Questions and answers about direct licensing
Direct licensing agencies are criticising SUISA, other collecting societies and the system of collective management – sometimes making false statements and accusations. We would like to take this opportunity to address the most important allegations.
We would like to take this opportunity to address the most important allegations.
1) Some direct licensing agencies are very critical of collecting societies such as SUISA. Why is this?
These agencies develop their business model by positioning themselves as – in their own words – a cheaper, faster and more transparent alternative for authors compared to traditional collecting societies. In recent weeks, PACE in particular has been active in trying to discredit the collecting societies. Unlike SUISA, whose tariffs and distribution regulations are publicly available, PACE does not operate transparently; its website does not provide event organisers with information regarding the licence fee and authors are likewise not informed when they will be paid.
2) The costs of collecting societies such as SUISA are alleged to be too high
An expert report commissioned by the Swiss Federal Institute of Intellectual Property (IPI) in 2015 concluded that the administrative costs of Swiss collecting societies are generally reasonable:
In the case of concerts, SUISA deducts 15% for administrative costs and 10% for socio-cultural purposes. However, beneficiaries whose works are performed at concerts receive a bonus with the payment of copyright revenues. These bonuses come, for example, from SUISA’s ancillary income or from remuneration from other areas that cannot be distributed accurately. Overall, SUISA therefore distributes more than 85% of the revenue it receives from the concert organiser. It should be noted that, in autumn 2024, SUISA adopted new conditions for large-scale concerts, increasing this proportion to over 95%. This means that the effective cost deductions made by SUISA are lower than those made by direct licensing agencies.
3) SUISA’s new conditions for large-scale concerts are alleged to be discriminatory
This is incorrect. All concerts with more than 5,000 people in which at least 60% of works played are composed by the artists themselves will benefit from these new conditions. In proportion to the payments received, a small concert entails higher administrative costs for SUISA than a large concert with a small number of beneficiaries. It is therefore fair that SUISA’s utilisation conditions take account of these different situations. In addition, this strategy discourages large rights holders from leaving the collecting societies, maintaining solidarity with small rights holders.
The new conditions were approved by the SUISA Board of Directors. This consists primarily of SUISA members, who in turn are elected by the SUISA Annual General Meeting.
4) The collecting societies are accused of being untransparent
On the contrary, SUISA publishes the figures on its activities in a transparency report, which is part of the annual report: https://www.suisa.ch/en/Ueber-die-SUISA/Generalversammlung.html. On the other hand, figures for direct licensing agencies are difficult to find, if they exist at all.
The conditions for concert organisers, including discounts, are stipulated in the Common Tariff K (CT K), which has been published and is accessible to all (https://www.suisa.ch/en/Kunden/Auffuehrungen/Konzerte-allgemein.html). This tariff has been approved by the Federal Arbitration Commission for the Exploitation of Copyright and Related Rights (EschK) and is binding for the civil courts (Art. 59 (3) of the Copyright Act (CopA)).
Unlike some foreign collecting societies, SUISA does not offer kickbacks to event organisers. This makes everything very transparent for rights holders and other interested parties.
The accusation of lack of transparency is therefore not levelled by SUISA members, but by the direct licensing agencies. Members have access to the information they require at any time or may request it if it is not publicly available.
5) It allegedly takes too long for collecting societies to distribute payments to beneficiaries
SUISA statements and payments are issued to beneficiaries on a quarterly basis. All payments received in the previous quarter (for concerts, but also for radio and television broadcasts, club use, etc.) are then settled. This means that the remuneration paid by the organiser is usually distributed no later than 90 days after the concert (provided that the money has been transferred to SUISA). In the case of certain large-scale concerts where rights management is easier, SUISA has undertaken to distribute payments to beneficiaries no later than 30 days after the event.
The direct licensing agencies are limited to a single type of exploitation of a work, namely concerts. The copyright societies, on the other hand, offer the beneficiaries a comprehensive service. They manage the rights for all kinds of uses, even for very marginal cases such as a youth organisation’s evening dance event. A comparison of the distribution periods of direct licensing agencies and collecting societies is therefore irrelevant.
6) SUISA is alleged to be too lenient towards concert organisers
The discount specified in the CT K concert tariff is linked to a consideration. Organisers who benefit from this must belong to an association that supports SUISA in the fulfilment of its duties. The tariff therefore promotes strong partnerships between SUISA and the concert events sector and thus compliance with copyright law. SUISA members benefit from this strong partnership.
In addition, SUISA opposes market distortion by direct licensing agencies. Such agencies are able to demand higher copyright royalties from the organisers than those of the CT K, whereas SUISA itself is bound by this tariff. This puts rights holders who have their rights exercised by SUISA at a disadvantage.
7) SUISA allegedly wants to protect its market position at the expense of its members
The interests of SUISA are the interests of its members, as the cooperative operates according to democratic rules. Within SUISA, authors and publishers of music exercise their right of self-determination, which should be supported by law.
