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Music in video games: Licensing and Addendum to Rights Administration Agreement

What is a video game without sound? Video games are hard to imagine without music. Many games become huge hits precisely because of their music which is often even released as a separate soundtrack. What is the proper licensing procedure for music in video games and what is the purpose of the new Addendum to the Rights Administration Agreement? Text by Michael Wohlgemuth

Music in video games: Licensing and Addendum to Rights Administration Agreement

Gaming corner at the internet café: every game has to have the right sound. (Photo: OHishiapply / Shutterstock.com)

The video-game industry has been chalking up continuous growth for years. The corona crisis gave earnings in this sector an additional boost. Never before have so many people consumed video games, whether on their smartphones, tablets, consoles, or PCs.

Although music plays a significant part in this success story, video-game producers have so far only cooperated with collective management organisations in isolated cases. Instead, the producers have worked directly with authors and artists who do not belong to a collective management organisation, which has enabled them to sign what are known as “buy-out dealsˮ.

This is mostly still the case today. To improve its members’ competitive chances in this flourishing market, SUISA has prepared a new addendum to the rights management agreement.

Buy-out
In a buy-out, the author transfers all their rights of use in their works to the producer against payment of a single lump-sum amount. As a result, once the purchase price is paid, the author is not entitled to any further revenues from royalties or neighbouring rights. As a rule, members of collective management organisations cannot sign buy-out agreements because they have transferred their rights of use to their collective management organisation. The very purpose of the collective management organisation is to ensure that its members receive royalties for every new use of their works. Clearly, a compromise had to be found in the case of video games (see text).

Basic principles

What music rights must a video-game producer acquire?

To produce or reproduce a video game, the producer must acquire the following rights:

  • Synchronisation right: This is the right to set an audiovisual work (in this case, a video game) to music. SUISA members (or their publishers) may settle the synchronisation rights directly with the video-game producer.
  • Reproduction and physical distribution rights: These rights are necessary to reproduce a musical work on a video or data carrier and to distribute the recording thereafter. SUISA manages the reproduction and distribution rights. The new addendum provides that these rights may be excluded from the rights administration agreement (for more, see the section “New Addendum to the Rights Administration Agreement for SUISA members”).
  • Online rights (download and streaming): Nowadays, most games are also – or only – sold on Internet for the buyer to download. In order to make a game available for downloading, the video-game producer or the online distributor (e.g. the platforms Steam or Origin) need to acquire a downloading licence.
    Certain video games can only be played by streaming on a browser, for example. This then requires a streaming licence.
    SUISA manages these online rights. Such rights cannot be excluded from the rights administration agreement by the addendum.
  • Neighbouring rights: Neighbouring rights are the rights of the performers and the rights in the sound recording. These two rights are collectively referred to as “Master Rights”.
    Authors who play their compositions themselves and produce their own recordings may licence these rights, as a performer and recording producer combined, directly to the video-game producer for all uses. Otherwise, the owner of the Master Rights must license them separately to the video-game producer. SUISA does not manage these rights.

For legal questions relating to video games, please contact our Legal Department: legalservices (at) suisa (dot) ch

New Addendum to the Rights Administration Agreement for SUISA members

Buy-outs are, as we stated above, customary practice for video-game producers. This has repeatedly placed SUISA members at a competitive disadvantage on the video-game music market because of their membership. Producers have preferred to work with authors who do not belong to a collective management organisation and who can therefore freely dispose of their rights.

The new addendum is designed to eliminate the competitive disadvantage for our members while maintaining the basic fundamentals of collective management. Since buy-outs cannot be reconciled with the basic principles of fair and usage-based remuneration, SUISA has opted for a compromise solution.

The new addendum to the rights administration agreement enables SUISA members for the first time to settle the synchronisation, reproduction, and distribution rights for commissioned compositions in one package directly with the video-game producers. At the same time, SUISA will continue to manage online uses like downloads or streamings – as is also the case in the film sector.

All other rights of use remain with SUISA in accordance with the rights administration agreement. Thus, when music from a video game is broadcast on the radio or performed at events, for example, SUISA will assert the rights of its member composer.

