We always seek to operate as cost-efficiently as possible, while ensuring the quality of our services and optimising the distributions made to our members. Our goal is 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. As we were able to significantly increase our accumulated royalties in 2022 while keeping our expenses under control, we achieved a record low expense percentage at 12.6% (13.7% in 2021). The expenses of Teosto’s own operations amounted to EUR 10.45 million (EUR 9.88 million in 2021).

A competitive expense percentage is important in the competition for the management of rightholders’ rights.  The total costs of a collective management organisation’s management services for rightholders consist of the administrative expense percentage 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.

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 2022, the share of cultural contributions withheld from collected royalties was 6.0% (2021: 6.0%) after the deduction of costs, i.e. about EUR 3.5 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.

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 fund, 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). We examine our asset managers’ performance from this perspective annually and expect active reporting on ESG matters.

It was a weak year for investment activities: as a result of the substantial decline in stock prices and the rise in interest rates, the return on both investment portfolios was slightly negative when measured by market value.At the end of 2022, the market value of the Teosto Fund’s investments was about EUR 41.7 million and the rate of return was about -2.3% p.a. (2021: EUR 41.7 million and 21.1% p.a.).  At the end of 2022, the capital in Teosto ry’s fund, calculated on the basis of market value, was about EUR 40.9 million and the rate of return was about -5.1% p.a. (2021: EUR 45.1 million and 15.9% p.a.).

The state pays private copying compensation from its budget to music authors for the copies made of their works for private use. In 2015–2022, 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 2022, Teosto received a total of EUR 2.2 million of private copying compensation (2021: EUR 2.3 million). Of this amount, we paid about EUR 1.0 million to Teosto’s rightholders as distributions and allocated about EUR 1.1 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. The compensation is paid from the state budget and the Ministry of Education and Culture is responsible for paying it. In 2022, EUR 0.49 million in lending compensation (2021: EUR 0.54 million) was paid to Teosto, of which we distributed EUR 0.43 million to composers, lyricists and arrangers.