Sacem

Annual Report and Accounts 2017 Accounts and Report Annual MAXIMISING VALUE in a connected world

Society of Authors, Annual Report and Composers and Publishers of Music Accounts 2017 Maximising value in a connected world

As the world’s leading authors’ rights organisations, our mission is to protect and enhance the value of our members’ rights, and to inspire a strong and sustainable future for our industry.

In an increasingly connected world, our focus on driving innovation in support of our commitment to delivering fairness and value for creators have resulted in another record year of collections and distributions. During the year, we collected €969.8m in royalties and distributed €843.9m to around 300,000 creators around the world for 2.4 million works. Including mandates, we collected more than €1.4bn and distributed in excess of €1.3bn1.

Our membership grew to almost 165,000, and we processed over 2.1 trillion streams – more than double the number in 2016.

At our heart, we are deeply committed to a sustainable and vibrant cultural environment, investing over €58.9m in a range of social and cultural programmes to support talent and creativity across all ages, activities and communities within France and internationally.

As we move forward to address the challenges and opportunities of the WELCOME future, our objectives remain to continue investing in technology leadership and process efficiency to maximise value for members, and to remain committed to TO SACEM long-term cultural sustainability. 1 See pages 30-31. 2017

Winning the Sacem Award this Artists featured at the front cover: year is a chance to continue my musical journey. I am an author, ANITTA Songwriter/composer/performer I compose to accompany my JAIN Songwriter/composer/performer lyrics. I really define myself by KUNGS what I write.” Composer/performer Gaël Faye Author/composer/performer

GRANDS PRIX SACEM 2017 Francis Lemarque Prize for New Artists

Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

Contents INNOVATING FOR Strategic review OUR MEMBERS 12 02 At a glance – an overview of Sacem in 2017 04 President’s statement 06 Chief Executive’s statement 08 Sacem around the world 10 Market overview 12 Innovating for our members 14 Protecting and caring for creators 16 Creating value for our members 18 Investing in the future 20 2017 Highlights 30 Business model

Management report 34 Operations and governance 36 Supervision and members 37 Collections 40 Repertoire 40 Mandates and distribution 42 Cultural aid CREATING VALUE INVESTING IN 44 Social responsibility FOR OUR MEMBERS 16 THE FUTURE 18 45 Human resources 45 Information systems 45 Legal framework 50 Financial performance (combined figures)

Transparency report 56 Transparency report 58 Transparency auditor’s report

Statutory financial statements HIGHLIGHTS BUSINESS 60 Income and expenses statement OF THE YEAR 20 MODEL 30 61 Balance sheet 63 Notes to the statutory financial Audiovisual statements 2017 ¤319.8m 66 Appendices 2016 €328.3m

General rights 76 Statutory auditor’s report 2017 (regional network) ¤305.8m 78 Glossary 2016 €291.8m

Private copying (Sacem repertoire) 80 Credits 2017 ¤95.8m 2016 €83.2m

Annual Report 2017 Sacem 1 At a glance – an overview of Sacem in 2017

Sacem is the most international of MUSIC WITH all the authors’ societies in the world. We are proud to be at the forefront of our increasingly global industry – maximising the value of authors’ rights, investing in NO BORDERS technology, driving strategic partnerships and ensuring that royalties are distributed efficiently, accurately and fairly. 166 nationalities represented 20,012 foreign members Creators e eat cr Cre to k ati ds or ng un w w wo F ne rk

Register online Authors’ rights

Calculation of distribution Publishers release

Software

Work is consumed / played / broadcasted streamed

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Key drivers 2017 in numbers >170 735,820 territories covered by our multi-territory contracts completed To collect and distribute online copyright contracts negotiated by Sacem royalties

For authors, composers and publishers of music, dubbers and subtitlers, poets, comedians and author-directors 164,840 500,000 total number of members customers 300,000 2.4m songwriters, composers and publishers works on which royalties were distributed To protect and defend around the world who benefited from royalties distributed by Sacem Our members, their rights, their interests and our repertoire

Revenue

To offer our members individual support +2.1% Increase For all matters related to social protection and professional training 2017 €969.8m collected in 2017 2016

Distribution To dedicate ourselves to sustainable creation +1.7% Increase Through cultural activity in France and internationally 2017 €843.9m distributed in 2017 2016

Annual Report 2017 Sacem 3 President’s statement

EFFICIENCY AND DYNAMISM ARE OUR HALLMARKS THROUGHOUT THE WORLD

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Just as freedom of expression continues to be fundamental to our system of law more than two centuries later, royalties are the structural framework of intellectual property, focusing on the protection of the moral and economic rights of the creator.”

Jean-Claude Petit Composer, Conductor, President of the Board of Directors 2017-2018

Royalties are a valuable From this point of view, the year 2017 Other measures have also been resource that have been was a trying year for many creative taken to simplify procedures, enhance artists who were suddenly deprived services and improve efficiency, which established step by step of their income by a large audiovisual as I have stated on previous occasions throughout history. group that decided not to pay them, will help to maintain Sacem’s position while continuing to use their works as a dynamic, innovatory society that They are the result of a centuries long to add value to its programmes. stands by its traditions and its principles, struggle by our predecessors to put Fortunately, the action taken by whilst adapting its practices to what the an end to preferential rights and to Sacem and other collective management times demand. recognise the right of songwriters organisations eventually reasserted the and composers to manage their own right to payment and managed to rebuild Jean-Claude Petit works as they see fit. The recognition a balanced relationship that guarantees Composer, Conductor, of authors’ rights was one of the great fair remuneration for songwriters in President of the Board of Directors 2017-2018 concepts to come out of the French the future. revolution, and these rights were recognised as inviolable and sacrosanct I was very happy with the firm stand under the Convention on the Declaration our Society took last year to protect of the Rights of Man and of the Citizen. the rights of creators and publishers. Just as freedom of expression continues Efficiency and dynamism have become to be fundamental to our system of our hallmarks throughout the world law more than two centuries later, and have led large companies such as royalties are the structural framework Warner, and more recently Impel, to of intellectual property, focusing on the join us and benefit from our extensive protection of the moral and economic experience. The URights online authors’ rights of the creator. rights management platform that we have set up jointly with IBM is part of If the fight for democracy and freedom the strategy to increase the value of our of expression is everyone’s concern in members’ rights for both musical and a world where there is no shortage of audiovisual works. The plan is to make sorcerer’s apprentices with authoritarian URights available to other societies too – tendencies, then royalties also require members of Armonia in particular. heightened vigilance in the face of those who would eradicate them for In the interests of increased commercial reasons, hiding behind their transparency, 2017 was also marked fake “libertarian” rhetoric. by a major reform of our governance, the result of the European Directive on Collective Management of Copyright and Related Rights being adapted for French law. A major effect of this reform Sacem headquarters has been the creation of a supervisory Paris, France board and an ethics committee within the Society.

Annual Report 2017 Sacem 5 Chief Executive’s statement

Sacem has changed considerably over the last few years in order to meet the challenges of an evolving and increasingly competitive world. The changes in how music is used, and in particular the growth of streaming services as a strategic and rapidly growing market have been key drivers behind our Society’s need to adapt and modernise. Thousands of billions of pieces of data are now processed by our systems every year.

Sacem has been particularly effective in implementing the transformational WE ARE DRIVING modernisation essential to meeting these challenges, and has consequently succeeded in strengthening its position VALUE IN AN INCREASINGLY as the world’s leading authors’ society. Our ongoing investment in technology over the last few years, together with the upgrading of our tools for managing the documentation of songwriters’ works and the distribution of their rights, the URights strategic partnership with IBM GLOBAL for managing authors’ rights online, the simplification of our operating procedures MARKETPLACE to make our work more efficient, the improvement in the services that we provide to our members are initiatives that have all contributed strongly to another year of record results.

Our main goals: PROACTIVE DIGITAL for our members and clients

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The changes in how music is used, and in particular the growth of streaming services as a strategic and rapidly growing market have been key drivers behind our Society’s need to adapt and modernise. Thousands of billions of pieces of data are now processed by our systems every year.”

Jean-Noël Tronc Chief Executive Officer, Sacem

A successful year Addressing key issues We have also lobbied successfully, together with the whole music sector, Sacem achieved an increase in royalties As in every year, Sacem has been to support the export of French music collected in almost all areas. While on the front line of several issues in abroad, the Ministry of Culture having revenues from our regional network, 2017, including electronic music. Our finally taken the decision to double online and international, continued to objective is to improve the identification the funds available for promoting the grow, audiovisual media remain the of electronic works played in clubs and influence of our artists around the world. principal source of rights. Sacem’s festivals by adopting an internationally At the national level, Sacem actively commitment and dedication has ensured recognised technological solution, supports arts education and the teaching that more than 300,000 creators DJ Monitor. A resource platform for of instrumental skills in schools and and publishers worldwide received electronic music, available in French and colleges with the objective – involving royalties from us in 2017. €844 million, English, has also been put in place and almost every branch of music – of forming representing 87% of collections, was delivers information that is useful for both a choir or an orchestra in every school directly distributed to our members, French and international professionals. by 2022. authors, composers, writer-directors Even though the use of music on and publishers and we are pleased legal sites is exploding, Sacem is fully Among the cultural and creative to have been recognised by the main committed to the fight against piracy and industries, music is still remarkably supervisory authority in France in terms will continue to provide tools to help its dynamic. In this environment, Sacem of transparency and efficiency. members in this fight. A new service, in remains committed to serving its 165,000 co-operation with LeakID, now allows members in France and around the Our approach and results have clearly our members to remove or de-reference world, fiercely defending the interests contributed to increasing Sacem’s links to their works that are posted on of its songwriters, composers and attractiveness to creators around the illegal websites or streaming platforms. publishers who create the music that world, with nearly 4,000 new members Once again, Sacem has been playing an enchants and enthralls us all year long. joining in 2017 – 13% of them from influential role in defending and promoting abroad. Sacem is now one of the largest the interests of our sector wherever this Jean-Noël Tronc collective management organisations in is possible. We have maintained the Chief Executive Officer, Africa and the Middle East with nearly pressure to preserve authors’ rights in Sacem 10,000 members – an example of the forthcoming European Digital Single Sacem’s focus on regions where creative Market Directive, and to ensure that activity is undergoing an unprecedented the transfer of value does not benefit period of growth and where we can the digital platforms to the detriment actively participate in the development of creators. of author’s rights. Another example of our increasing attractiveness relates to our expertise in streaming and to the efficiency and transparency of our services. Last year, the publisher Warner/ Chappell Music entrusted us with the management of its repertoire within the framework of a multi-territorial online music licensing agreement for multiple streaming platforms.

A 360° VIEW INTERNATIONAL FIGUREHEAD

Annual Report 2017 Sacem 7 Sacem around the world

SERVING CREATORS WORLDWIDE We are a leading company on the international scene. Our strengths: a worldwide repertoire that grows and A unique service offer shines in all its diversity. Our assets: tools, services Being a member of Sacem means and a commitment to creators and publishers of benefiting from unique worldwide all kinds. Our commitment: to anticipate, innovate, social support among artists’ societies share... to maximise the value of the rights of all those (such as providence and health insurance, and relief funds) and from who create, wherever they are. cultural support that encourages French and foreign artists in their international development including assistance with showcases, tours, festivals and concerts. We offer our members a range of online services €26.5m 1 (filing works, viewing statements...), as 7% well as a benefits programme: Sacem invested in social and cultural North America programmes and aids PLUS which involves partnerships with many companies offering discounts to our members including Apple, 2,115 AccorHotels and many more. cultural projects supported (out of the 3,091 projects received by Sacem) throughout France and worldwide

9%1 Sacem is a secure base for a songwriter. South America I have confidence in my company and I feel protected, even though I think we Gilberto Gil must always go further in our exploration Songwriter/composer/ of the digital market. It has to be very performer proactive because everything is moving very fast these days.” Carlinhos Brown Songwriter/composer/performer

1 Sacem foreign members.

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Maximisation of rights

To collect rights, we provide worldwide And with URights, the world’s leading coverage thanks to our recognized platform for processing the use of expertise. 164 agreements have been online work, we can guarantee ever signed with 116 foreign companies fairer and more efficient remuneration 164 116 and 200 contracts have been signed that adapts to the way music is agreements foreign with online music services such consumed. signed in 2017 companies as Deezer, YouTube, Apple music, Amazon, Netflix, and SoundCloud. 200 contracts signed with online music services in 2017

36%1 Europe

6%1 Middle East

Oum Songwriter/composer/ Amr Diab Composer performer 2%1 Asia Pacific

40%1 Africa

Oumou Sangaré Songwriter/composer/performer Oumou Sangaré, a songwriter, composer Special contacts and performer, joined Sacem in 2017. As 8,120 other African songwriters and As unique contact points, our composers, she has chosen to rely on correspondents are attentive to the specific needs and expectations of our expertise to protect her interests and creators around the world. remunerate her for the use of her works in France and throughout the world.