In practice, for the reproduction and distribution rights to be excluded from the rights administration agreement, the following criteria must be satisfied:

  • the work must be a commissioned composition. Pre-existing works that have already been published cannot be excluded from the rights administration agreement.
  • • When the work is commissioned, the following particulars must be communicated to SUISA:
    • title of the work and video game;
    • playing time of the work;
    • name and address of the principal;
    • name and address of the game producer;
    • nature and aim of the game.
  • The exclusion cannot apply to games which are used by a company for advertising, sponsoring or other purposes in association with presentations about the company itself or its products and services.

The Addendum can be obtained from the Members’ Department: authors (at) suisa (dot) ch

Licences and tariffs

What fees does SUISA apply for online uses?

Online platforms (domestic*)

These licence fees apply to online platforms offering video games for streaming or downloading.

Downloads 2% of total revenues Minimum fee
Generally CHF 500 per 100,000 downloads or streams
Subscription 2% of total revenues Minimum fee
CHF 0.15 per subscriber per month

*The licensing for international platforms like Steam, Uplay, Playstation Store etc. is handled through our subsidiary SUISA Digital Licensing AG.

Other online uses (e.g. game-playing via live-streaming or browser)

The following licence fees only apply if the producer or publisher itself distributes the game (e.g. via its own website):

General 2% of total revenues Minimum fee
A. Music only in the game menu and intro or outro sequences
CHF 400 per 100,000 downloads or streams
B. Games with in-game background music
CHF 500 per 100,000 downloads or streams
C. Games with a focus on music
CHF 600 per 100,000 downloads or streams
Advertising games 2% of total revenues Minimum fee
A. Music only in the game menu and intro or outro sequences
CHF 800 per 100,000 downloads or streams
B. Games with in-game background music
CHF 1,000 per 100,000 downloads or streams
C. Games with a focus on music
CHF 1,200 per 100,000 downloads or streams

What fees does SUISA apply for reproduction and distribution rights?

Since video games are audiovisual productions, Tariff VI applies. The main points of this tariff are:

Physical reproduction for sale

  • 3.3% of the retail sales price, or of costs (if the game is distributed for free)
  • 4.4% of the actual invoiced price (AIP) if the customer has concluded a multiannual contract with SUISA covering royalty settlements and can furnish to SUISA the breakdown of its sales with the number of units and sales price per audiovisual recording per accounting period. The AIP is the price invoiced by the customer to the retailer or, if the customer does not distribute the recordings itself, the actual wholesale price invoiced by the customer’s official distributor.
  • The applicable rate is reduced as follows:
    storage space of the protected music to total storage capacity of the carrier
    (e.g. 500 MB protected music to 2000 MB storage capacity of the carrier = 75% fee reduction)
  • Minimum fee:
    29 centimes per game with music, regardless of its playing time,
    2.2 centimes per minute of music and per audiovisual recording, subject to a maximum of 29 centimes per audiovisual recording if the customer provides SUISA with an accurate breakdown of the music in the game.

Special case: Commissioned music by SUISA members

If a member of SUISA composes commissioned music for a game and signs the Video Game Addendum to the Rights Administration Agreement, the licence fee can be negotiated directly with the game producer without involving SUISA.

Production music mark-up

The use of production music managed by SUISA is subject to the following mark-ups:

  • for the synchronisation right: 50%
  • for neighbouring rights:
    • 50% of the total remuneration for the reproduction rights under Tariff VI (see above) and the synchronisation rights if the game is distributed only in Switzerland and Liechtenstein.
    • 100% of the total remuneration for the reproduction rights under Tariff VI (see above) and the synchronisation rights if the game is distributed internationally.

For video-game licensing or inquiries, please contact: customerservices (at) suisa (dot) ch

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What is a video game without sound? Video games are hard to imagine without music. Many games become huge hits precisely because of their music which is often even released as a separate soundtrack. What is the proper licensing procedure for music in video games and what is the purpose of the new Addendum to the Rights Administration Agreement? Text by Michael Wohlgemuth

Music in video games: Licensing and Addendum to Rights Administration Agreement

Gaming corner at the internet café: every game has to have the right sound. (Photo: OHishiapply / Shutterstock.com)

The video-game industry has been chalking up continuous growth for years. The corona crisis gave earnings in this sector an additional boost. Never before have so many people consumed video games, whether on their smartphones, tablets, consoles, or PCs.

