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Royalties paid for the use of music

Composer-lyricist Jenni Vartiainen
Member of Teosto since 2004

When you are a Teosto member and your music is performed in public or recorded (audio or AV recording), you will receive royalties for the use of your music.

The royalties paid for music use belong to the authors of the works: composers, lyricists and arrangers. In addition, a share of the royalties for published works is paid to the publishers of the works.

If you perform your own music, you will be entitled to royalties as long as you remember to submit a performance notification for the performance.

A public performance of music always requires a licence and payment of royalties. Teosto licenses the works of its own members and also represents members of foreign copyright societies in Finland.

  • Public performance includes playing music on the radio, television, the internet, at a concert or as background music. A licence is always required for a public performance.
  • Private use includes, for example, the use of music by private individuals on social media platforms and streaming platforms. On platforms licensed by Teosto, music authors will also receive royalties from private use.
  • In addition, private use includes weddings, birthdays and other family occasions. PLEASE NOTE! Events held by companies or other organisations do not usually constitute private use, even if they are private events.
  • You also need a licence to reproduce music (e.g. on CDs, vinyl records, DVDs, Blu-ray discs, computers, online music services, USB flash drives or external hard drives).

The organiser of the event or other music performance is responsible for obtaining a licence. The performer is only responsible if they are the organiser of the event.

We collect royalties for music use by selling licenses to music users so that they can reproduce and perform music to promote their business or entertain their customers and employees.

Licence prices are based on agreements between Teosto and music users and public price lists, which you can read more about on the Music Licences page.

However, we cannot pay royalties until the party using the music has paid the licence fee to Teosto. If the licence fee is not paid on time, the payment of royalties to music authors and publishers will have to be postponed. See unpaid royalties that could not be distributed on time.

Royalties paid by Teosto are subject to withholding tax. We will deduct withholding tax and any other personal deductions (e.g. distribution or publisher advances) from your distributions according to your tax rate.

Licences for music reproduction are issued and reproduction royalties are collected and distributed by our partner Nordisk Copyright Bureau (NCB). Most of the invoicing for international online music services and the processing of music usage data are handled by the Network of Music Partners (NMP).

Royalties collected by NCB and NMP are paid through Teosto’s distributions.

The amount of royalties paid for the use of an individual work depends on many factors:

  • The event, media or service in which the music was played
  • For commercial operators, how much revenue or, for example, proceeds from ticket sales they have generated
  • The performance category multiplier, which can be used to, for example, determine a larger amount of royalties for live music performed on  the radio compared to recorded music
  • The duration of the performance
  • The number of performances

Teosto’s distribution rules define the principles on the basis of which we distribute and pay royalties. On our website, we have listed approximate distribution values, i.e. prices per minute, for various types of music use.

In addition, the amount or royalties received by an individual author is affected by how the authors of the work have decided to share the royalties accumulated by the work.

The authors agree on the royalty shares for the work themselves when they submit a work notification. When agreeing on royalty shares, the limits stated in Teosto’s distribution rules must be considered.

The amount of royalties paid to the rightholders, i.e. music authors and publishers, is always based on the total amount of the music royalties for the respective year by distribution category (radio, TV, live performances, etc.). This total amount is divided by the number of minutes of music performed in that distribution category.

However, the amount of royalties is emphasised on the basis of how the music was actually used, which means that not all minutes have the same value.

  • For radio and TV performances, the amount of royalties collected depends, among other things, on the reach of the channel/station on which the music was performed, the duration of the performance and the number of performances.
  • For events, the amount of royalties is influenced by, for example, the size of the venue and, in the case of paid events, the proceeds from ticket sales and, in the case of free events, the number of attendees.
  • For online services, the amount of royalties collected is affected by, for example, whether the service is paid or free, whether the content can be streamed or downloaded, the amount of use and the time the content has been available in the service. See the list of services licensed by Teosto.

Other revenue and transfers from Teosto are added to the royalties collected. On the other hand, our operating costs and the cultural contributions will be deducted from the total.  Cultural contributions are used to support the performance of domestic music through, for example, grants awarded by Teosto’s member organisations.