Annual Report 2017 Sacem 9 Market overview FOCUS ON LIVE SHOWS ACROSS THE WORLD The appetite for physical events and venues has sharpened. The music industry is now once again driven by live events, and revenues from live shows now exceed recorded music sales in some regions.1 North America

North America is the leader in the performing arts (US$61.5bn) with a pronounced craving for musical shows1. 80% of millennials in North America Key facts attended a live event in 2015. Music was still a large part of Customer experience is a millennials’ budget: US$125 in 2015. crucial priority to sustained success.2

T-Mobile Arena Los Angeles

Sources 1 Cultural Times | The first global map of cultural and creative industries Cisac, 2015. 2 European Arena Yearbook 2017 Published on June 30, 2017.

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My music is inspired by influences from all walks of life. After two years of touring and 207 concerts, I am proud to have received the Sacem Grand Prize for repertoire abroad in November 2017.” Jain US$16.5bn Songwriter / composer / performer ticket sales for live music performances in Europe total more than twice those of GRANDS PRIX SACEM 2017 recorded music sales (US$6.3bn)1 Grand Prize for repertoire abroad 16.1m people attended live music shows in 2016 in European arenas

Europe France Significant investments are being made With more than 740 million throughout Europe to construct ever France has the most extensive inhabitants, Europe’s multiple more state of the art entertainment network of music venues in the countries, currencies, cultures facilities, thus putting pressure on world: SMACs (modern music and languages, on paper, existing venues to continually upgrade their facilities, as well as increasing the venues) for emerging artists, make the continent a complex overall competition for tours and events 2 Zénith arenas in the largest cities, proposition for touring artists. between arenas, cities and countries.2 and vast arenas for major touring artists.

Royal Albert Hall London

Digital

In a connected development, Venue specific apps help to numerous venues have been strengthen relationships with fans, working hard to improve their allowing arenas to exploit collected Philharmonie de Paris social media presence, with data and promote customer France marketing teams recognising the royalty via competitions.2 benefits of being able to show potential ticket buyers video clips, artist interviews and other immersive multimedia content to boost number of ‘buy now’ clicks.

Annual Report 2017 Sacem 11 Innovating for our members

AT THE FOREFRONT OF INTELLIGENT Three multi-territorial deals with Facebook

TECHNOLOGY Sacem has signed three deals with Our success depends on our ability Facebook, covering the use of Sacem’s to adapt in a fragmented online world. repertoire, Wixen Music Publishing’s repertoire and the repertoire of Ongoing investment programmes, Canadian society SOCAN. The partnerships with world-leading pan-European mandates have technology leaders and driving forward been expanded to include Facebook. innovative new projects ensure that we The multi-year licensing agreements will cover more than 180 territories across remain at the forefront of technology, Facebook, Instagram, Messenger and which is at the heart of our commitment Oculus, and will enable users to create to generating value for our members. and share videos including music from Sacem and the repertoires we represent.

Key trends in 2017 95% of online revenues are collected from multi-territorial platforms

We are excited to expand our relationship with Sacem and the music rights holders they represent. 2.1trillion Facebook is committed to partnering with industry leaders like Sacem and we look forward to working music usage data points processed by Sacem in 2017 with them to discover innovative ways to use the power of songs to connect people.” Anjali Southward Head of International Music Publishing Business Development Facebook

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An eventful year for URights

The URights tracking tool operates in a Development of the music online process Big Data environment to search sales and its operational management tools is statistics from all DSPs between 2015 now complete. New partnerships and now – a total of 17 billion sales lines Processing of VOD and SVOD data – and its business intelligence tool provides will be operational in 2018/2019, as will business analysis of online sales activity. In June, an agreement was signed with pricing simulation. Warner/Chappell Music in which Sacem was entrusted with the international management of online music licenses for 2017 2018 the Warner/Chappell Music repertoire. The mandate covers rights relating to mechanical reproduction and will apply to pan-European licenses concluded with Deezer, Qobuz and YouTube on a multi- territorial basis. URights URights URights Tracking Business Intelligence Online Processing Licensing identification

Music Prediction VOD / SVOD We work closely with Sacem on processing digital rights from important platforms, including YouTube and Deezer, in Europe. We’ve been delighted with Sacem’s combination of technical expertise and customer service excellence. Our partnership is really delivering Downloads and streams processed by Sacem IT for our songwriters, ensuring they’re Number of streams or downloads (billion) paid promptly, accurately and transparently.” 2017 2,108 2016 983 Eric Mackay Executive Vice President Global Digital Strategy 2015 589 Warner/Chappell Music 2014 303

2013 122 0 2200

Blockchain: Improved identification of musical works

In 2017, Sacem joined forces with Work has focused on load testing Next step: to develop ASCAP (US) and PRS For Music to push the technology to its limits. a product that can be (UK). The three societies have been These tests have confirmed that used by the collective working with IBM in using blockchain the use of blockchain technology management organisation technology to manage links between would be beneficial for creating a ecosystem and the music International Standard Recording foundation to facilitate identification industry in general. Codes (ISRC) for music recordings of musical works. and ISWC (International Standard Work Codes) for musical works, among other things.

Annual Report 2017 Sacem 13 Protecting and caring for creators and publishers COMMITMENT TO OUR MEMBERS From its inception, Sacem has had a strong socially responsible and supportive dimension. This commitment is a testament to the collective and cooperative spirit of creators and publishers. 40 Today, at a time when creative careers continue to Sacem members involved in the governance of social organisations (Agessa, Ircec, Raap, have elements of uncertainty, Sacem is developing Racl, Afdas) and guarantors of the rights and and strengthening its social support programmes protection of the interests of creators to better meet the specific needs of its members at each stage of their professional careers. 120 individual relief actions implemented by the Comité du cœur in 2017 for creators in need, €185,000 paid in individual grants and voluntary support

Becoming a member of the Comité du cœur is an €32.4m affirmation that songwriters dedicated to social welfare projects are a brotherhood, in solidarity. Everyone contributes according to heir means and helps to support those who are going through hard times.” Vanessa Bertran Dubber/President of Professional Union of Dubbing Authors

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The social system of Social services for songwriters is our common the greatest number good, and was hard-won of people only a few decades ago. It is our duty to defend it, and to In 2017, the Sacem General strengthen it if possible, and to Assembly adopted a major ensure that it endures.” reform creating the conditions Patrick Lemaître for expanding the Mutual Composer/Board member/President of RACL/ Assistance Allowance Scheme Vice-President of IRCEC (Régime d’allocations d’entraide – RAES) to include as many of its members as possible.

The Board of Directors also decided to increase the resources of the Relief Fund Sacem is committed to from 2018 onwards. creating and strengthening a model that cares for creators at every age in their lives. It has set up specific social schemes for its members.

Solidarity and relief The Sacem Relief Fund and the association of the Comité du cœur provides financial, moral and practical Health insurance support and assistance to songwriters, The Société Mutualiste (Smacem, composers and publishers in difficult or “Friendly Society”) enables situations. Created in 1951 and professional members to benefit recognised as a public service, the from their own complementary Comité du cœur derives its resources health insurance. from donations and legacies, beginning with the contributions of solidarity creators who are its members. Mutual assistance The purpose of the Mutual Assistance Allowance Scheme (RAES) is to secure the retirement of Sacem members aged over 60, in addition to the coverage provided by pension plans.

Annual Report 2017 Sacem 15 Creating value for our members THE BEST VALUE FOR CREATORS We are continually innovating Between two countries, a to make sure that maximum world tour and international royalties are distributed promptly collaboration, Sacem is always and accurately. Our network and at our side.” cutting edge technology enable us to maximise collections – IBEYI meaning that our members can Songwriters/composers/performers be confident that they are being properly rewarded.

A society for everyone

Following a customer satisfaction survey carried out among its members in 2016, Sacem has launched 20 projects to improve the services it provides to members and anyone whose author’s rights are managed by Sacem.

This ambitious programme involves all our teams and has succeeded in simplifying many of our in-house processes, allowing us to carry out our work much more efficiently.

Sacem has always been there for us in our joint adventure. With its support, we have been able to spread our work around the world.” David Guetta / Fred Rister Producers/Composers

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+5% Increase Maximising royalties Regional network collections We are constantly developing 2017 our territorial coverage and the €305.8M performance of our regional network. We are increasing collections 2016 €291.8M for general rights (music sound, concerts, shows, cinemas, festivals, 2015 €284.2M nightclubs) despite the difficult economic situation. 2014 €280.7M 735,820 contracts in 2017 with 500,000 highly diverse clients 60+ local offices throughout France Fatoumata Diawara Songwriter/composer/performer

Online access 81,450 7,875 14,125 members opened an account on the works registered online each month connections per month on the portal to sacem.fr portal consult usage data on works

Annual Report 2017 Sacem 17 Investing in the future ENSURING A SUSTAINABLE CREATIVE FUTURE FOR ALL Sacem works to support the vitality of our cultural and creative heritage. Laying the groundwork for a future of creative and cultural Thanks to Sacem for helping all dynamism is a core objective. We are types of music live in harmony. committed to supporting a healthy Without Sacem, contemporary and strong cultural scene and create classical music would not exist.” development opportunities for Karol Beffa authors, composers and publishers. Author/composer

GRANDS PRIX SACEM 2017 Grand Prix of Symphonic Music

Growing up with music

As a trailblazer among authors’ societies, in 2013 Sacem Since 2015 founded a centre dedicated to the provision of cultural and artistic education. Its objective 39 7,500 was to give everyone access to shows supported schoolchildren music making, to introduce a wide range of musical repertoires and to promote the awareness of music and artists from all parts of the world. Sacem is committed to supporting communal musical 25 300 making for all, convinced that festivals with performances artists it plays a major role in the dedicated to children learning process, but it is also important for personal and social development from an early age. Since 2016, an important part of allocating funds from the private copying levy has been dedicated to artistic and cultural education.

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Our cultural involvement in 2017

Cross-border cultural activities 2,115 68.4% cultural projects supported throughout of projects supported out of the France and worldwide 3,091 proposals received Supporting cultural diversity and promoting French language productions abroad are at the heart of Sacem’s remit. As a result of the first partnership with the French Institute, the “Musique ¤ 26.5 m et Cinéma” project was born. invested in cultural programmes and aids This promotes composers of music for the moving image during screenings abroad. Our participation in the Bureau Export de la Musique Française serves to promote the French music industry and its artists internationally.

Promotion and funding of audio-visual production There is no music without pictures. Whether it’s for TV or cinema, Sacem is involved in numerous In 2017, our partnerships with for choreography, with words or projects and sets up new the CNC and France Télévisions for the imagination, we always partnerships every year to support enabled us to join forces to compose to an image.” the work of composers who establish la Cinémathèque create music for film and audio- du Documentaire. Matthieu Gonet Songwriter/Composer visual productions. It supports the creation of original music, its promotion, its distribution and professional training for authors and composers.

Annual Report 2017 Sacem 19 2017 Highlights

TRANSPARENCY & GOVERNANCE

On 1st March, a major statutory reform was adopted at an Extraordinary General Assembly which brought together nearly 350 voters, all members of Sacem.

This made Sacem the first collective New Board elections management organisation to comply in On June 20, the General Assembly France with the new European regulation. elected its new Board of Directors for This reform includes strengthening of one year and the members of the new the powers of the General Assembly, the Supervisory Board. creation of a Supervisory Board and an Ethics Committee, the annual publication societe.sacem.fr/gouvernance of a transparency report, as well as the implementation of measures to further increase transparency and to make sure Sacem members are kept better informed.

Bruno Cotte Pascal Roche Former president of the criminal chamber In September, Pascal Roche was of the Court of Appeal and former appointed as CTIO (Chief Technology and magistrate at the International Criminal Information Officer) at Sacem and joined Court, Bruno Cotte has been the first the Executive Board. president of Sacem’s Ethics Committee since September.