Although music plays a significant part in this success story, video-game producers have so...read more

Residuals from online collections – what’s that and how can I participate in them?

In mid-December, we pay our members the fourth settlement of their online revenues this year. But this time, we’ll put a cherry on top! This “cherry” comes from the so-called “residuals” about the distribution of which the SUISA Board had decided in autumn 2021. In this context, here’s the most important piece of advice: Register all works as soon as possible with SUISA! Text by Anke Link

Residuals from online collections – what’s that and how can I participate in them?

Due to an international agreement with online music platforms, SUISA amended its distribution rules in the online collections area. (Photo: MandriaPix / Shutterstock.com)

“Residuals” are amounts paid by online music platforms for works or parts of works which have not been claimed by any collective management organisation. The reason for this is often that the works or parts of works have not been registered by the authors or publishers with their collective management organisations. SUISA can only collect licence fees via the SUISA Digital Licensing AG (SUDL) from the platform for works that have been declared and completely documented. This is why it is important that you register the works as soon as possible! Best before they are published online (details on this also in the blog article “Online licensing activities require early work registrations” of 29 October 2020).

International rules on how to deal with “residuals”

In the summer of 2020, an international working group, consisting of CMOs (SUISA was also part of it), major publishers and the most important platforms agreed on binding rules regarding how to deal with “residuals”: The money attributable to unclaimed works or parts of works is divided among all licensors of a platform in proportion to their respective market share. SUISA thus receives a share for each territory for which it licenses a platform, according to the importance of its repertoire in relation to the other repertoires used in that country.

This is just one more reason why it is important that works are registered as soon as possible, as this increases SUISA’s repertoire share. What needs to be mentioned in this context is that the members undertake towards SUISA to register their works within a certain period anyway: in the case of authors, this is within a month after the work has been created and in the case of publishers within a month after the work has been published.

It will now also be possible via SUISA Digital Licensing to issue an invoice for this period even after the expiry of an already distributed usage period, and this up to a maximum of 18 months after the end of the usage period. For works which have been fully registered with SUISA within the period, SUDL will be able to request the respective licence fee from the platform.

Only when the period within which a retroactive invoice can be issued, has expired, “residuals” will be determined. This means: The contributions for works or part of works which have, by then, still not been claimed by a collective management organisation, will be paid by the online music platforms to all of its licensors in proportion to their repertoire share.

Changes to the SUISA distribution rules

Up to now, only iTunes had paid “residuals” to SUISA. With the agreement made in the summer of 2020, the large platforms are now following suit. This way, a binding provision became necessary in the distribution rules of SUISA, about which the SUISA Board of Directors decided in September 2021. It will be applied to the fourth online distribution 2021 for the first time.

SUISA distributes its share in the “residuals” as a blanket adjustmenton the current online distributions. In contrast to revenues for works that have not been documented or have been only partially documented, which are used offline (e.g. at concerts), the “residuals” will not be reserved for potential late or subsequent settlements at a later point in time.

The reason for this is, on the one hand the disproportionately high costs which such work-based adjustments would entail. On the other hand, our analyses have shown that the works which only get registered fully after the 18-month period has expired, only have little economic significance. Incidentally, even our sister organisations abroad do not reserve “residuals” from the distribution for longer periods.

Whether we are talking about online or offline uses: A fast work registration is an advantage in any case because it facilitates a quick payment of the licensing revenues. Late work registrations, however, always carry the risk of income losses for the respective rightsholders. Additional costs are also created for SUISA which is a disadvantage for all rightsholders.

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  1. Durussel André says:

    Merci pour ces informations claires et intéressantes

Leave a Reply

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.

Your email address will not be published.

In mid-December, we pay our members the fourth settlement of their online revenues this year. But this time, we’ll put a cherry on top! This “cherry” comes from the so-called “residuals” about the distribution of which the SUISA Board had decided in autumn 2021. In this context, here’s the most important piece of advice: Register all works as soon as possible with SUISA! Text by Anke Link

Residuals from online collections – what’s that and how can I participate in them?