You can find more information on what is added and deducted from the total distributable amount in section 5.2 of the Distribution Rules.

Teosto’s distributions are based on the reports and information we collect from various parties.

Artists who perform music submit information to us about the works they perform at gigs and concerts. Music users, such as gig organisers or TV channels and radio stations, also submit information to us about the music they have played or reproduced.

Based on these reports, we create an overall picture of whose music has been performed, i.e. to whom we should distribute royalties.

Read more about distributions and payments dates on Royalty Distributions page.

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Television companies pay performing right royalties in accordance with the agreement between Teosto and other companies for using music. The channels deliver Teosto detailed information on the broadcast programmes and the music included in them. Teosto’s affiliates are in charge of delivering the information from abroad.

The contents broadcast on television are grouped in the distribution reports by the role the music has on the programme. For instance, the music in television series and commercials has a different price in the distribution report.

Radio companies and stations pay Teosto performing right royalties either in accordance with an agreement made with Teosto or their turnover. The amount of payment based on turnover is a percentage of the turnover, depending on the amount of used music.

We receive detailed information on the music radio channels play. The amount of royalties the music author receives depends on the time of day their work was played and the extent of the channel’s service area, among other things.

The organiser of a concert or a festival pays performing rights royalties for the use of music, based on the proceeds from ticket sales at paid events and the number of audience at free events. The performing right royalties of shows are based on either the actual or the potential number of audience (events free of charge) or the proceeds from ticket sales.

Teosto has agreements with municipalities, congregations and music institutes, among others, on paying performing right royalties and reporting performance information. For instance, municipalities pay annual compensation based on the number of residents in the municipality for the use of music.

Companies often use background music in their customer facilities to promote sales and create atmosphere. Companies pay performing right royalties for the use of background music in accordance with, for instance, the surface area of the customer facilities or the number of potential customers.

Teosto conducts a biannual background music survey to find out the sources of background music used by companies. The reporting and distribution regulation committee and the Board of Teosto utilise the survey information when making a decision on the reporting and payments of background music. The income charged for background music is distributed to the authors on the basis of the performance information in radio, television and live events.

Teosto has a reciprocal representation agreement with over 80 foreign copyright societies. These agreements cover over 100 countries. Their objective is to ensure that our members receive performing rights royalties when their music is performed abroad. Foreign copyright societies manage the promotion of copyrights and the payments of performing right royalties in their countries and distribute the compensations to our members through Teosto. In turn, Teosto represents the rights of foreign authors and publishers in Finland and ensures that their music is licensed and their performing right royalties are paid.

The distributions from abroad are usually divided into similar payment groups as domestic compensations. However, each copyright society has its own payment policies and Teosto is unable to influence other societies’ distribution rules.

Other copyright societies are for example Swedish Stim, German Gema and Norwegian Tono.

The compensations paid for using music in online services are based on the agreements between service providers and Teosto. The reporting and payments of using music online can be influenced by the fees of the service, manner of performing, usage volume and the duration of having the work available in the service, among other things. Online distributions are paid for the services licensed by Teosto or an affiliate of Teosto. See the list of online services licensed by Teosto.

Online distribution covers both downloads of music services, streaming music (e.g. Spotify) and the music played in audiovisual services and online radios.

A lending compensation is a copyright royalty paid to the author of a work. Authors whose works are lent from public libraries or from the libraries of universities, colleges or universities of applied sciences in the form of books, sheet music or sound recordings are entitled to a lending compensation.

The lending compensation applies to for example authors, translators, journalists, illustrators, musicians and illustrators.

Lending compensation is based on the European Union’s Rental and Lending Directive and the Copyright Act. It is funded from the state budget and paid by the Ministry of Education and Culture.

Lending compensation is administered by three organisations: Sanasto pays the remuneration to authors of literary works, Kopiosto to authors of graphic works and photographic works, and Teosto to authors of music.

The distribution of the lending compensation to authors is based on the lending statistics of libraries. Compensation is paid to authors of music, text and images who live in Finland or in another EEA country.

The amount of compensation per author is determined by the number of times the publication or sound recording is borrowed. Music authors who are members of Teosto receive the lending compensation directly as part of their distributions taking place in December.

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