New law on transparency As provided for by the law of 7th July 2016 on the freedom of creation, collective management organisations have created a unique electronic database that lists how the sums they have allocated to cultural activities have been used, financed by private copying, with the names of their beneficiaries and amounts. This database is accessible to everyone.

aidescreation.org

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LA FIN DES PRÉJUGÉS SUR LA MUSIQUE : MORE L’EXPÉRIENCE DE SONORISATION DES LIEUX SILENCIEUX La musique là où on ne l’attend pas

Etude et enquête terrain réalisée en 2017 par LSA études pour Mood Media et Sacem dans 5 magasins et secteurs SERVICES (optique, banque, pharmacie, sport et station-service) qui ne diffusaient pas de musique, entre mars et juin 2017. Sacem has launched an MAIS 71% DES COMMERCES DIFFUSENT DE LA MUSIQUE, 9 FRANÇAIS SUR 10 ÉCOUTENT DE LA extensive new programme, 29% RESTENT ENCORE RÉTICENTS MUSIQUE AU QUOTIDIEN 1

QUE SE PASSE-T-IL QUAND LA MUSIQUE EST IMPACTANTE ET AMÉLIORE L’EXPÉRIENCE-CLIENT called “New Member ON DIFFUSE DE LA MUSIQUE DANS CES LIEUX SILENCIEUX? Relations” to enrich +30% 8 CLIENTS SUR 10 PRÉFÈRENT SUR LE NET PROMOTER SCORE relations with its members ENTENDRE DE LA MUSIQUE 2 and better meet their needs. LA MUSIQUE AMÉLIORE LA PERCEPTION DES ENSEIGNES

Among the projects are the Sacem Plus establishment of a multi-channel system 70% +61% 65% With its Sacem PLUS service, Sacem DES CLIENTS TROUVENT C'EST LA PROGRESSION DE DES CLIENTS PENSENT QU'ELLE for membership, the creation of a QUE LA MUSIQUE AMÉLIORE LA PERCEPTION ’PREMIUM’ DIFFÉRENCIE LE MAGASIN DES offers its members a service in the L’IMAGE DU MAGASIN DU MAGASIN AUTRES POINTS DE VENTE reception centre for professional and 3 fight against piracy: completely free, LA MUSIQUE FIDÉLISE LES CLIENTS full members, the launch of a mobile accessible via the member account at application, and the appointment +32% +41% sacem.fr, LeakID makes it possible for DE CLIENTS SOUHAITENT DES PRIMOVISITEURS of representatives dedicated to RECOMMANDER LE MAGASIN ONT ENVIE DE REVENIR 4 illegal sites to be delisted. LA MUSIQUE AMÉLIORE LA RELATION foreign members. AVEC LES CLIENTS ET LE QUOTIDIEN DES SALARIÉS createurs-editeurs.sacem.fr/ offres-sacem-plus

POUR 76% DES CLIENTS LES CLIENTS SONT DE MEILLEURE 73% DES CLIENTS SE SENTENT LE TEMPS D’ATTENTE PASSE HUMEUR D’APRÈS 67% DES PLUS EN FORME GRÂCE À LA PLUS VITE SALARIÉS ET LA RELATION VENDEUR DIFFUSION DE MUSIQUE CLIENT EST FACILITÉE !

MOTIVATION : 93% DES SALARIÉS PRÉFÈRENT TRAVAILLER EN MUSIQUE

5 SÉRIEUX ET CONFIDENTIALITÉ, LES NOUVEAUX ATOUTS DE LA MUSIQUE EN POINTS DE VENTE

76% DES CLIENTS AFFIRMENT QUE LA POUR 56% DES CLIENTS LA DIFFUSION DE MUSIQUE EST COMPATIBLE AVEC MUSIQUE EST GARANTE DE LA LE SÉRIEUX DU POINT DE VENTE CONFIDENTIALITÉ DES ÉCHANGES

IL N’Y A PAS DE LIEUX SILENCIEUX, CHAQUE LIEU QUI ACCUEILLE LE PUBLIC A VOCATION À DIFFUSER DE LA MUSIQUE, PARCE QUE LA MUSIQUE FAIT PARTIE DE Sacem Pro L’EXPÉRIENCE-CLIENT ! In June 2017, the Sacem Pro programme celebrated its first birthday! This service supports Sacem’s clients in organising musical events and the distribution of music within their institutions. Happier with music clients.sacem.fr/sacem-pro A study on the impact of music in public places, which are usually music-free, was carried out by Mood Media and Sacem. Among the lessons learned: 67% of employees find that customers are in a better mood when music is played!

clients.sacem.fr

Annual Report 2017 Sacem 21 2017 Highlights continued AGREEMENTS

Sacem has uncompromisingly defended the interests of its members, in order Canal + to guarantee everyone the Warner/Chappell Music After several months of litigation, Sacem fairest level of remuneration. Sacem has been appointed by Warner/ and the Canal + Group reached an Once again, the Society Chappell Music in a new partnership to agreement, in October 2017, concerning administer its repertoire in a multi-territory the payment of authors’ rights for works has demonstrated the online mandate. from its repertoire that are broadcast importance of the collective on all the Canal + Group company’s management model in channels and services. The group has paid Sacem all sums due for 2017. defending the rights of creators.” Jean-Noël Tronc CEO of Sacem

Universal Music A historic partnership has been established between Sacem and Universal Music MENA to collect authors’ rights from the United Arab Emirates, since there is no local CMO. Under this Amazon and YouTube Code of best practice agreement, UM MENA will licence all Sacem has renewed its You tube In October, a historic agreement was sorts of music uses (background music, Agreement with improved conditions and drawn up between organisations concerts, TV and radio channels...). has signed a new deal with Amazon for representing professional songwriters, Sacem ensuring all back office its streaming subscription service. composers and publishers, with the operations thanks to its technologies signing of a Code of Best Practice in and capabilities. the publishing of musical works in the presence of the Minister of Culture. INNOVATION In January, Sacem and IBM created URights, a new copyright management platform for online music.

Thanks to this 10-year strategic Blockchain alliance, the identification of the rights ASCAP, Sacem and PRS for Music are associated with works distributed online all committed to a Blockchain project, will be made easier and will allow a in order to improve the identification of better understanding of the value of works for their beneficiaries. online music.

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ELECTRONIC MUSIC

In October 2017, after taking Electronic Music Factory Sónar Festival stock of the economic As a result of collaborative work with all In 2017, Sacem was a partner in the electronic music professionals, Sacem + D Barcelona, International Congress landscape of electronic also launched the first online resource on Creative Industries and Technology. music in France for the centre dedicated to electronic music: This event is organised in parallel with first time in 2016, Sacem Electronic Music Factory, designed to the Sónar Festival which focuses on support the creators and publishers of new trends in electronic music. announced the signing of electronic music. a partnership with DJ Monitor, market leader in the identification of electronic music. electronicmusicfactory.com

The objective: to improve the identification of titles played in clubs and at music festivals and to improve the monitoring of the rights of electronic music creators.

The Rex Club is delighted to announce that a monitoring system has been installed to ensure artists are fairly paid when their music is played in our club. I would encourage other establishments to Amsterdam Dance Event (ADE) install this system as soon Presentation of a monitoring solution for electronic music and a new online as possible.” resource centre available for creators, Fabrice Gadeau producers, promoters, bookers and Director of Rex Club publishers.

Annual Report 2017 Sacem 23 2017 Highlights continued

OUR COMMITMENT FOR AUTHORS’ RIGHTS

Throughout the Presidential election campaign, the association Tous Pour La Musique challenged the candidates with 13 proposals to strengthen music’s place From left to right: Jean-Marie Moreau, Fred Rister, Sylvie Hoarau (Brigitte), Johan Ledoux (Blankass), Anggun, at the heart of public policies Guillaume Ledoux (Blankass) and Da Silva in France. These proposals Meet the songwriters included a plan for music On 30th May 2017 in Brussels, the education for all. event Meet the songwriters, initiated under the aegis of the Gesac (European mavoixpourlamusique.fr Group of Societies of Songwriters and Composers), brought together many tplmusique.org creators who launched an appeal to the European Union in the presence of high- level decision-makers in Parliament and the Commission. European creators have called on the EU to take better account of From left to right: Jean-Marie Moreau, copyright on the Internet so that the value Guillaume Ledoux (Blankass), Fred Rister and of cultural assets broadcast by content Johan Ledoux (Blankass) platforms is recognised.

meettheauthors.eu

Fighting piracy ÉDUCATION | LA MUSIQUE, UNE LANGUE VIVANTE POUR TOUS La musique est une chance pour la construction du collectif comme de l’individu, mais son apprentissage n’est pas suffisamment valorisé dans les cursus scolaires. Tandis que98% Sacem unceasingly adapts its expertise des français écoutent de la musique, seuls 11 % d’entre eux jouent d’un instrument et rares sont ceux qui comprennent son processus de création et l’action bénéfique qu’elle peut avoir dans bien des domaines (éducatif, social, médical, etc.). regarding counterfeiting. The work of its investigators, with the police and the gendarmerie, led in 2017 to the closure PROPOSITION/ 01 of the T411 site, which illegally offered the download of more than 68,000 albums 01 and 100,000 films. UNE FORMATION ORCHESTRALE OU CHORALE DANS CHAQUE ÉCOLE Donner à chaque établissement scolaire les moyens financiers et humains de se doter de formations orchestrales ou chorales sous cinq ans.

National Music Centre Timo Wölken’s report PUBLIC On June 22nd, Roch-Olivier Maistre The European Parliament’s Legal Affairs presented his report to the Minister Committee has adopted Timo Wölken’s of Culture in which he proposed the report on the proposed “cable and INSTITUTIONS creation of a public institution dedicated satellite” regulation. Parliamentarians, to music, which would be called “National especially Jean-Marie Cavada, played a Music Centre”. He stressed the need unifying role in these fundamental issues to put the music sector at the heart of for creators. public policies.

24 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

ARTISTIC GRANDS PRIX AWARDS SACEM On 27th November 2017, the Sacem Grands Prix  ceremony was held in the Salle Pleyel. This year, a IX SACEM 2017 new award has made R its debut: The Grand Prix for ANDS P ANDS R

#PRIXSACEM Works for Young Audiences,G SACEM.FR awarded to Aldebert.

List of award winners 2017

Sacem Special Prize Grand Prize for French Song, Salvatore ADAMO author-composer (creator)

PHOTOGRAPHIES DES LAURÉATS DES GRANDS PRIX 2017 : Adamo/Claude Gassian – Aldebert/Sylvain Granjon – Karol Beffa/Amélie Tcherniak – Jean-Michel Bernard/Giovanni Cittadini Cesi – Bigflo & Oli/Fifou – Calogero/Laurent Pierre GRILLET Seroussi – Tristan Carné/Sylvie Grosbois – Eric Debègue/Jean-François Augé – Gaël Faye/Chris Schwaagga – Pierre Grillet/Sidney Caron – Nora Hamzawi/Sylvain Norget – Jain/Paul & Martin – Mory Kanté/Marc Ribes – François Meïmoun/ Grand Prize for Works for Young Catherine-Maria Chapel – Petit Biscuit/Jonathan Bertin – Soprano/Fifou – Justin Timberlake, Shellback, Max Martin/Dalle, Axel Öberg, Armando Gallo – Bojan Z/DR. Conception Belleville Audiences Grand Prize for Comedy ALDEBERT Nora HAMZAWI Grand Prize for Symphonic Grand Prize for Sacem Music (career) repertoire abroad From left to right: Jean-Noël Tronc, Quincy Jones, Karol BEFFA JAIN Jean-Claude Petit Grand Prize for music composition Grand Prize for World Music Quincy Jones for film Mory KANTE Jean-Michel BERNARD On April 25th in Los Angeles, Sacem Grand Prize for symphonic awarded Quincy Jones a special Rolf Marbot Prize for the song music (young composer) prize in recognition of his outstanding of the year François MEÏMOUN contribution to music during the Colcoa “JE SUIS”, Bigflo & Oli Los Angeles French Film Festival, Grand Prize for Electro co-organised by the Franco-American Songwriters: PETIT BISCUIT Florian and Olivio Ordonez Cultural Fund and the American Guilds. Grand Prize Urban Music Composers: SOPRANO Florian and Olivio Ordonez, Augustin Charnet, Clément Libes Award for the best new international work of the year Publishers: BMG Rights Management France, Warner “CAN’T STOP THE FEELING” Chappell Music France, La Main Invisible Justin Timberlake Publishing Songwriters: Justin Timberlake, Max Martin, Shellback Film/Video Director’s Grand Prize Tristan CARNÉ Publishers: Tennman Tunes, Universal Music Grand Prize for French Song Z Tunes LLC, DWA Songs, MXM Music AB. (creator-performer) Anne Dudley CALOGERO Sub-publishers for France: Universal Music Composer Anne Dudley was the winner Publishing, Kobalt Music Publishing Limited. Grand Prize for Music Publishing of the 11th France Music-Sacem Award CRISTAL PUBLISHING, Eric Debègue Jazz Grand Prize for film music. BOJAN Z Francis Lemarque Prize for New Artists Gaël FAYE

Annual Report 2017 Sacem 25 2017 Highlights continued TRIBUTES Great names of French songwriting. Sacem pays tribute to them all.