Due to an international agreement with online music platforms, SUISA amended its distribution rules in the online collections area. (Photo: MandriaPix / Shutterstock.com)

“Residuals” are amounts paid by online music platforms for works or parts of works which have not been claimed by any collective management organisation. The reason for this is often that the works or parts of works have not been registered by the...read more

Online licensing activities require early work registrations

From a sales perspective, online music distribution provides enormous opportunities. With little effort, music can be made available to a global audience within an instant. The distribution of copyright royalties, however, is complex when it comes to online usages. This is also due to the fact that the processes differ from those for performing and broadcasting rights. The most important advice is: First, register the work with SUISA as early as possible, then publish it online. Text by Andreas Wegelin and Manu Leuenberger

Online licensing activities require early work registrations

If you distribute your music via an online provider, it will be advantageous if you stick to the following rule of thumb: First, register the work with SUISA, then publish it online. (Photo: Anutr Yossundara / Shutterstock.com)

When it comes to the internet, trade activities are not halted by national borders. Especially in cases when the goods are not physical but only purely digital in terms of their transport from the provider to the customer – as is the case for music. Online music providers such as Apple Music, Spotify or YouTube take their products directly to the audience via streaming or download: On its journey between the internet platform and the playback devices of the listeners, the music product does not pass customs, nor are there any intermediaries (apart from the telecoms provider of the internet access).

The following is decisive in this chain of commerce: When it comes to online music-distribution, territorial limitations have not only been lifted to a great extent for the consumer but also with regards to the licensing of the copyright. The distribution process differs fundamentally from the existing practice in the “offline sector”, i.e. for performing or broadcasting rights or the licensing of sound recordings. SUISA only issues licences for the territory of Switzerland and the Principality of Liechtenstein in the offline sector, but for all works that have been used, including those of the members of our sister societies abroad. Reciprocal representation agreements ensure that the members of other sister societies obtain the share in the works that have been used in Switzerland. The same also applies vice versa: If works by SUISA members are performed abroad, the sister society in charge for the territory in question collects the remuneration and passes it to SUISA for onward distribution to its rightsholders.

This works differently in the online sector. Another practice has established itself since the Recommendation of the EU Competition Commission from 2005, according to which more competition should be created during the online exploitation of copyright. The corresponding EU Directive which was determined five years ago states that each rightsholder can choose for their online licences whether they want to issue them directly or whether they wish to instruct a partner such as a collective management organisation of their choice to manage them across Europe (also known as pan-European).

SUISA active since 2012 for online direct licensing

The major music publishers have assigned the rights management for the shares in their works on a cross-border basis 10 years ago. This type of licensing is called direct licensing. In the field of cross-border usages, rightsholders, i.e. publishers or collective management organisations, specifically account the royalties for their repertoire directly with the “Digital Service Providers” (in short: DSPs) such as Apple Music, Spotify or YouTube. This means: If users abroad listen to works by SUISA members on platforms by the online music providers, SUISA collects the remuneration for such usages directly from the provider. There are no more “intermediaries” between SUISA and the Digital Service Provider as it exists in the traditional offline sector by way of a foreign sister society.

Many societies in Europe have already transitioned to this global direct licensing practice of their members’ works. Since 2012, SUISA has been licensing the rights of its members not only for Switzerland but also for other territories on a cross-border basis, and that with a constantly increasing number of online music providers. In the beginning, these included the European countries, since 2018, more and more territories are added outside of Europe. In the meantime, SUISA is usually issuing global licences to the DSPs with the exception of the following: USA, Canada, South America, North Korea, South Korea, Japan, Syria and Australasia. There are plans, however, to expand into these territories in the future.

Direct licensing has had the consequence that SUISA could only issue licence invoices for works for which it had the relevant documentation, since it is the individual work share that is now relevant, not just the fact whether an author is a SUISA member or not.

Nevertheless, it happens often that Digital Service Providers receive invoices from several collective management organisations for shares in the same work. This leads to so-called “overclaims” or “underclaims”. Such overclaims or underclaims (in terms of rights) result from a lack of clarity among the societies issuing the invoices who can claim the remuneration for which shares in a work in which territory for their principals. There is often also a situation of “no claims” i.e. when no society issues an invoice.

