Ceo's review: 90 years for the benefit of music authors

Finnish Composers' Copyright Society Teosto was founded on 7 March 1928 to promote the success of Finnish music authors.  The founding of Teosto was sparked by the beginning of radio broadcasting by the Finnish Broadcasting Company Yle in 1927 and the international development of copyright law.

The world today looks very different than 90 years ago when Teosto started its work, led by Master of Arts Lauri Ikonen. The way we distribute and consume music has changed dramatically. Even though Yle is still an important distribution channel, more music than ever before is available to consumers through legal online services. Entertainment, especially music, is an important part of today’s sharing and platform-based economy.

Ready for change!

We can be certain that the development we have seen in the past few decades will continue at an accelerating pace. In addition to being prepared for the upcoming changes, Teosto also wants to influence their direction. It is important for us to provide competitive services for our clients, including those who have their eyes on the international market or have already achieved international success.

In 2017, we studied the ways and trends of consuming music and developed new, even visionary, opportunities to collect copyright royalties from abroad for the music authors and publishers we represent. We also speeded up distribution and, together with Music Finland and the Finnish Music Publishers Association, arranged the second Top 20 – Future Hitmakers course for music authors with potential for international success.

With our services, we want to provide our music user customers with an easy interface and enable innovative business. We want to make the use of music in business as easy as possible. This goal was partially achieved last year, as the background music customers of Teosto and Gramex started using the services of our joint venture, GT Music Licences Ltd. Now our background music customers can get all the required permits from one place.

The new Act on the Collective Management of Copyright entered into force in January 2017. It regulates the operations of Teosto and the other joint administration organisations. Teosto’s operations were already largely compliant with the new Act, but it required us to check the rules of Teosto and amend the client agreement of rightholders.

Another change was the outsourcing of the operations of our long-time partner, Nordisk Copyright Bureau (NCB), to the Danish copyright organisation Koda. This was necessary because the amount of royalties collected by NCB had been declining for a long time, resulting from the decline of physical record sales and, consequently, the increasing use of digital services. We ensured that, despite the outsourcing, NCB will serve Teosto’s customers in Finnish also in the future.  

Massive breakthrough of digital music services – eliminating the value gap

In spring 2017, we studied music consumption in the Nordic countries together with the other Polaris organisations (the Norwegian Tono and Danish Koda). The results of the study revealed the impressive breakthrough of digital services: in the Nordic countries, over 80 per cent of consumers are already using streaming services to listen to music. YouTube and Spotify are by far the most popular music services. Music streaming on social media, Facebook in particular, is also increasing.

The momentary removal of music content from Finnish YouTube by Google in November 2017 concretely demonstrated YouTube’s importance as a music listening channel. The music was taken down because of our prolonged agreement negotiations with Google. Eventually the music was inaccessible to consumers only for one day, but it caused an avalanche of feedback in traditional and social media. This also confirmed our view of the importance of YouTube as a music service in Finland.

The significance of YouTube, Facebook and other platform services for music consumption has constituted the main message in our contribution to the preparation of the EU’s copyright reform, both in Finland and in Brussels.

The business of platform services, such as Facebook and YouTube, is now based on free access to cultural content. They either fail to pay any copyright royalties to the rightholders or the payment is not in line with the actual use of the content.

We want to ensure that the value accumulated by cultural content is fairly distributed as income also to the music authors and publishers. In addition, we want to ensure that consumers can enjoy cultural content as extensively as possible. We believe that this can be made into a win-win situation, providing that the value is equitably distributed to those involved.

In Finland, our advocacy work focused on the taxation of music authors. We worked to promote legislation that provides better support for music authors’ work and also to promote taxation that makes full-time creative work and successful business possible for music authors.

Anniversary year full of activity

In the light of the figures for 2017, significant growth was seen in online royalties with an increase of 15 per cent year-on-year.  However, more than half of the royalties collected by Teosto still come from the radio and television.

Advertisement-funded TV channels suffered from a challenging financial situation in 2017, which also affected the amount of royalties. Royalty negotiations and maintenance of the price level will become increasingly challenging in the AV field. Even though we revised our AV pricing in 2017 and received a positive opinion from the Finnish Competition and Consumer Authority, there is still disagreement on the price level with some TV content broadcasters. 

Even in tight situations, our history of 90 years provides us with a firm foundation to stand on. Copyright is at the core of our expertise, and we have a solid experience in looking after music authors’ interests. Therefore, I am confident that we can respond to the future challenges, improve our own operations and the market and access new areas of business. The world keeps changing, but our basic job remains the same: we enable the success of music authors.

Katri Sipilä,
CEO of Teosto