Johnny Hallyday Barbara Among these great French names was On the 20th anniversary of Barbara’s the “idol of three generations”, Johnny death, the Philharmonie de Paris Hallyday, who died in December. The dedicated an event exhibition to the French singer performed more than French singer. Supported by Sacem, 1,300 songs written by more than 800 this exhibition contained unpublished songwriters and composers. archive material, such as a song written by Barbara for Jacques Higelin, loaned by Sacem.

Jacques Prévert In March, Sacem held a special celebration for Jacques Prévert, one of France’s most popular 20th century poets and an innovative screenwriter for some of the most influential French films of the 1930s and 1940s.

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OUR MEMBERS

Jorge Arriagada Composer Music for film Jorge Arriagada, historical partner of Cannes Raoul Ruiz, gave a master class at the Sacem supports composers of film World Cinema Pavilion, of which Sacem music in association with the Cannes is a partner. Film Festival and the Official Selection, Directors’ Fortnight, Critics’ Week, ACID Sacem is also a partner of Talents and Marché du Film. This year, composer Cannes-Adami, for which it finances the Gabriel Yared, member of Sacem, was on creation of original music for short films the official selection jury. and promotes the work of composers.

Parcours Croisés Promotion Ceremonies Salvatore Adamo Marcel Azzola 50 year-long career, hundreds of songs, 48 members were honoured for their more than 100 million records sold 50 years of shared history with Sacem. worldwide... He took advantage of the Among them, legendary accordionist release of his 25th album to tell his story Marcel Azzola, who, at the age of 90, is in the 23rd May 2017 edition of Parcours still warming up his accordion. Croisés, a scheduled event organised by Sacem. A success that was extensively prolonged on social networks.

7 years of French VIP For 7 years, Sacem, with Midem, the Export Office, CSDEM and FCM, has been supporting and promoting the work of young independent publishers during major musical events (shows, festivals). The 2018 promotion: Philippe Manivet (Musigamy), Matt Darti (Anteprima Prime), Matthieu Morin (Hold On Music).

Annual Report 2017 Sacem 27 2017 Highlights continued

DEBATES, IDEAS AND TEACHING

Going back to school with music Going back to school in 2017 was accompanied by music! Placing the collective practices of artistic and musical education at the centre of the educational project, the Minister of National Education Jean-Michel Blanquer, and the Minister of Culture Françoise Nyssen, arranged for schoolchildren to be welcomed into their first day back in class by music.

Creation Days The first Journées de la Création were held in Lyon on June 29th, in partnership with the Nuits de Fourvière Festival. Supporting school orchestras Sacem supports and promotes the Two days of debates and insights about creation of orchestras and choirs at the future of creation. school, supporting in particular many structures such as Orchestre à l’Ecole (Orchestras at School), the Fédération Nationale des Chorales Scolaires (National Federation of School Choirs) and the Jeunesses Musicales de Pervenche Berès, Member of the France (Young French Musicians). This European Parliament commitment was echoed in the Choir Plan announced by the government.

Ministry of National Education partnership Sacem University has partnered with Canopé, the official educational network of Welcoming the future Ministry Of National Education. Together, This debate on the impact of Artificial Fabrique à Chansons they produced “Les Fondamentaux”, five Intelligence in music was held during the The third Fabrique à Chansons was fun videos about music, artistic creation Printemps de Bourges Festival. sponsored by Aldebert. This is an event and authors’ rights, for teachers, kids and that brings together 2,500 schoolchildren their parents. and 100 songwriters from throughout France every year.

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Educ’Arte partnership Sacem University is the official provider of educational contents about music on the online content platform of Arte Media for teachers and their students. Educational contents Sacem University produces all the educational tools used by Sacem and their partners to raise awareness about author’s rights among young people and their teachers, and beyond.

COMMENT SE FABRIQUE LA MUSIQUE ?

Au départ, comme pour toute création artistique, la musique est une idée qui va L’INTERPRÈTE devenir une œuvre. C’est celui qui chante ou qui joue la musique Le compositeur et l’auteur sont les créateurs qui donnent naissance de manière concrète à cette idée. (musiciens, orchestres). Parfois, l’auteur et le Ils sont les « parents » de l’œuvre musicale et c’est pour cela qu’ils ont des droits sur leur création : des compositeur sont aussi interprètes. droits d’auteur. C’est à partir de leur création qu’un jour, peut-être, nous entendrons cette musique ou chanson à la radio ou jouée en concert. La Sacem gère les droits des auteurs, compositeurs et éditeurs de musique.

INGÉ

DIRECTRICE SON ARTISTIQUE

L’œuvre peut être jouée en concert, c’est ce qu’on appelle la musique L’ENREGISTREMENT DE L’ŒUVRE vivante ou le live. Le concert peut avoir lieu dans une salle de spectacles, LA SCÈNE en plein air, dans un festival. Il se fait en général soit dans un studio “personnel” (ou home-studio) soit dans un studio professionnel. LE COMPOSITEUR L’AUTEUR Les ingénieurs du son et le directeur artistique accompagnent l’artiste. Le label (maison de disques) LA COMPOSITRICE L’AUTEURE finance en général l’enregistrement. C’est la personne qui crée la musique, soit en C’est la personne écrivant des notes sur une portée, soit en composant qui écrit les paroles. directement sur un instrument ou un ordinateur.

L’ÉCOLE DE MUSIQUE L’ÉDITEUR L’ÉDITRICE TOI, MOI, NOUS L’apprentissage de la musique se fait dans des écoles de musique ou des conservatoires avec des professeurs de musique et de chant. Certains C’est le partenaire des créateurs. Il commercialise L’œuvre existe aussi grâce à sa diffusion : à la radio, à la télé, sur élèves en feront leur métier, d’autres juste un loisir. les œuvres, les développe en trouvant des interprètes Internet, dans les magasins… La musique est partout dans nos Dans de nombreux pays, la musique s’apprend à pour les jouer, en les proposant dans des films. Il gère vies. Nous l’écoutons sur nos téléphones portables, dans nos l’école, comme beaucoup d’autres matières. aussi les droits liés à la reproduction des partitions. voitures, sur nos chaînes Hi-Fi.

# Sacem on the festival road From Avignon to La Rochelle via Trouville, the festival season is an opportunity for Sacem to set out along the roads of France for meeting creators and sacemsupports project leaders, from all genres and all disciplines.

With Mise en oeuvre(s), a programme following a framework agreement with Ulule, KissKissBankBank and proarti, offered via several directories in different packages, seventeen crowdfunding campaigns were set up, raising a total of €100,000 with a success rate of 100%.

Annual Report 2017 Sacem 29 Business model

We are fully focused on maximising the value of royalties for all our members. Our strong OUR network and innovative systems combined with a commitment to technological COLLECTIONS development mean that we are well placed to maintain our leading position. Our revenues amount to €969.8m, and including mandates we collected more than €1.4bn.

Audiovisual 2017 ¤319.8m -2.6% 2016 €328.3m

General rights 2017 (regional network) ¤305.8m 4.8% 2016 €291.8m Sacem authors’ rights Private copying (Sacem repertoire) collections 2017 ¤95.8m 15.2% 2017 2016 €83.2m €969.8m 2016 International €949.5m 2017 ¤83.9m 2.7% 2016 €81.7m 2.1% Online 2017 ¤83.8m 7.9% 2016 € 77.6 m

CD/DVD/BD 2017 ¤80.8m -7.0% 2016 €86.8m

Mandates and other Total Sacem 2017 5.7% collections €445.4m (inc. mandates) 2016 €421.5m 2017 €1,415.3m

2016 2017 figures were impacted by a contractual amendment resulting in an increase in revenues. €1,371.0m 2016 has been restated pursuant to the contractual amendment between Sacem and SDRM.

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The strength of our collection processes and systems enables us to distribute fully DISTRIBUTION and invest heavily in order to support and energise the full cycle of sustainable value AND OPERATIONS creation. We nurture talent and creativity within and outside Sacem and are committed to delivering the best for everyone that we have a relationship with.

Distribution of 2017 Sacem authors’ rights ¤843.9m 1.7% 2016 €829.9m

2017 2016 restated Sacem members 553.6 538.7 Mandators (managed by Sacem)/other collecting societies 214.6 212.5 Social & cultural programmes 47.9 49.4 Cultural projects (25% PC) 27.8 29.3 Sub-total 843.9 829.9 Accounting One-Off impact on distribution 40.1 0 Total Sacem Other mandators/other collective societies and mandators 449.1 377.2 distribution Total distributions including mandates 1,333.0 1,207.1 (inc. mandates) We distribute to our members amongst the highest proportion of collected authors’ rights in our industry. Our members are our lifeblood, and we are dedicated to ensuring that each one receives the best possible return for their creativity. 2017 €1,333.0m

2016 €1,207.1m

Other mandates 2017 €449.1m 19.1% 2016 €377.2m

Operations 2017 ¤160.0m -1.8% 2016 €162.9m

2017 2016 Personal expenses 137.7 135.2 Other operating expenses 45.5 47.1 Net amortisation and provision 15.2 17.5 Other income -38.4 -36.9 Total operating costs 160.0 162.9

Most of our expenses relate to our staff and systems. Sacem has some of the most knowledgeable and experienced people in our industry, supported by advanced technology and cutting edge processes.

2017 figures were impacted by a contractual amendment resulting in an increase in revenues. 2016 has been restated pursuant to the contractual amendment between Sacem and SDRM.

Annual Report 2017 Sacem 31 Business model continued FOCUS ON SACEM’S BUSINESS MODEL

Cash inflows Sacem

87% of collections are distributed to right holders and through Collections our social and €969.8m cultural actions

Withheld Cash €125.9m

Resources Variance on suspense account €153.1m net result reserve - € 27. 2m Deduction for Undistributable administration costs €127. 8 m €25.3m

32 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

The graph opposite shows how the In addition to these undistributable Cash outflows cash inflows (collections) balance with amounts, the net expenses are also cash outflows (attribution to rightholders financed through deductions for from distribution and Social and cultural administrative costs. These deductions services in addition to the legal resources are calculated as a rate on amounts to 25% Private Copying). The necessary input to distribution calculations. The processes carried out by Sacem to deal rates chart is validated by the Board of with distribution calculations generate Directors and depends on the type of suspense accounts in Sacem’s financial uses. For instance, the different rates statements. used for the General Rights collected by Sacem’s regional network show four When a line from the programmes levels based upon the actual costs for transferred by the clients cannot be collection and distribution; while the rate Distribution matched to a registered work from used for BIEM/IFPI records producers the works database, the distribution IT contracts reflects the Cannes agreements €768.2m systems generate suspense accounts to signed by many European CMOs. for rights holders keep on hold the money due for these These rates can be updated whenever lines. During three years the calculations needed by decision of the Board in their are processed again to pay the assignment to check the statutes rule to rightholders as soon as the programme keep a cumulated net result around 0 (+/- is enhanced, manually corrected or as 5% of actual expenses of the year) as for the work is lately registered… But after a non profit company such as Sacem. three years, the remaining amounts in suspense accounts are accounted for as resources to finance costs, in conformity to Sacem’s statutes. These amounts, called undistributables, do not Social and cultural include undistributables linked to Private Copying rights as stated by the French law (Intellectual Property Code) which are €47.9 m transferred as resources to Cultural Aids through the legal 25% Private Copying.