This has led to a scenario where the providers paid rightsholders more than the agreed remuneration in the case of “overclaims” and too little or nothing in the case of “underclaims” or “no claims”. There are also Service Providers which withhold the payment in the case of “overclaims”. If thus the claims of all invoicing collective management organisations for a work exceed 100% (shares), no royalties are paid as long as it is not defined who is actually permitted to invoice for which share.

Invoicing process with online music providers

A working group of the collective management organisations, major publisher and the most important online music providers has taken care of this issue and agreed to the following solution:

Issuing invoices to a DSP happens in several steps. The collective management organisation receives usage data from the DSP. Based on these usage reports, which contain a period of one or three months, the provider receives an invoice for all work shares in titles for which the society holds the usage rights of an author or a publisher. If the invoices that have been issued by various collective management organisations do not match for one work title, so-called “disputes” arise.

The societies have 18 months to resolve such conflicts of claims. Within said period, SUISA checks the data of the usage reports once more and compares it with the updated SUISA work documentation. If, during this search, new correlating entries are detected, they will be invoiced retroactively. Whatever has not been resolved after 18 months shall fall under the so-called “residuals”; this is the licensing remuneration for work shares which have not or only partially been invoiced (“underclaims” and “no claims”).

The “residuals”, the remuneration that has not been claimed from the DSP from “underclaims” and “no claims” shall be paid out by SUISA as a supplement to the works used in the same distribution period. A work that has not been registered at that point could therefore not receive a supplement.

Register the work first, then publish it online

The most important advice for SUISA members who make their compositions available via online music distribution channels, is: First, register the work with SUISA as early as possible, do not publish it online before!

If you follow this rule of thumb, you create a basis whereby works can be detected from the beginning in online usage reports and can be invoiced to the Digital Service Providers. The distribution process with the online music providers is subject to deadlines and the attention of the audience on the internet is often rather ephemeral. When you register works too late, there is the risk that usages are not detected and royalties cannot be allocated.

If the work registration takes place before the first recording of the work is published for streaming or downloading, SUISA can claim the work shares with the Digital Service Providers from the very beginning. In order to enable a simple automatic identification, the metadata of the works registration should be the same as the data which the DSP has for the work.

Metadata is additional information and particulars which describes other data in more detail. Thanks to such additional information, it is possible to determine and thus find individual elements during searches within big data volumes. A musical work title ideally comprises, apart from the usual details on composer, lyricist, publisher etc., information on the performer(s), and, if applicable, alternative work titles of versions in other languages as well as remix/edit versions, such as “song title – radio edit” or “song title – extended version”. Complete and correct metadata provides a great advantage when it comes to finding a concordance during the automated matching of the usage reports with the works database.

These requirements are vital for a work to be correctly distributed in all of the territories directly licensed by SUISA and with all of the online music providers directly licensed by SUISA.

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  1. Claire Chalut says:

    Vous ne parlez que de “Apple Music”, “Spotify” et “Youtube” (cette dernière plateforme touche surtout la VIDEO et quid ? de “Soundcloud” (destinée à l’audio). Qu’en est-il avec “Soundcloud” ? (qui est beaucoup utilisé), avez-vous des relations avec eux ??? ET, comment ?? Merci de votre réponse.

    Autre remarque (qui n’a rien à voir avec cet article) : comment se fait-il que l’on ne retrouve pas les oeuvres déposées dans votre banque de données (souvent il est réponde “inconnu” ou “pas trouvé”, etc.

    C. Chalout

Leave a Reply

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.

Your email address will not be published.

