 33.33%. The distribution rules are thus adapted to the CISAC key which is applied at international level. Text by Irène Philipp Ziebold

8/12 for authors, 4/12 for publishers: SUISA will adapt its distribution key for performing and broadcasting rights to European standards again. (Photo: Manu Leuenberger)

The majority of SUISA’s European sister societies apply the so-called “CISAC key” when it comes to originally published works in the performing and broadcasting rights sector. CISAC is the international umbrella for collective management organisations (Confédération Internationale des Sociétés d’Auteurs et Compositeurs). The shares of the distribution key recommended by the...read more