25% Private copying € 27. 8 m

Annual Report 2017 Sacem 33 Management report WE ARE MANAGED BY OUR MEMBERS Strong governance Our members ensure that Sacem is run to high standards of governance and transparency. 1st Sacem is the first French collective management organisation to have implemented the European Directive on collective management

Board of Directors for 2018-2019 First row, left to right: Serge Perathoner / Thierry Perrier / Frédéric Doll / Jean Fauque / Frédéric Zeitoun 160 Second row, left to right: members representing 164,840 Rémy Grumbach / David Séchan / Christine Lidon / Wally Badarou / Patrick Lemaitre / Alain Chamfort / creators and publishers across our Marion Sarraut / Thierry Communal / Richard Seff / Laurent Petitgirard / Jean-Marie Moreau / various boards and committees Arnold Turboust / Rodolphe Dardalhon / Jean-Marie Salhani / Caroline Molko

Our operations Support, protect and defend Established in 1851, Sacem is a Our business operations involve We also play a crucial role in the private non-profit non-trading supporting creative people, protecting sustainability of musical and cultural their repertoire and defending creativity. For over fifty years we entity managed by its members their interests both nationally and have been implementing a range of – mainly songwriters, composers internationally. Sacem is a member cultural development programmes, and music publishers. of various international organisations encompassing all the richness and working for the rights of creative people diversity of cultural creativity. Our activities Our role is to negotiate with users, collect and the protection of copyright, including include supporting creative careers, and accurately distribute authors’ rights to the International Confederation of encouraging the renewal of repertoires, our members when their work is available Societies of Authors and Composers facilitating the distribution of creative publicly. For example, through audiovisual (Cisac), the International Office of output and helping young professionals media, concerts, festivals, the internet, Mechanical Publishing (Biem), and the get a start in the business. Since 1985 cinemas, nightclubs and shops, or European Consortium of Societies of these cultural activities have been reproduced through, for example, digital Authors and Composers (Gesac). In funded by revenues from royalties on files, CD, DVDs or video games. We also France we work alongside other industry Private Copying in addition to voluntary manage the collection and distribution groups lobbying for similar rights, and aids created in the 60s – enabling us to of royalties to members of other similar strive to deliver the best quality of support 2,115 projects across a range French and international organisations services and support for our members. of cultural genres in 2017. which have given Sacem a mandate to represent them.

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Governance The reform in four points: Founded and managed by 1. Greater involvement of songwriters, composers and publishers in the its members – songwriters, decision-making process with effective composers and publishers reinforcement of the powers of the of music, authors of dubbing General Assembly; and subtitles, poets, stand-up 2. Creation of a Supervisory Board, comedians and author-directors – made up of Sacem songwriters, Sacem operates as a cooperative. composers and publishers of Sacem, to oversee the Board of Directors and Elected by the Sacem General Assembly, the CEO’s activities; the Board of Directors is made up of 3. Creation of an Ethics Committee, six songwriters, six composers and six chaired by an independent third party, music publishers (one-third renewable to prevent and manage conflicts each year in June), as well as an author- of interest; director as a permanent member and an 4. Reinforcement of measures providing author-director as a substitute. The Board for greater transparency and better of Directors makes all decisions essential information for Sacem members. for the life of Sacem. It appoints the CEO, who manages the Society and is A wealth of experience responsible for implementing the policies Established in 1851, Sacem is defined by the Board. a private non-profit non-trading entity managed by its members – On 1st March 2017, less than three mainly songwriters, composers months after the transposition of and music publishers. the European Directive on collective management by the Act of 22 December 2016, Sacem undertook an unprecedented reform of its Articles of Association, and was the first collective management organisation in France to be in compliance.

How Sacem is run

The General Assembly Elects

Ethics Committee Appoints

Sacem CEO The Board Supervisory of Directors Board Appoints

Regulatory Technical Programmes Committees Committees Committee

Annual Report 2017 Sacem 35 Management report continued

Supervision Members • Catalogue: More than 255,000 accesses to the catalogue this year. Few private companies undergo Sacem currently has 164,840 In this service, Dubbing and subtitle such regular detailed review. members – up from 161,170 in 2016 authors can access to the audiovisual The examination of Sacem – in France and throughout the works in which their works are used. management operations world, comprising 158,810 • Registering playlists (works performed guarantees efficiency and creators and 6,030 publishers. in concert): 78% are now registered transparency. online (+30% in 4 years) Its members include songwriters, • Consulting usage data on works with Yearly external controls: composers and publishers; author- the context in which they are exploited: directors; poets; dubbing and subtitle 14,125 connections per month • Auditor authors; and authors of humorous • Consulting account records with • Permanent Auditing Committee for texts and sketches, among others. display of the net amount available Collective Management Societies An indication of our appeal is that after withholding (updated daily) • Ministry of Culture 3,828 new members joined in 2017. • ‘History of my distributions’ with • Detailed report on the sums from With 20,012 foreign members from graphic visualisation of royalty the private copy levy used for payments over several years Cultural Action 166 different nationalities, Sacem is the world’s most internationally diverse • ‘Summary of my distributions’: dynamic overall presentation of Internal controls: authors’ society. royalty payments • Board of Directors Members’ online services • ‘My detailed distributions’: presentation • Supervisory Board Over 81,450 Sacem members have of royalty payments work by work with • Ethics Committee registered their own space on the sacem. an unprecedented level of detail: Up • Transparency Report fr website and use the various online to 17,000 connections during royalty payments and more than 136,000 • Auditing and Internal Control services. This figure has more than connections this year. Department doubled in five years. • ‘My list of works’ to check royalties in • Committees They benefit from a range of a specific list of works increasingly optimised online services: • Tool for claiming works which have • Filing works online: over 7,875 been unidentified during the process each month (+75% in 5 years) of distribution 302,000 works have been registered • Access to Sacem PLUS: a service of online since the launch of the exclusive offers and advantages to all application in 2014. members. 46 offers and advantages in the fields of music, creation, training, hospitality, career development…

Sacem has always accompanied me 3,828 throughout my career. By collecting my author’s rights, it gives me the freedom to create and to new members joined Sacem in 2017. live my passion: jazz.” Among them, 416 foreign members and 72 nationalities are represented. GRANDS PRIX SACEM 2017 Bojan Z Jazz Grand Prize Composer/performer

36 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

Collections Our clients Sacem Pro: a customer service offering International Our clients have free and legal access to works across all genres which are the In April 2016, Sacem successfully Sacem collects royalties for its members basis of Sacem’s worldwide repertoire. launched Sacem Pro, an offer of services worldwide through 164 agreements All have access to more than 121 million for Sacem customers, which includes: signed with 116 foreign societies. works, across the whole range of genres • Advice: Three guidebooks available Moreover, in some territories, like that make up Sacem’s worldwide in digital form or hard copy were Luxembourg, Lebanon and Monaco, repertoire. By paying authors’ rights, prepared to assist customers in Sacem signs contracts directly or client users of music are keeping musical using the repertoire. Focusing on through its local structure with music creation alive and participating in its music, their purpose is to help non- broadcasters, from whom rights are sustainability. professional customers organise collected before being distributed concerts and other music events to members. or set up a sound system on professional premises. In countries with which Sacem has agreements, it is that country’s authors’ • Discounts: 67 partners offer right society that establishes contracts customers help in areas such as and collects royalties, before transferring setting up background music on their relevant royalties to Sacem for the professional premises, renting or repertoire that it represents, which Sacem buying equipment, soundproofing an then distributes to its members. This type establishment, finding musicians or of agreement is often reciprocal, with technicians, promoting their event and both authors’ societies being responsible setting up a ticket office. for the other’s rights within its jurisdiction.

This is still the dominant model except in the specific case of multi-territory Digital Service Providers for which each CMO (Collective Management Organisation) collects only the rights linked to the exploitation of its own repertoire.

81,450 +121 million members have registered their works represented by Sacem member account on sacem.fr throughout the world.

Annual Report 2017 Sacem 37 Management report continued

Licences Sacem is recognised for its expertise in Audiovisual media – TV, radio, cable this field, especially for the management satellite and broadband – remains of rights for publishers UMPI and Sacem’s main source of revenue. Wixen. The Canadian society SOCAN Collections from online music rose consequently chose Sacem to handle directly linked to increased streaming its repertoire throughout Europe. In and collections in the Internet sector. 2016, Sacem became the only European The latter exceed those from recording society entrusted with representing digital media (CDs, DVDs, etc.). Again this rights for a North American musical rights year, the vitality of French production management organisation in the context was confirmed with 8 of the 10 top of pan-European licensing. Cooperation sales within France being by French with other CMOs was reinforced in this artists produced in France, while vinyl context, as exemplified within Armonia, sales continued their upward growth, the first European licensing hub, which representing 12% of all record sales last welcomed its ninth member, the Austrian year. Over 95% of Internet collections are society AKM, and appoints its first CEO from multi-territorial platforms (Spotify, in 2016. Apple music, YouTube, etc.). The success of these platforms, strong growth of our activity with international clients, contracts signed with global mobile applications Alexandre Tharaud and the work by our back office staff in Composer/performer speedy processing and invoicing of our clients’ broadcast reports: all of these examples illustrate how Sacem is able to maintain its position as leader in today’s highly competitive digital environment. Justice Songwriter/composer

90,577 customer accounts created on the sacem.fr portal since we first launched online customer service in 2015

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Highly diverse clients From hairdressers to streaming platforms through audiovisual media and nightclubs, we initiated more than 96 735,820 contracts in 2017 with close countries Sacem collects royalties for to 500,000 highly diverse clients. its members – through 164 agreements signed with 116 foreign societies

Our regional network Private Copying Our extensive regional network is one Since being adopted in France in 1985, of our most valuable assets in terms of the private copying levy has made it delivering the very best for our members. possible to compensate for the loss of We have teams on the ground throughout revenue suffered by creators as a result France and internationally comprising of the legal exception allowing private six regional hubs and more than 60 local copies to be made of their works. offices, enabling us to maintain close relationships with our regional customers The cultural aid payments are broken and members and to ensure accurate down between four legal categories: aid and efficient collection. for creation and production, aid for the realisation of live performances, aid for By being in close touch with the people the training of artists (authors, composers who are playing music and driving and performers) and aid for artistic and forward sustainable creativity, we are able cultural education. to feel the pulse of the music business, sense the direction the economy is Private Copying regularly undergoes heading, foresee the issues that music attacks by certain equipment importers creators and publishers are faced with, who continue to seek to dismantle and be ready to best serve the interests this system in France and the rest of of our members by adapting quickly to Europe. Sacem remains dedicated, changing markets and circumstances. alongside other authors’ societies, to preserving it across 24 countries in the 2016 was a year of transition and European Union. In France in 2016, the consolidation in terms of digital law pertaining to freedom of production, transformation of the Regional network architecture and heritage helped with the creation of 90,577 customer consolidate the private copying system in accounts on the sacem.fr portal, since particular by subjecting nPVRs (Network we first launched online customer Personal Video Recorder) to the private service in 2015. In the field, all our copying levy under certain well defined representatives are equipped with mobile conditions. devices (smartphone or tablet) to facilitate geolocation of prospects, optimise The private copying levy is of crucial roadmaps, obtain electronic signatures importance, being a guarantee of cultural of contracts and improve communication diversity and our country’s artistic vitality. with customers and prospects thanks to embedded presentations.

Annual Report 2017 Sacem 39 Management report continued

Mandates A VARIED We also collect royalties for: • Performers and producers of music, audiovisual works, visual arts and writing via Copie France (Private REPERTOIRE Copying). • Performers (members of the Adami and Spedidam collective management organisations) and record producers (SCPP and SPPF) for the broadcast of their works in public places such as shops, hotels and restaurants. • Authors of the performing arts, audiovisual works (members of SACD), multimedia works (members of Scam) and graphic and plastic arts (members of ADAGP) for part of media A varied repertoire broadcasting of their works (especially audiovisual). Audiovisual • Music for video • International music publishers (Universal Music Publishing, Warner/ • Musical illustrations of programmes Chappell, Wixen Music Publishing, • Musical documentaries Inc. and Sharandall Music) for part Repertoire • Advertising music of the digital use of their international We represent, manage and protect more • Musical videos repertoires. than 121 million works throughout the • Music for the moving image • Phono-mechanical rights on physical world and across the range of creative products (CDs, DVDs, BRs) distributed genres. This repertoire is expanding every Content by European Universal Music day – in 2017, more than 1.6 million new subsidiaries. • Editorials • Dubbing works were added, 201,000 by Sacem • Canadian creators in Europe – since • Poems • Subtitles members. 2016, Sacem has been representing • Humour • Skits the repertoire of Socan exploited by DSPs in Europe. Music • Electro-music • RnB • Symphonic • Traditional Distribution music music 80% of authors’ rights are distributed • Jazz • World music work-by-work in order to reflect, as much as possible, the detail of music • Song • Zouk broadcasting programmes. This • Rap • Instrumental accuracy is the result of the considerable • Reggae • Techno technological innovation and expertise needed to process large volumes of data, while at the same time providing reliable documentation.

