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Annual Report 2020// Transparency Report • Income Statement

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Annual Report 2020// Transparency Report • Income Statement ANNUAL REPORT 2020// TRANSPARENCY REPORT • INCOME STATEMENT Photo: Johannes Andersen, concert with Oslo Ess INDEX DIRECTORS´REPORT FOR 2020 Transparency report 3 Message from the CEO 4 Directors’ report 5 Legal and administrative structure 8 Board and management 9 Special Report on Social, Cultural 10 and Educational Services Distributions 14 Disbursements abroad 17 Income from abroad 23 Financial statements 27 Accounting policies and Notes 34 Auditor’s report 48 Photo, first page: Johannes Andersen, from drive in concert with Oslo Ess, Norges Varemesse april 2021. INDEX Photo, this page: Shutterstock TONO Annual Report 2020 // 2 TRANSPARENCY REPORT TONO is a cooperative society, owned and controlled by The EU’s Directive on collective management of copyright and composers, lyricists and music publishers which manages the related rights (2014/26/EU) was adopted in 2014, and will be performance rights for musical works in Norway and collects incorporated into Norwegian law in 2021. The law will require fees for their public performance. TONO licenses the public the production of an annual transparency report. TONO wel- performance of copyrighted music on the radio, TV, internet, comes the directive and the requirement relating to the pro- at concerts and the cinema, etc., upon payment. Each year, it duction of a transparency report. TONO has elected to pro- transfers its financial profit from music that has been played duce an annual report for the 2020 financial year that includes in public to the music rights holders. the information we believe the directive requires. TONO has more than 36,000 members, and also manages the TONO would like the annual and transparency report to rights, in Norwegian territory, of millions of creators and music provide a deeper insight into and greater understanding of publishers belonging to TONO’s sister companies in countries TONO’s nature, operations, finances and management among across the globe. our members, sister companies, customers, other members of the music industry and other interested parties. INDEX TONO Annual Report 2020 // 3 MESSAGE FROM THE CEO A difficult year for TONO’s members. economy, which includes both creators and music publishers. Regrettably, we believe that 2021 will be an even more diffi- The compensation schemes and financial stimulus packages cult year. We doubt that the high level of international income In June 2020, when TONO published its annual report for established by the authorities fell largely wide of the mark we saw in 2020 will be repeated in 2021, since all our sister 2019, it was with pride in having a fantastic result. Neverthe- as far as our members were concerned. The sense of falling companies are reporting a significant slump in revenue. Nor less, that feeling was naturally overshadowed by the crisis through the cracks was keenly felt. can we expect, as things stand today, that the concert market that the arts in general, and TONO’s members in particular, will fully reopen this year. found themselves. Unfortunately, we are still struggling with In the autumn of 2020, however, after discussions with Nor- that crisis, and 2021 will be no better than 2020. In fact, as we way’s Culture Minister Abid Q. Raja himself and key gov- TONO has argued that the Ministry of Culture must give pri- write this in May 2021, things look set to get worse. ernment authorities, we succeeded in establishing a basic ority to compensation schemes in 2021 rather than financial understanding of how the creator economy works. TONO’s stimulus packages. Stimulus packages have proved to be Since 12 March 2020, TONO’s employees have managed op- estimates of lost income formed the basis for what was, in the imprecise and of limited value. In addition, they have been erations from their own homes. Despite this, all distributions new year, made tangible by the Norwegian Ministry of Culture complex and have failed to meet the needs of the creator and bursary awards to members have taken place on time and in the form of NOK 30.5 million in state aid. These are funds economy. We believe that the Ministry has seen the limitations as planned for a normal year. which TONO will distribute in the manner specified in the Min- inherent in stimulus packages and will prioritise compensa- istry of Culture’s appropriation letter. The funds will be distrib- tion schemes going forward. The area hit hardest by the disastrous year of 2020 was the uted to Norwegian members working in Norway, on the basis concert segment, the most important source of income for a of established distribution principles. Up to NOK 600,000 may TONO will continue its endeavours to ensure that our mem- large proportion of TONO’s members. The reopening of the be deducted to cover costs. The