We always seek to operate as cost-efficiently as possible, while aiming to increase the royalties paid to rightholders for the use of their music. We are continuously exploring opportunities to operate more efficiently.

A key financial indicator of our operations’ efficiency is the expense percentage. We aim to provide high-quality, reliable copyright services with a reasonable expense percentage.

In 2023, our operating expenses increased as expected but still remained within the budget. The expense percentage of our operations was higher than last year, 14.6% (2022: 12.6%). The expenses of Teosto’s own operations amounted to EUR 12.39 million (EUR 10.45 million in 2022). >> Read more about the bases of the expense percentage here

A single large item was an expense provision for the Finnish broadcasting company MTV’s legal costs (EUR 0.7 million), recorded on the basis of the decision issued by the Market Court on 31 October 2023, which was negative from Teosto’s point of view. In addition, we continued investments in our digital services as planned, such as the new distribution and reporting system, web services and financial systems.

The total costs of our service consist of operating expenses and the withholding of cultural contributions. Based on a decision by its members, Teosto’s withholding percentage for cultural contributions is 6% of the net royalties, which is a moderate rate when compared internationally.

Teosto carries out investing activities in two separate investment portfolios:

• The activities and investing principles of Teosto ry’s portfolio comply with the Act on the Collective Management of Copyright and are confirmed by the General Meeting. The portfolio consists of funds that are waiting for distribution to rightholders.
• The Teosto Fund’s portfolio is a self-financed reserve, the capital of which is intended for the promotion of Finnish creative music. The use and investing principles of the portfolio have been confirmed by the General Meeting.

Our investment activities are based on an investment policy built around the central principles of a long-term investment horizon and diversification. Thanks to these principles, our portfolios are resilient to short-term changes in value. We require asset managers who take part in our investing activities to commit to the UN Principles for Responsible Investment (PRI) and we also require active ESG reporting.

In 2023, the investment market was turbulent due to events in international relations and their consequences. Nevertheless, both Teosto ry’s and the Teosto Fund’s portfolios delivered positive returns.  At the end of 2023, the market value of the Teosto Fund’s investments was about EUR 45.0 million and the rate of return was about 3.8% p.a. (2022: EUR 41.7 million and -2.3% p.a.).  At the end of 2023, the capital in Teosto ry’s fund, calculated on the basis of market value, was about EUR 40.7 million and the rate of return was about 2.1% p.a. (2022: EUR 40.9 million and -5.1% p.a.).

The Teosto Fund was established for the purpose of promoting Finnish music and improving the conditions for it. The purpose of the Fund is to maintain and secure the continuity of the funding of these promotion activities in a situation where previous sources of funding are reduced or eliminated.

The Fund’s primary funding source is cultural contributions, which Teosto withholds on the basis of decisions by its members and in accordance with the agreements it has made with its rightholders and foreign copyright societies.  In 2023, the share of cultural contributions withheld from collected royalties was 6.0% (2022: 6.0%) after the deduction of costs, i.e. about EUR 3.4 million. Some of the cultural contributions are used directly to promote music (see the section “Cultural responsibility”). The Fund has also grown through increases in the value of assets as well as private copying compensation paid from the state budget.

In 2023, Teosto’s Extraordinary General Meeting decided to establish a new cultural foundation called the Teosto Cultural Foundation. The foundation aims to improve the conditions and diversity of Finnish creative musical art and to make it more international over the long term. A decision was made to donate about EUR 10 million in investment assets to the foundation from the Teosto Fund as the initial capital.

The state pays private copying compensation from its budget to music authors for the copies made of their works for private use. In 2015–2023, the amount of private copying compensation was EUR 11 million a year. The compensation was set up to compensate for the losses caused by making copies of works for private use.

For 2023, Teosto received a total of EUR 2.2 million of private copying compensation (2022: EUR 2.2 million). Of this amount, we paid about EUR 1.2 million to Teosto’s rightholders as distributions and allocated about EUR 1.0 million to music authors’ common goals through the Teosto Fund.

The state also pays lending compensation through Teosto for the library loans of sheet music, scores and recordings. The lending compensation is based on the EU Rental and Lending Directive and the Copyright Act. In 2023, the lending compensation paid to Teosto totalled EUR 0.49 million (2022: EUR 0.49 million), of which we distributed EUR 0.39 million to composers, lyricists and arrangers.