Damso Songwriter/composer/performer

40 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

Work-by-work Surveys Private Copying – audiovisual Audiovisual Live dance events The surveys made by audience Authors’ rights relating to TV For live dance events, rights collected measurement companies have shown or radio stations are recorded are distributed on the basis of repertoires that most of the copies are still made in statements, and are based provided by member conductors every up to now from television and Sacem on how many seconds the half year. collects the authors’ rights from TV broadcast lasts for. channels for distribution. Distribution rates are calculated on the Concerts and shows basis of 150 half-yearly listening reports, Consumer usages All authors’ rights collected which are converted into statistical Background music for shows and concerts statements of the music played. Any works reproduced on CD are distributed based on and selling 500 copies are the duration of the works Nightclubs registered for a period of 10 performed. If this information Rights collected from years in a specific file. To is not available, rights nightclubs are distributed on participate in authors’ rights are divided according to the basis of a sample survey distribution in this area, the the duration of the works conducted every week by an works of this file need to have indicated by its creators. expert company with a panel been played in concerts, live of 110 clubs. dance events, at a ball or Cinemas broadcast on radio. Authors’ rights collected in Data collected is used to establish respect of films are allocated detailed statistical statements of the to each musical work based music being played. Accuracy and efficiency on the duration of use in the film. Private Copying Surveys are carried out by 9% CD or DVD Audience measurement 11% The number of units produced companies. and their wholesale price allow us to determine the level of Private Copying – audio authors’ rights to be allocated. Audience measurement companies 80% provide us with information on the Internet sources from which copies have Identifying the source of each been made, such as radio, CDs and work downloaded or listened downloads. Sacem holds the resulting to by platform, by territory royalties for distribution. and allocating the rights attributable to it, is based on the number of downloads

or plays(1) and on the total Work-by-work number of downloaded, By surveys listened-to or visualized works. By taking into account consumer habits International Royalties for works played abroad are collected and Vincent Peirani distributed according to the Composer/Performer rules of the rights societies in each country. The procedure for distribution of data exchange between societies is agreed in contracts between them and follow international standards set by Cisac, the International Confederation of Authors and Composers. The royalties are then paid by Sacem to its members on the basis of such information provided by foreign societies.

Annual Report 2017 Sacem 41 Management report continued

Cultural aid In addition to collecting and distributing authors’ rights, Sacem runs support programmes for musical creation, live performance and vocational training for creators through cultural initiatives.

We provide direct support to authors, composers (such as aid for self- production, residences, career support, grants), publishers and show producers (such as aid to concert venues, festivals, producers) programming and promoting these artists. Pop, jazz, rock, contemporary, world, urban and electro music, song, music for video, poetry, humour, all repertoires coming under Sacem’s management benefit from COLCOA 2017 – Left to right: Stan McCoy, Louis Diringer, Senator Chris Dodd, Claude Lelouch, this aid. Jean-Noël Tronc (President of FACF), Andrea Berloff, Taylor Hackford.

This cultural action covers all the repertoires managed by Sacem, with Sacem associates with three crowdfunding particular attention paid to those having platforms KissKissBankBank, Proarti low media exposure. and Ullule.

Committed to film, audio-visual and International cultural initiatives were Two countries, one passion music for moving image, Sacem also expanded, with the launch of new The Franco-American Cultural Fund invests across all fields of digital creation support programmes and the Support (FACF) celebrated its 21st anniversary and broadcasting through its digital for projects website now available in in 2017. Every April, Los Angeles hosts accompaniment programmes and English, as well as the first partnership the screening of nearly 80 French short support for transmedia initiatives. with the Institut Français for the “Music and Cinema” project, a brand new and feature films. It includes several prizes, including Critics’, Audience, Short Sacem also conducts projects on artistic programme to promote composers of Film and Television awards. In 2017, it education (young audiences) and cultural music for cinema at screenings abroad, attracted over 25,000 people. activities to help publicise and make as part of festival programming or content available to wider audiences through French partnerships. The Franco-American Cultural Fund is particularly for repertoires suffering from a unique collaborative effort between low media coverage. With regard to professional training, a reform to the dedicated program Sacem and American Guilds (DGA, WGA, MPAA) to promote French cinema, In 2017, €26.5 million was committed concerning contemporary music has develop ties with American distributors, to support cultural activities, including been implemented in order to facilitate facilitate access to the North American direct aid to 2,115 projects and actions to access to training for creators who are market for many French filmmakers and defend authors’ rights, with €24.3 million not eligible for AFDAS financing. producers and support a restoration from the 25% levy on private copying programme for great films from France and €2.2 million from social and cultural and the US. The work of the fund is deductions. supported by a portion of the authors’ share of French private copy levy In 2017, Sacem increased its support for funds dedicated by French law for the songwriters, composers and publishers support of creativity, the promotion by diversifying its means of intervention of performance and for the training of and by continuing to adapt to changes new talent. in the sector: co-financing programmes (FCM, Export Office, cultural sector organisations, etc...) and by opening the self-production support programme for exclusively digitally distributed projects.

42 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

Cultural Aid in 2017 6% 3% The FACF was founded Creation and production Live performance 8% 20 years ago and its Optimisation activities and other concept was simple: to voluntary aids Operating costs 8% create a dialogue and an Artist training understanding between Cultural and artistic education 36% filmmakers in the US and France. Of all the cultures in the world, the US and 38% France have always an intimate love affair with cinema.”

Taylor Hackford American film director, former DGA president, FACF board member €26.5m to support cultural activities (€24.3m 25% Private Copying and €2.2m voluntary aids).

Kungs Composer/performer

Annual Report 2017 Sacem 43 Management report continued

Social responsibility Sacem works for its members in all areas It is they, who through the statutory of social activity: deductions for social and cultural services Choosing music or writing as a career (€59.0 million in 2017) and through their means opting for passion. But making a • Through its own internal initiatives: contributions to social organisations and living through words and notes can be a –– Provident Fund (with the Mutual aid their donations to the Comité du cœur, challenge – and while the precariousness allowance scheme – RAES) so actively contribute to supporting and and volatility of any career has grown in –– Solidarity Fund (mutual assistance, sustaining creators and their work. recent years, the profession of songwriter emergency aid, death benefits) or composer by its very nature has –– Comité du cœur, an association Sacem is constantly working to develop always had its share of uncertainty. created and supported by the and strengthen its social and professional members of Sacem, which helps activities. Accordingly, in 2017, it That’s why Sacem’s members have songwriters and composers in embarked on a major reform of its old- throughout its history instilled within distress age security scheme (RAES) with a view the society a strong sense of social to extending its benefits to as many of its responsibility, and have worked hard to • By ensuring a close relationship with members as possible. It has also defined create and strengthen a model that takes external social organisations, even and launched a new programme to care of creators at every age of their lives. participating in their governance: support professional development, which –– Agessa (Authors’ Social Security aims to enable creators who do not have Unwavering commitment and dedication Management Association) access to the legal right to funding to to the protection of its members are –– IRCEC Pension Fund (with the two access training courses selected for anchored at the heart of Sacem’s identity. supplementary pension plans, their quality and professional interest. From our inception, we have been RAAP and RACL) committed to working to develop greater –– Afdas, which manages authors’ Sacem’s objective is to better support professionalism and recognition for training funds its members by meeting their specific creators, to promote and defend needs at each stage of their professional their status and to guarantee the The initiatives and activities it has set up development. highest and most complete quality and developed demonstrate Sacem’s of social protection. strong commitment to supporting its members, and are also a very concrete reflection of the spirit of solidarity of songwriters, composers and music publishers.

Anitta Songwriter/composer/performer

44 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

Human resources Information systems Legal framework With 1,324 employees at the end of 2017, In 2017, Pascal Roche took over the Sacem’s operations are subject to the Sacem’s teams are organised around management of information systems, with Code of Intellectual Property and to a its “core business” activities: managing the task of continuing the modernisation range of internal and external controls. At members (admissions, depositing of IT tools for members and customers European level, a 2005 recommendation works, distribution, etc.), collecting of Sacem and mastering the challenge on copyright management led to a rights (regional network, licensing, of Big Data, blockchain and AI. fragmentation of repertoires forcing online international, etc.) and support services music platforms to multiply requests (legal, IT, finance, human resources, The principle IT projects in progress relate for authorisation of their activities. The communication, cultural action, etc.). All to 3 topics: continuing the complete increased complexity of the market is the teams are spread over more than 60 transformation of its IT systems for partly responsible for the Directive on sites in France (mainland and overseas). processing rights and distribution, Collective Management adopted in 2014 The human resources policy supports implementing URights, the global and transposed into French law by the Sacem’s strategy by concentrating solution for processing rights on-line, Act of 22 December 2016. This directive its efforts on the organisation of work in partnership with IBM, and pursuing reflects primarily a desire to improve the (changing professions and organisation, strategic innovative projects such as governance and transparency of national modernisation of information systems, the experimentation with blockchain, and other European rights management etc.), vocational training and building on launched at Sacem’s initiative alongside companies by strengthening disclosure a strong social dialogue. the American society, ASCAP and the requirements and control of their activities British society, PRS. by the rights holders. These provisions After the redesign of our incentive and – already widely adopted in France – will savings scheme, to adapt it to our new enable greater harmonisation of the rules challenges, 2017 was marked by the across all the European rights societies. launch of a new project to modernise human resources management For collective management organisations (modernisation of the remuneration in the music industry, and therefore system and a five-year review of our for Sacem, the Directive also aims to Classification system) and the launch facilitate the delivery of multi-repertoire of the remote working experiment. and pan-European licenses for the In the same vein of taking charge of use of online music works. Through modernising our work life, the Human various specific initiatives, Sacem has Resources Department has been heavily campaigned for many years to improve involved in the development of digital the market for online music, be it through working methods, with the introduction national licenses to operate online rights, of new tools (corporate social network, multi-territory licenses to use entire Skype, Cloud, etc.), while preventing the repertoires, management mandates risks associated with these developments for international publisher accounts or by signing a company agreement with the through the Armonia platform developed trade unions on the right to disconnect. in partnership with other European authors’ rights organisations. Finally, the HR strategy is continuing with its active CSR (Corporate Social Responsibility) policy and is planning new key actions in terms of professional equality and diversity.

Cléa Vincent Songwriter/composer/performer

Annual Report 2017 Sacem 45 Management report continued

Top 20 hits abroad 20171 No. Title Writer Publisher Artist 1 B. Cotto / N. Choke Industry / Warner Chappell Lilly Wood & Prayer in C Hadida / P. Music France The Prick feat. Guimard Robin Schulz Remix

2 C. François / J. Nouv Barclay / Jeune Musique Éditions Claude Comme d’habitude Revaux / G. Thibaut François / / P. Anka Frank Sinatra / Paul Anka

3 S. Guess / 12Th And Spring Garden / Dj Snake Major Lazer + Lean on DJ Snake / P. Music Llc / Bmg Gold Songs / Get DJ Snake Meckseper / P. T. Familiar Music Llc / Guess Publishing Wesley / K. Oersted Llc / I Like Turtles Music / Songs Of Smp / Reservoir Reverb Music Ltd 4 E. Catry / C. Klingande Music / Sony Atv Music Klingande Jubel Steinmyller Publishing France

5 J. Kosma / J. Enoch Cie Yves Montand Les feuilles Prévert / J. Enoch mortes

6 Imany / J.J. Haute Fidélité / JRG Editions Musicales Imany Don’t be so shy Goldman / S. / Taktic Music / Think Zik Group Goldman

7 J. Ben Jor Peermusic do Brasil Edições Musicais Jorge Ben Mas que nada Ltda Jor / Sergio Mendes / Black Eyed Peas 8 F. Barkati / P. De Hella Publishing / Together Publishing Don Omar Danza Kuduro Oliveira / F. Toigo / Ltd / Crown P Music Publishing / Emi feat. Lucenzo Big Ali / W. Landron Music Publishing France / Because Éditions

9 La vie en rose E. Piaf / Louiguy Éditions Beuscher Édith Piaf

10 H. Belolo / J. Morali Black Scorpio Village People Y M C A / V. Willis

1 Ranking of exports in 2017 for exploitation in 2016.

46 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

No. Title Writer Publisher Artist 11 M. Moussorgski / Hawkes And Son (London) Ltd Tableaux d’une M. Ravel exposition

12 Pierre et le loup S. Prokofiev Le Chant du Monde

13 S. Guess / DJ BMG Gold Songs / Universal Music DJ Snake feat. You know you Snake / F. Dewji / Publishing / Dj Snake Music Llc / Get Aluna George like it G. Reid Familiar Music Llc / Guess Publishing Llc

