The concert organiser is responsible for paying the copyright licence fee in the case of artist engagement agreements. More information on this fundamental principle and relevant legal aspects is included in the article “Artist engagement contract: Does the artist have to pay SUISA a licence fee?” from the members’ magazine SUISAinfo 1.12 (Article as PDF, in German).
It occurs that events are organised by the bands themselves or in cooperation with third parties. In such cases, the type of cooperation between the band and the organiser determines who has to pay the copyright licence fee.
Types of cooperation between artists and event organisers
In the case of jointly organised events, a distinction between two types has to be made from a legal perspective. The musician can rent a venue (Art. 253 ff. OR, Swiss Code of Obligations). Alternatively, the musician can enter some form of cooperation with an event organiser – in most cases, a concert venue.
Renting a venue
Bands or musicians can rent an event space, e.g. a concert venue, and organise the event themselves. The musician and the landlord of the concert venue enter into a rental agreement. The landlord lets the event space to the band for an amount which has been previously stipulated for the agreed use. The rental price includes the entire space, including the bar. The entire financial risk for the event lies with the musician. This means: He or she sells the tickets, executes the advertising campaign and runs the bar.
In other words: If a landlord lets a venue to a band against payment, but without the financial participation of the landlord being dependent on the success of the event, a rental agreement is deemed to be in effect.
But beware: As soon as the landlord participates in the income from the bar or the sales of the tickets, it is no longer deemed to be a rent but a cooperation in legal terms. While the agreement might well be called “rental agreement”, the title of the agreement does not really matter: For the purposes of its legal classification, the intention of the parties is the exclusive decisive factor (Art. 18 para 1 OR).
Musicians or bands often obtain agreements with the titles “artist engagement contract” or “rental agreement”, and contains the following or other similar provisions: The band does not receive a fixed payment, but the income generated by ticket sales, while the landlord runs the bar and keeps the respective proceeds.
In the case of such a cooperation the success for both partners fundamentally depends on the audience numbers attending the event. The landlord can only cover the costs for the venue and the bar staff if many people consume a lot at the bar. The musician’s pay is directly linked to the number of tickets sold.
The financial success for both cooperation partners therefore directly depends on the financial success of the event. In such a case a statutory provision (Art. 530 para 1 OR) shall apply, stating that a contractual relationship where two or more persons agree to combine their efforts or resources in order to achieve a common goal constitutes a simple partnership!
In other words: By means of this type of cooperation, a simple partnership has been created between the musician and the landlord. This entails some ramifications from a legal point of view: For example, all partners have a joint and several liability in a simple partnership, regardless of the kind or size of their contribution (Art. 544 para. 3 OR).
Based on the rules of joint and several liability, a creditor may choose from which debtor, resp. partner they wish to collect the relevant part of the receivables. If you are a creditor, you can thus choose whether you collect 100% of the outstanding receivables from partner A or e.g. 70% from partner A and 30% from partner B. In most cases, however, creditors tend to resort to only one debtor – usually the debtor with the highest ability to pay.
Due to this fact, it often happens in relation to simple partnerships that a single partner has to pay for the entire claim. This happens even though all partners are jointly liable in equal parts for the debts. One of the provisions for the joint liability (Art. 148 para. 2 OR), however, reads as follows: If a joint and several debtor who pays more than his fair share, he has recourse against the others for the excess.
Consequences for copyright licence fees
The two types of cooperation described above for concert events influence who is responsible for paying the copyright licence fees and how the relevant claims are managed by SUISA.
Renting a venue
In the case of a pure rental agreement, an event space is made available to musicians and they become organisers themselves. As organisers, musicians have to acquire all authorisations from the authorities and also the necessary licences for the use of music. This means: Musicians must notify SUISA of the concert and pay the relevant copyright licence fees for it.
There are two conditions both of which have to be met so that no fees have to be paid to SUISA: The musician(s) is/are the only involved author(s) of all of the performed works, and there are no publishers for any of the works.
If the landlord and the band share the success risk of the event, a simple partnership is formed as described above. In this case, the law determines that the partners generally have equal shares in profits and losses unless they have an agreement to the contrary (Art. 533 para. 1 OR). Organisational issues or determining who bears the costs can be freely agreed upon between the partners.
In a deed of partnership – even if it is actually referred to as an engagement or rental agreement – it is possible to allocate the duty to pay the copyright licence fee or the responsibility to obtain the licence for the music use to the musician.
As previously stated, a musician can, as the sole organiser, and under specific conditions, renounce on the perception of his rights. Such conditions shall not be deemed to have been fulfilled if the duty has been imposed upon the musician to pay the copyright licence fee or to obtain the licence by way of a deed of partnership. As soon as the landlord is participating in the financial success of the event, i.e. in another form of cooperation than pure rent, the band is not the sole organiser, but the simple partnership becomes the organiser.
As already mentioned, and based on the rules of joint and several liability, it is permissible that a creditor may choose from which debtor, resp. partner they wish to collect the relevant part of the receivables. In such cases, the creditor is not obliged to consider internal arrangements made between the partners. SUISA shall, in such cases, always turn to the landlord of the venue.
For such concert cooperation cases, the musicians must take into account that: If you sign a contract where the payment of the copyright licence fees has been passed on to you, the musician(s), you will be obliged to pay the amount and to reimburse the landlord. Even though SUISA always turns to the landlord, the landlord can still take recourse at the end of the day. Whether landlords are likely to do so, cannot be anticipated. As a consequence, it is advisable to be careful when signing such agreements and to carefully weigh up the benefits and risks.
If artists rent a venue, they will be responsible as organisers for paying the copyright licence fees. They can, however, renounce on SUISA collecting fees for the event if only their own songs are performed, where no third parties, irrespective whether other authors or publishers are involved.
If artists enter into a cooperation with the venue, from which a simple partnership emerges, SUISA will always turn to the landlord with regards to the copyright licence fees. Artists must be aware of the fact that the landlord can, however, take recourse against them.