From a sales perspective, online music distribution provides enormous opportunities. With little effort, music can be made available to a global audience within an instant. The distribution of copyright royalties, however, is complex when it comes to online usages. This is also due to the fact that the processes differ from those for performing and broadcasting rights. The most important advice is: First, register the work with SUISA as early as possible, then publish it online. Text by Andreas Wegelin and Manu Leuenberger

Online licensing activities require early work registrations

If you distribute your music via an online provider, it will be advantageous if you stick to the following rule of thumb: First, register the work with SUISA, then publish it online. (Photo: Anutr Yossundara / Shutterstock.com)

When it comes to the internet, trade activities are not halted by national...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?
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The first year of SUISA Digital Licensing AG

A little more than one and a half years ago, SUISA founded its subsidiary company, SUISA Digital Licensing AG. The subsidiary company has now completed its first business year. A year which was under the auspices of development and brought about a multitude of new findings. It is time for retrospection and a first interim summary. Text by Fabian Niggemeier

The first year of SUISA Digital Licensing AG

The first business year of SUISA Digital Licensing AG was influenced by negotiations with many music service providers, successfully and jointly held with the SESAC Digital Licensing AG. (Photo: MichaelJayBerlin / Shutterstock.com)

By launching the subsidiary company, in short SUISA Digital, SUISA has outsourced cross-border and international online licensing in its entirety. SUISA is, from now, only responsible for the licensing of music uses on homepages and music services which only address a Swiss audience.

SUISA Digital’s responsibilities

SUISA has, for nearly six years, issued pan-European licences for online uses. In other words, the rights of SUISA members in the online world are not granted just for Switzerland, but directly for the whole of Europe. Thanks to the outstanding IT systems in this sector, SUISA was able to significantly increase the income of its members.

Another step followed in 2017: SUISA founded the Joint Venture, Mint Digital Services, with US collective management organisation SESAC. Until then, SUISA negotiated agreements with internet music providers (music service providers, abbreviated to MSPs) and managed the agreements itself upon their conclusion. With the creation of the Joint Venture, these two fundamental activities were split and outsourced. Mint Digital Services is responsible for the administration of the agreements i.e. the technical processing and invoicing in the name of the rights holders, whereas SUISA Digital is responsible for market monitoring, market penetration and the negotiation of the agreements. By way of another new introduction, the territory where the agreements apply was extended from Europe to nearly the whole world.

SUISA Digital is thus building a global licensing system and also offers this system to third parties. Collective management organisations from other countries can instruct SUISA Digital just like publishers can (for their Anglo-American repertoire), or authors from all over the world. That way, a cost-efficient management of rights can be ensured in the best possible manner.

Joint licences

SUISA Digital does not pursue this task by itself. It is in the interest of the rights holders as well as the MSPs to structure the negotiations in as efficient a manner as possible. That means to cover and govern as many rights as possible with as few agreements as possible. For this reason, SUISA Digital offers all MSPs to extend their agreements to the repertoire of SESAC Digital Licensing AG (in short: SESAC Digital). Provided that the MSP agrees, SUISA Digital and SESAC Digital jointly lead the negotiations and bundle their repertoire into a joint licence.

This is in the interest of the MSPs since it means they have to undertake less negotiation efforts, but also in the interest of SUISA Digital and SESAC Digital since a highly interesting “package” can be offered to the providers by joining up the repertoires. The advantage of this package is also that it does not just contain compositions which are used in Switzerland or Europe but also create a high demand globally.

The negotiations

At the end of 2017, a small but motivated team only focussed on preparing the negotiations. A multitude of information and figures had to be gathered and linked. Designing the agreement for areas outside Switzerland and Europe presented some challenges to the negotiation team. The parties agreed that the price of music should be linked mainly to the local significance of the music and the local buying power. It can thus be ensured that an adequate remuneration can be invoiced which remains affordable to the consumers.

Economic deliberations also made it clear that the big MSPs had to be approached first. The six biggest providers are responsible for 80% of the turnover. This statistical average does, of course, not apply for the music of all members: Those who are active in a specific music genre will at best have a bigger turnover on the platforms that focus specially on that genre. It was nevertheless paramount to prioritise the providers in line with their market share; knowing that certain big providers would be among the negotiation partners that would be harder to deal with.

Involving a mix of consistency, comprehension and rigour it was possible to make good progress in the negotiations. After twelve months, agreements could be entered into with all big MSPs or the negotiations are close to being concluded. Since these agreements are now ‘safe’, the next task is to complete the market penetration.