14 Goodbye A.L. Blanc / Feder District 6 France Publishing Feder

15 M. Solveig / M. Toth Three Six Zero Music Publishing / Martin Solveig Intoxicated / J. Mejia KOPG Limited

16 A. Barroso Vitale Irmaos Sa Industria E Comercio / Aquarela do Brasil Peermusic France

17 S. Arcoverde / Editora Musical Panttanal Michel Telo Ai se eu te pego A. Cerqueira / A. Da Fonseca / A. Teixeira / K. Vinagre

18 C. Leroux / W.C Universal Music Publishing / C. Le Roux The Avener, The fade out lines John / K. Phoebe Phoebe Killdeer

19 V. Prodan / A. Play On 911 Alexandra Mr Saxobeat Nemirschi Stan

20 A. Ford / M. Evain Play On 911 / BTP / Yaz Prod / Record Willy William Ego / Zonee L / W. One William

Annual Report 2017 Sacem 47 Management report continued

Top 20 rights in France 20171 No. Title Writer Publisher Artist 1 B. Cotto / N. Hadida / P. Choke Industry / Warner Chappell Lilly Wood & Prayer in C Guimard Music France The Prick feat. Robin Schulz Remix

2 K. Girac / Soprano / F. Big 4 Publishing / Ear Print / Kendji Girac No me mires mas Savio / F. Saldivia Universal Music Publishing / Warner feat. Soprano Chappell Music France

3 L. Haddad / N. Khaled / Bukowski Publishing / Sash Amir J’ai cherché J. Errami Productions / Tick Tone Music / Universal Music Publishing / Universkalp

4 C. Martin / M. Eriksen EMI Music Publishing LTD / Reach Coldplay Hymn for the / T. Hermansen / M. Music Publishing / Universal Music weekend Tovar / G. Berryman / Publishing W. Champion / V. Yard / S. Zant / J. Buckland 5 L. Ferguson / I. Origin Music / Universal Music Kungs This girl Khatchoyan / J. Mason Publishing

6 Imany / J.J. Goldman / Haute Fidélité / JRG Editions Imany Don’t be so shy S. Goldman Musicales / Taktic Music / Think Zik Group

7 J. Timberlake / M. DWA Songs / MXM Music AB / Justin Can’t stop Sandberg / J. Schuster Tennman Tunes / Universal Music Timberlake the feeling Z Tunes

8 Maître Gims / D. 7TH Magnitude / Universal Music Maître Gims Sapés comme Koueloukouenda / G. Publishing / Warner Chappell Music jamais Dinga Pinto France / Wati B Editions

9 Come Jain / Yodelice Spookland Publishing / Zanaka Jain

10 C. Maé / D. Munoz Derrière les Planches / Martiprod Christophe Il est où le Editions / Warner Chappell Music Maé bonheur France

1 Ranking based on authors’ rights distributed in 2017.

48 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

No. Title Writer Publisher Artist 11 The keys Talisco Roy Music Talisco

12 J.M. Moreau / R. EMI Music Publishing Kids United On écrit sur les Musurrama murs

13 J.J. Goldman / Y. Macé JRG Editions Musicales / RCNE Céline Dion Encore un soir / L. Leroy SEC Les Editions Musicales

14 C. Dessart / R. Mir / N. C. Dessart / R. Mir / Universal Music Kendji Girac Andalouse Khaled Publishing

15 S. Hagopian / S. Color Edition / Leo and Co Claudio Capéo Un homme debout Saussez / J.P. Anziani / F. Goualard / M. Niakate

16 E. Mattiasson / M. BMG Rights Management / Silva Matt Simons Catch release Simons Tone Music

17 Sia / G. Kurstin EMI April Music Inc / EMI Music Sia Cheap thrills Publishing / Kurstin Music

18 J. Bieber / E. Sheeran / Bieber Time Publishing / Please Justin Bieber Love yourself B. Levin Don’t Forget To Pay Me Music / Sony ATV Music Publishing / Universal Music Corporation

19 M. Houbé / R. Rebillaud Gohan Music / Intense / Peermusic Kendji Girac Color gitano / F. Welgryn France

20 L. Lamarca / H. Pince / French Flair Entertainment Fréro Delavega Le cœur éléphant J. Grenier / R. Joutard

Annual Report 2017 Sacem 49 Management report continued

1 Financial performance • Furthermore, SDRM collections These flows used to be absent (combined figures) are now transferred to Sacem for from the collections in the statutory distribution with no deduction in accounts but included in the Sacem carried out in 2017 a change in its order that the whole deductions are consolidated figures displayed in way to account for flows between SDRM processed, centralised and declared the annual report. The aim is that and Sacem: by Sacem in a complete transparency collections in statutory accounts • SDRM being the French CMO for for the rightholders; reflect the real activity carried out musical mechanical rights, it used to • Henceforth SDRM and Sacem by Sacem employees. process deductions for collections collections include in their statutory while distribution was processed by accounts some mandates like the Consequently, the financial figures as SDRM for Phono / Video / Online and Central License Agreement with stated below need a restated for 2016 by Sacem for TV / Radio / Private record labels who entrusted Sacem to be compared to 2017 ones, reflecting Copying / International. From 2017, for the centralized collection for what they would have been if they had SDRM becomes only a collecting some of their foreign subsidiaries, followed the same principles as now after organisation and not a distribution one or with publishers who have granted the flows simplification between SDRM anymore. It implies that all the suspense Sacem a multi-territory licence for and Sacem for a better transparency and accounts of rights to be distributed are online utilisation. completeness. now managed by Sacem alone;

1.1. Key consolidated figures Financial pipeline from collections to distribution % of 2016 % of M€ 2017 collections restated collections Var Var%

Collections 1,415.3 100.0% 1,371.0 100.0% 44.3 3.2% Sacem 969.8 68.5% 949.5 69.3% 20.3 2.1% Mandates & Other 445.4 31.5% 421.5 30.7% 23.9 5.7%

Net expenses to be financed through deductions -160.0 -162.9 2.9 -1.8% Operating expenses -198.4 14.0% -199.8 14.6% 1.4 -0.7% Other operating income 3.7 -0.3% 2.8 -0.2% 0.8 29.8% Interest and other income 33.9 -2.4% 33.4 -2.4% 0.5 1.4% Net non recurring income 0.8 -0.1% 0.6 0.0% 0.2 28.1% Distributable royalties 1,255.3 88.7% 1,208.1 88.1% 47.2 3.9%

Variation in distribution reserves 77.7 5.5% -1.0 -0.1% 78.7 -7741.4% Variance on the reserve of net result -2.4 -2.5 0.0 -2.0% Variance on the suspense accounts 80.1 1.4 78.6 5477.5%

Distribution -1,333.0 94.2% -1,207.1 88.0% -125.9 10.4% In favour of Sacem members -641.6 45.3% -588.1 42.9% -53.5 9.1% – Distribution to Sacem members -593.7 -538.7 -55.0 10.2% – Accounting One-Off impact on distribution -40.1 – Social and cultural programmes - 47.9 -49.4 1.5 -3.0% In favour of other collecting societies or mandators -663.6 46.9% -589.7 43.0% -73.9 12.5% – Mandators (by Sacem) incl. other CMOs -214.6 -212.5 -2.0 0.9% – Mandators (by SDRM) incl. other CMOs -4.9 -2.1 -2.8 136.4% – Other Mandators -444.2 -375.1 -69.1 18.4% In favour of cultural aid projects (25% Private copying levy) -27.8 2.0% -29.3 2.1% 1.4 -4.9%

50 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

1.2. Consolidated and mandates as described above. These • French collective organisations statutory collections collections amounted to €969.8 million benefiting from Private Copying (both in 2017. Adding the €73.4 million non- authors’ and neighbouring rights) The collecting operations managed by economic, one-off impact of suspense Sacem and its employees can be divided • French collective organisations accounts transfer from SDRM to Sacem, into two categories: commissioning Sacem with the total amount of €1,043.2 million can the collection of a part of their (1) Sacem collections be found in Sacem’s statutory accounts. neighbouring royalties Royalties relating to Sacem’s repertoire • French collective organisations (contribution of Sacem members), to (2) Mandates the repertoires of foreign collective commissioning Sacem with the Royalties relating to mandates granted collection of a part of their TV/Radio management organisations with to Sacem by the following: a reciprocity mandate, or to some royalties.

2016 M€ 2017 restated Var Var%

Sacem 969.8 949.5 20.3 2.1% TV/Radio (including cable, satellite, ADSL operators) 319.8 328.3 -8.5 -2.6% General rights (regional network) 305.8 291.8 13.9 4.8% Private Copying Sacem repertoire 95.8 83.2 12.6 15.2% International 83.9 81.7 2.2 2.7% Online 83.8 77.6 6.1 7.9% CD/DVD/BRD 80.8 86.8 -6.1 -7.0%

Mandates and others 445.4 421.5 23.9 5.7% Private Copying non-Sacem repertoire 220.7 225.9 -5.2 -2.3% Other mandates & miscellaneous 224.7 195.6 29.1 14.9%

Total 1,415.3 1,371.0 44.3 3.2%

Total collections increased by €44.3 million, Revenue breakdown 3.2% up compared to 2016, amounting to 16% €1,415.3 million at the end of 2017. Sacem TV/Radio (including cable, The different types of Sacem collections satellite, ADSL operators) (excluding the one-off impact due to the General rights (regional network) 16% transfer of SDRM suspense accounts) Private Copying Sacem repertoire 23% grew by €20.3 million, or 2.1%, on a International cumulated basis, with the following single Online item variations: CD/DVD/BRD • TV/Radio collections (including broadcast by cable, satellite and Mandates and others 6% broadband) are the royalties paid by Private Copying television (historical channels, TNT, non-Sacem repertoire theme-based channels, and local Other mandates & miscellaneous 6% 22% channels) and radio channels and 6% 7% radio advertising space sellers and by operators. Audiovisual remained stable in 2017. 2016 has been restated pursuant to the contractual amendment between Sacem and SDRM.

Annual Report 2017 Sacem 51 Management report continued

• Collections by the regional network • Private Copying collections for Sacem • CD/DVD/BRD collections decreased (general rights) increased by €13.9 repertoire increased by €12.6 million by €6.1 million – these are royalties million, or 4.8%. This includes royalties reaching a new historical record at paid by producers of physical audio collected by the 60 delegations under €95.8 million. This is mainly due to a (CD, vinyl, etc) or video (DVD, BluRay, the terms of public broadcasting rights favourable smartphones market and to etc) media. The decrease in this for shows and concerts, the use of several regularisations for past years. source of income is mainly due to the music in nightclubs, ambient music in • International collections increased by structural decrease of the CD, DVD bars and amusement parks, etc, and €2.2 million, despite the unfavourable and BluRay markets. The physical background music in stores, hotels, change impact – these are royalties recorded music business fell by 4.7% cafés, and restaurants. These are collected from foreign Collective in 2017 in France (Source: Snep). referred to as general rights. Management Organisations for the And the physical video DVD / BluRay To be noted: use of the Sacem repertoire outside market decreased by 9.8% in 2017 –– A favourable impact of background of France. Europe revenues remained in France (Source: CNC). music (+3.2%) which represents grossly flat, while North America, 42% of general rights. 2017 benefits Japan and Polynesia increased. Collections from mandates and others increased by €23.9 million due to nearly from several positive impacts: • Online collections increased all the mandates (neighbouring rights volume of contracts growth; by €6.1 million. 2016 has been collected for SPRE, mandates increase of the average invoiced restated pursuant to the contractual managed by Sacem Luxembourg, royalties; improvement regarding amendment between Sacem and online mandates). the payment of receivables; SDRM. These are royalties collected –– An increase by 12.7% of live from Digital Service Providers or other concerts and shows revenues: online music users. The growth is 2017 benefited from a strong driven by audio streaming (Spotify schedule for concerts produced among others) and video-sharing by tour promoters; good health services (YouTube) while downloadings regarding festivals. fall goes on.