8) The international network of collecting societies would allegedly lead to double deductions for beneficiaries and errors in the remuneration of beneficiaries
If SUISA licenses a concert in Switzerland for authors and music publishers affiliated with a foreign collecting society, it transfers the copyright royalties to the foreign society, which in turn distributes the money to its members. It is then possible that the foreign society may deduct a commission for its mediation activities, which accrues in addition to the deductions made by SUISA. Conversely, if a foreign collecting society transfers money to SUISA for one of its members, SUISA deducts 4% for administrative costs.
There is no worldwide database of musical works and their rights holders. Each national collecting society has its own database. However, the societies are in regular contact, thus limiting the risk of discrepancies between these national databases. The umbrella association of collecting societies (CISAC) has also set out rules for the synchronisation and correction of data. Direct licensing agencies believe that these inconsistencies systematically lead to errors and delays in the payment of beneficiaries. However, such problems occur only in exceptional cases.
Rights holders are able to exclude an area from the mandate of their collecting society and directly join the national society responsible for that area. In other words, an author who is a member of a foreign collecting society has the option of joining SUISA solely for the purpose of using their works in Switzerland. In this case, they receive their remuneration for concerts in Switzerland directly from SUISA without any additional commission from another collecting society and can also directly provide SUISA with correct information about their works.
9) SUISA allegedly wants to restrict the freedom of choice of rights holders
Collecting societies in Europe are self-help organisations for authors, who are able to join the society of their choice. Many successful authors benefit from the international network and are members of several societies. Agencies like PACE want to destroy this network However, they offer no real benefit to most authors or concert organisers, apart from causing disproportionately burdensome administrative processes and resulting in higher internal and external costs.
10) Members of SUISA would allegedly be obliged to participate in the foundations established by SUISA without benefiting from them.
Art. 48 (2) CopA states: ‘With the approval of the supreme organ of the rights management organisation, a portion of the proceeds may be used for social welfare purposes and for the appropriate promotion of culture.’ SUISA foundations were established by decision of its Annual General Meeting, i.e. the authors and publishers.
The social protection of artists in Switzerland is incomplete in some places. In addition, state funding for culture is limited. The SUISA foundations are the result of a private initiative and do not incur any costs for the state.
Contrary to the assumption of direct licensing agencies, beneficiaries who benefit from the new conditions for large-scale concerts (see points 2 and 3 above) pay contributions to the SUISA foundations, like all other beneficiaries (from Switzerland or abroad). It is true that foreign beneficiaries do not benefit from the services provided by SUISA foundations. Conversely, SUISA members also do not benefit from the services provided by the foundations of foreign collecting societies, even though they co-finance them if their works are performed abroad. Overall, therefore, the system is fair and balanced.
11) SUISA is alleged to have created a new cartel
SUISA rejects this accusation. As part of a new initiative called ‘One Arena’, SUISA is working with other European collecting societies to offer artists performing on international tours a single point of contact. This contact person informs the artists of the conditions for the exercise of their rights in each country (tariffs for organisers, including discounts; deductions by the various collecting societies; surcharges on the revenues to be distributed, distribution periods; etc.). In other words, One Arena offers artists the transparency they need to make an informed decision between collective rights management and direct licensing agencies.
12) Parliamentary initiative 25.434 is alleged to violate international law
In a decision dated 5 May 2023, the IPI did indeed invoke international law (in particular the Berne Convention for the Protection of Literary and Artistic Works) to justify the legality of direct licensing carried out in Switzerland by a foreign agency. This view is contradicted by a report by law professors Florent Thouvenin and Thomas Burri on behalf of SUISA and the SMPA – the Swiss Music Promoters Association. (This report was submitted to the Science, Education and Culture Committee.) Since then, the IPI has been involved in the preparatory work for parliamentary initiative 25.434, as it believes that SUISA’s collective rights management creates legal certainty and predictability for concert organisers.
13) SUISA is alleged to use a complex tariff structure which is detrimental to the concert organisers or from which the organisers benefit at the expense of the authors
SUISA’s tariffs for music use are negotiated with the relevant associations in accordance with a procedure laid down by law (Art. 46 CopA) and must be approved by the EschK (Art. 55 to 60 CopA). Only then do they become legally binding. Supervision of tariffs by a specialised body (with the possibility to appeal to the Federal Administrative Court and subsequently to the Federal Supreme Court) ensures that licence fees are transparent and comply with applicable law. On the other hand, nothing is known about the fees paid to direct licensors – neither the way in which these are calculated nor the criteria on which they are based. PACE does not adhere to this tariff structure, but intends to license part of the rights in a festival separately for the authors represented by PACE, on different terms not approved by the ESchK. In this connection, PACE claims that SUISA would dispute the tariff with the concert organisers before the IPI. This is not true. The IPI is not responsible for this issue at all – rather, responsibility lies with the aforementioned ESchK and, in the event of an appeal, the Federal Administrative Court and ultimately the Federal Supreme Court. It is true that SUISA does not agree with the organisers’ associations regarding the new concert tariff and that Administrative Court proceedings against the decision of the ESchK are therefore pending. However, the organisers' associations and SUISA agree that it makes no sense to complicate and increase the cost of a licensing system for concerts that works well in Switzerland by involving foreign companies such as PACE.