Until now, agreements with the following providers were jointly entered into with SESAC Digital:
YouTube, Spotify, Apple Music, Apple iTunes, Google Play, Deezer, Beatport, Facebook, Soundcloud, Melody VR, and Qobuz.

Joint negotiations are underway with the following providers:
Amazon, Napster, Tidal, Juke, 7Digital, dailymotion, Mixcloud, Red Karaoke, Soundtrack your Brand, What people play, Anghami, Auro, Bleep, Emoticast, Idagio, Smule, Xtendamix, Yousician, Better Day Wireless, DJ City, Juno, Linn Record, Musically, Recisio und Radionomy.

Add to that another approximately 20 MSPs from which feedback is due, as well as about 10 MSPs which are only active on a national level in the selected territories.

Distribution

As mentioned at the outset, the relevant agreements are processed and administered by the Joint Venture Mint Digital Services. The distribution of the income is, however, done by SUISA Digital and SUISA. A minimum of six months lies between the usage period and the distribution. The reason for this is that we do not represent the global repertoire, compared to the traditional offline sector. We can thus not invoice everything and then distribute, but only what we identify.

In this context, we depend on the collaboration by our members: The quicker they notify us of their works, the faster we can generate the invoices. For this reason, we are waiting between 60 and 100 days before we process the reports, depending on the MSP. That way, we can ensure that the majority of the new works and thus works with the highest usage levels has been registered and can be distributed by us. The distribution of the income is then made, at the latest, in the quarter after the payment from the MSPs has reached us.

There are going to be bigger settlements in due course. Since all agreements had to be renegotiated, no invoices could be sent out during the ongoing negotiations. In the cases of Spotify or Deezer, this led to the fact that the uses of the entire year 2018 were only invoiced at the beginning of 2019.

Outlook

During the second business year, SUISA Digital is going to focus firstly on achieving a coverage of the internet music market which is as complete as possible. Secondly, it is paramount that new markets, also outside of Europe, will be opened up and to ensure that SUISA members receive the remuneration they are due from anywhere in the world. For this purpose, we are constantly collaborating with Mint to improve systems and processes in order to continue providing our members with the best possible services in future.

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  1. Walter Thut says:

    Guten Tag,
    einen Fall welcher mich und andere von der SUISA vertretene Komponisten betrifft, und die oben genannten Zeitverschiebungen bei den Abrechnungungen fuer Urheber stark in Frage stellt, moechte ich gerne hier beschreiben:

    Die Urheber des bei dere SUISA angemeldeten Songs BACK TO THE DIRTY TOWN haben viele Millionen Clicks uf Youtube, und viele Screenshots Belege dass dieser Song seit 2017 z.B. in der Schweiz, Frankreich und den USA dauernd Webungen vorgeschaltet hat.

    Leider haben die Urherber von der SUISA noch keine einzige Ueberweisung erhalten. Obwohl die SUISA uns vor mehr als einem Jahr bestatigt hat, dass sie cies Clicks auch erfasst haben, und dass wir Verguetungen von der SUISA bis spaetestens Ende 2018 bekommen werden, haben wir noch keine einzige Abrechung dazu, und keinen einzigen Rappen ueberwiesen erhalten.

    Bei unserem digitalen Vertrieb funktioniert hingegen die Abrechnung sehr gut, und liegt bei mehreren Tausend CHF pro Jahr.

    Was stimmt hier nicht?

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A little more than one and a half years ago, SUISA founded its subsidiary company, SUISA Digital Licensing AG. The subsidiary company has now completed its first business year. A year which was under the auspices of development and brought about a multitude of new findings. It is time for retrospection and a first interim summary. Text by Fabian Niggemeier

The first year of SUISA Digital Licensing AG

The first business year of SUISA Digital Licensing AG was influenced by negotiations with many music service providers, successfully and jointly held with the SESAC Digital Licensing AG. (Photo: MichaelJayBerlin / Shutterstock.com)

By launching the subsidiary company, in short SUISA Digital, SUISA has outsourced cross-border and international online licensing in its entirety. SUISA is, from now, only responsible for the licensing of music uses on homepages and music services which only address a...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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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.

Your email address will not be published.

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