normal cultural fund levies bers receive compensation for the losses they are suffering as cultural sector still seems a long way off, and activity in our will not have to be deducted from the grant. a result of Covid restrictions. We believe the government’s un- sector is lower than ever. derstanding of the creator economy is now well established. It is clear that TONO’s members have made good use of the We hope this will make work on compensation schemes and In the spring of 2020, artists responded with a series of crea- lockdown period. The number of works registered in 2020 in- stimulus packages less complicated this year. tive initiatives, including live-streamed concerts. Here, TONO creased by 17 per cent from the previous year, and the num- quickly established licensing solutions that inspired sister ber of new members was higher than ever before. societies to do the same. Initially, the live-streamed concert phenomenon was characterised by makeshift and literally Overall, TONO’s annual profit was far better than we feared “DIY” solutions. They generated far less income than would halfway through 2020. Budget targets were reached. normally be the case. As the year progressed, live-streamed Yours sincerely, concerts have become more professional in form, although It should be mentioned that Norwegian rights holders’ works Cato Strøm we cannot say that this has in any way lifted concert earnings are also popular outside the country. Income from abroad CEO from rock bottom. rose by 46 per cent compared with 2019, to NOK 95.7 million. Throughout 2020, TONO has worked to establish arrange- At the same time, TONO’s administration managed to reduce ments that could compensate for some of the losses our costs by NOK 4.5 million. At the close of the year, the cost members have suffered. It has not been easy to make the ratio stood at 13.8 per cent, which was lower than budgeted. Ministry of Cultural understand the complexity of the creator INDEX TONO Annual Report 2020 // 4 DIRECTORS’ REPORT // 2020 Current status and future development of the business Unit holders a going concern is therefore without risk. There is a strong TONO SA (TONO) is a cooperative society that manages per- As at 31 December 2020, TONO had a total of 1,828 regis- likelihood that TONO’s operations will achieve a good result in forming and recording rights relating to music. In addition tered unit holders. 2021, although it is expected that part of TONO’s business will to individual collection contracts with 35,910 rights holders, As at 31 December 2019, TONO had 1,752 unit holders. be negatively affected by the Covid-19 pandemic. TONO has reciprocal representation agreements with 76 in- Of the unit holders who are also creators, 16.6 per cent are ternational sister companies, and thereby also manages their women. TONO has at all times a large and liquid cash management rights in Norwegian territory. TONO has delegated manage- One per cent of TONO’s unit holders are music publishers. portfolio. The objective is to achieve the highest possible re- ment of its rights holders’ recording rights to the Nordic Cop- turn on investment at the lowest possible risk. TONO’s con- yright Bureau (NCB) in Copenhagen, which is jointly owned Financial performance servative investment strategy secures stable returns. Each by the Nordic collection companies Koda (Denmark), Stim TONO generated gross revenues of NOK 711,881,506 in 2020. individual investment shall be made among those with the (Sweden), STEF (Iceland), Teosto (Finland) and TONO. This is a decrease of 7.67 per cent compared with 2019. After lowest risk in their asset class. Risk is further reduced through a 2 per cent deduction payable to the Norwegian Composers’ a broadly composed portfolio, and TONO employs multiple TONO is operated from Oslo. Its office address is Tøyenbek- Fund, as well as losses and administrative costs, TONO had financial services providers to reduce the management risk. ken 21, NO-0134 Oslo, Norway. NOK 597,806,883 for distribution to rights holders, a decrease of 11.36 per cent compared with 2019. For the business as a TONO administers ownership of the business’s premises in In 2020, the board of directors held nine meetings, while whole, expenses accounted for 13.84 per cent. Sameiet Galleriet through the wholly owned subsidiary Har- board committees held 12 meetings. moni AS. The financial statements have been prepared in accordance Collection contracts with the Norwegian Accounting Act of 1998, and comply with Market developments As at 31 December 2020, TONO had collection contracts with prevailing laws, regulations and generally accepted account- Norway was hard hit by the Covid-19 pandemic in 2020. The 35,910 rights holders. In 2020, 1,678 new rights holders were ing practice. The Accounting Act of 1998 caused material wide-ranging measures implemented to reduce the spread of added, 18 of whom were music publishers.
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