1.3. Net expenses M€ 2017 2016 Var Var% Personnel expenses -137.7 -135.2 -2.5 1.9% Other operating expenses -45.5 - 47.1 1.6 -3.4% Depreciation and amortization -15.2 -17.5 2.3 -13.3% Operating expenses -198.4 -199.8 1.4 -0.7%

Other operating income 3.7 2.8 0.8 29.8% Net financial income 33.9 33.4 0.5 1.4% Net non recurring income 0.8 0.6 0.2 28.1% Net expenses -160.0 -162.9 2.9 -1.8% Collections 1,415.3 1,371.0 44.3 3.2%

Net expenses ratio -11.3% -11.9%

52 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

Personnel expenses increased by 1.4. Outstanding royalties in 1.5. Attributed royalties €2.5 million, or 1.9%, including an the balance sheet The increase of €55,0 million in impact on variable pay triggered by the The suspense accounts for royalties attributions granted by Sacem to its exceptional performance on collections to be distributed between 2016 and members (+10.2%) and to mandators and distribution in 2017, and despite 2017 decreased strongly by €80 million, managed directly by Sacem (+0,9%), the headcount decrease from 1,335 to subject to several effects: stems from the one-off impact of time 1,324 in 2017. The new agreement for • One-off impact on Sacem suspense lag cancellation for mechanical rights profit sharing depends on criteria based for around €40 million and from the high upon collections, management rate and accounts for around €40 million linked to the flows simplification between level of collections and the actions taken distribution performance, these three to reduce the suspense accounts as criteria being in improvement in 2017. SDRM and Sacem. Mechanical rights were historically subject to a described above. Other operating expenses were mainly time lag. The alignment generated an accounting one-off impact; The increase of distributions to mandators made up of overhead expenses for the amounted to €69.1 million stems from • Decrease of Sacem suspense head office and the regional network the distributions by Copie France accounts for more than €15 million: through its local offices throughout France including significant regularisations and Sacem endeavours to distribute rights (rent, mail, printing, taxes and duties, from increases in other mandates like following the most accurate method, maintenance, security, utilities, etc), neighbouring rights. operational expenses linked to information usually based upon work-by-work systems (application maintenance, programmes transmitted by clients. IT technicians, etc), fees, training and The aim is to attribute the fairest way communication expenses, etc. collected money to the used works and their rightholders, whether big The decrease in operating expenses or small. As a counterpart of such amounted to €1.6 million reflects Sacem’s an accurate process, we put on hold will to minimize costs to targeted priority money in suspense accounts to keep projects and its successful object to the rights linked to unmatched lines some local taxes increase. between programmes and works database (low-quality programmes, The decrease in net amortization unregistered works…). Sacem invests and depreciation is composed of two through IT and human means to opposed effects: on the one hand, a clean these unmatched lines during light increase for amortization linked the following quarters enhancing to the growing IT investments over the programmes, manually identifiying past years, in particular related to the works… Optimising distribution being distribution and the online processes; on a priority for Sacem, we carried out the other hand a depreciation write-off on new specific actions enabling us to old securities (with an equal counterpart decrease suspense accounts in 2017 in financial charges). following on from 2015 and 2016; • Decrease of Copie France suspense Other operating income grew by accounts for €35 million: Copie France €0.8 million due to the one-off payment collected regularisations in December by new members split between equities 2016 which were distributed in and operating income. Ja n u a r y 2017.

The net financial income increased by €0.5, or 1.4%, despite the financial charges for old securities.

The net non recurring income amounts to €0.8 million in 2017, grossly flat.

The net expenses ratio decreased from 11.9% to 11.3% between 2016 and 2017, thanks to the collections increase and the net expenses kept under control.

Annual Report 2017 Sacem 53 Management report continued

1.6. Amounts for the purposes of social and cultural services (excluding 25% Private Copying resources) Sources of income and uses of funds (for social and cultural aid)

M€ 2017 2016 Var Var% Collection of royalties attributed to social and cultural aid (1) 47.9 49.4 -1.5 -3.0% Collection of royalties attributed to Optimisation Funds (2) 1.5 1.6 0.0 -2.5% Other sources of income (accruals) 9.5 -1.6 11.2 -682.3% Total revenues 59.0 49.3 9.7 19.6%

Contingency Funds 30.6 30.7 -0.1 -0.2% Solidarity Funds 1.7 1.8 0.0 -1.8% Voluntary Cultural Aid – Optimisation Funds (2) 1.5 1.6 0.0 -2.5% Voluntary Cultural Aid – Non-Optimisation Funds (3) 0.7 0.6 0.1 21.4% Total expenses 34.6 34.6 0.0 -0.1%

Surplus of the fiscal year 24.4 14.7 9.7 65.9%

Sacem’s Articles of Association provide (2) The collection of royalties intended In addition to the Optimisation Funds, for the possibility of contingency, for Optimisation Funds, i.e. direct there are other ‘voluntary’ cultural aid solidarity and assistance action in favour aid given to certain members via resources, i.e. outside the scope of the of its members and the payment of the mark-up of royalties which they legal 25% Private Copying levy (see 1.7.). services in the framework of social aid. have been paid. These Optimisation The financing of social and cultural aids Funds support: (3) Non-Optimisation Funds voluntary is mainly done via: cultural aid payments are mainly • Jazz improvisers comprised of promotions for the (1) The collection of certain royalties • Young pop authors and composers broadcasting of music in French as highlighted in 2.2.1. – calculated regions, support for artists wishing to • The royalties generated by public as a percentage of the collections net self-produce their music, endowments performances or the recent recording of deductions withheld from royalties to the winners of certain awards such of symphonic music, electroacoustic to finance operating expenses; this as the Sacem Grands Prix, etc. music, poetry, etc. percentage cannot statutorily exceed 10%. The average deduction rate • Composers and publishers of as a percentage of collections is soundtracks for audiovisual around 5.8%. documentaries

54 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

1.7. Amounts for the purposes of cultural services so-called 25% Private Copying resources Sources of income and use funds (25% Private Copying levy for cultural aid)

M€ 2017 2016 Var Var% Collection of royalties attributed to cultural aid projects (1) 27.8 29.3 -1.4 -4.9% Financial sources of income 0.5 0.3 0.1 40.9% Total revenues 28.3 29.6 -1.3 -4.4%

Aid for creation and production (2) 8.4 8.2 0.2 3.0% Aid for the realisation of live performances (2) 9.1 9.0 0.1 1.2% Aid for the training of artists (2) 1.5 1.6 0.0 -2.6% Aid for artistic and cultural education 0.7 0.7 Fund for the Creation of Music (FCM) (3) 1.6 1.6 0.0 0.0% Franco-American Cultural Fund (FACF) (4) 0.8 0.8 -0.1 -11.1% Overhead expenses 2.2 1.9 0.3 18.0% Total expenses 24.3 23.0 1.3 5.5%

Surplus of the fiscal year 4.0 6.5 -2.6 -39.6%

The cultural aid paid by Sacem is (3) The subsidy paid to the Fund The Cultural Action department has had financed partly by the budgets allocated for the Creation of Music (FCM), an increased sources of income for the to voluntary aid (see 2.3.8.) and partly initiative financed by all the collective past years, with funds used for cultural by the sources of income provided for societies active in the musical field, aid increasing from €23.1 million in 2016 by Article L. 324-17 of the Intellectual can also be added to these spends. to €24.3 million in 2017. The main fields Property Code. The latter amounts are which benefited from these additional legally allocated to so-called “Private (4) The Franco-American Cultural sources were: Copying” cultural aids. Fund (FACF) was created in 1996 with the aim of promoting the art of • Funding in favour of young audiences (1) These collections correspond to the cinema on both sides of the Atlantic or community actions; royalties legally attributed to cultural aid. and to encourage dialogue between • Funding for editorial pre-production; professionals in both countries. • Activities in defence of authors’ rights (2) The cultural aid payments are FACF is financed via the 25% Private (for example, the fight against piracy); broken down between four legal Copying levy, in agreement with categories as defined in Article R. 321- the American professional guilds • Funding for live performances in 6 of the Intellectual Property Code, i.e. representing audiovisual creators music festivals; aid for creation and production, aid (DGA, WGAW and MPA). • Funding for developing French music for the realisation of live performances around the world (touring abroad…). and aid for the training of artists (authors, composers and singers) and as defined in Article L. 324-17 of the Intellectual Property Code, i.e. aid for artistic and cultural education.

Annual Report 2017 Sacem 55 Transparency report

2.2. Report on the year’s activities; The Society is governed by a Board of TRANSPARENCY Report from the manager of the 2017 Directors, the 19 members and substitute financial year. member of which are elected by the REPORT General Assembly. 2.3. Number of refusals to grant The Board of Directors appoints a Chief The transparency report was operating licences in accordance prepared in accordance with Administrative Office who is the manager with the provisions of paragraph of Sacem. Article R321-14 (established by 3 of article L. 324-7 and main Decree No. 2017-924 of May 6, categories of reason for refusal; The activities of the Board of Directors 2017 – art. 3) of the Intellectual No refusals. and the Chief Executive Officer are Property Code. supervised by the Supervisory Board, 2.4. Description of the collective the 6 members of which are also elected 2.1. Accounts for the 2017 management organisation’s legal by the General Assembly. financial year and governance structure; Sacem accounts for the year ending A non-trading company governed by 31/12/2017 and auditor’s report on the articles 1832 et seq. of the Civil Code and year’s accounts. the provisions of Title II, Book III of the French Intellectual Property Code (CPI).

2.5. List of legal entities controlled by the organisation in accordance with 2.6. Total amount of remuneration article L. 233-16 of the French commercial code, including total capital, paid during the previous year to (a) proportion of capital held, year-end results for the last financial year, and the persons mentioned in paragraph net and gross carrying amount of shares held; 1 of article L. 323-13 and (b) members of the Supervisory Board, CAPITAL Share of Result of the SUBSIDIARIES AND PARTICIPATIONS in Euros capital held last period in Euros along with other benefits granted SDRM 61 59/61 0 to them; Sacem Luxembourg 10,000 75% 0 The total amount paid in 2017 to: SCI DES 225-227 AVENUE CHARLES • the Board of Directors and Chief DE GAULLE 914,700 75% 5,553,763 Executive Officer is €1,068,000 SCI CHATEAUDUN 304,900 75% 371,621 • the Supervisory Board is €69,000 SCI VILLETTE 2,286,735 2/3 443,637

2.7. Amount of revenue from the exploitation of rights, broken down by category of rights managed and type of use, and amount of income from investing this revenue with details on how this income is used;

COLLECTIONS (M€) 2017 2017 2017

Current Non-recurrent activity impact* TOTAL Voluntary collective management 874.0 73.4 9 47.4 TV/Radio (incl. cable, satellite, operators) 319.8 2.9 322.7 General rights (Regional network) 305.8 305.8 International 83.9 0.8 84.8 Online 83.8 25.1 108.9 Phono/Video 80.8 44.5 125.3 Mandatory collective management 95.8 0.0 95.8 Private copying 95.8 95.8 Sacem 969.8 73.4 1,043.0

*Non-recurrent impact linked to the simplification of flows between SDRM and Sacem for DRM (transfer of suspense accounts from SDRM to Sacem). Categories of rights and types of use 1. Sacem manages two categories of rights: • Rights managed legally by collective management • Rights managed voluntarily by collective management Types of use depend on sector of activity.

56 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

The amount of financial revenue c) Amount of operating and financial e) Amount of deductions made from (€31.5 million) is deducted from costs relating to services other than revenue from the exploitation of management fees. rights management, including social, rights, broken down by category of cultural and educational services; rights managed and type of use, and 2.8. Financial information on the purpose of the deductions; cost of managing rights and other The amount of operating costs relating services that the organisation to cultural and educational services as Financing of costs (M€) provides to rights holders: provided for in article L 324-17 of the CPI is €2.2 million. Deductions a) Total amount of operating and Usage type on rights financial costs broken down by d) Type of resources used to cover Current category of rights managed; where the amounts; activity costs are indirect and cannot be attributed to one or more categories Voluntary collective Operating costs for rights management of rights, an explanation of the method management 113.5 are funded as follows: used to allocate them is also given; TV/Radio (incl. cable, satellite, operators) 53.0 Resources (M€) Costs (M€) General rights (Regional Deductions on rights 119.0 network) 40.6 Net operating and personnel expenses 171.2 Variation of provisional International 3.0 deductions on rights Online 6.7 Charges for provisions and pending allocation 8.8 depreciation 15.2 Phono/Video 3.8 Non-apportionables 25.3 Other income -2.5 Other 6.5 Financial result -31.5 Legal collective Net resources 153.1 Extraordinary result -0.8 management 5.5 Private copying 5.5 Surplus/Deficit 1.6 Net costs 151.5 Sacem 119.0

The total surplus (€10.5 million, including The breakdown of costs by category of These deductions cover costs incurred the carry forward surplus from the rights consists of separating the costs by collection and distribution activities. previous year of €8.9 million) is shown of voluntary collective management as the first resource in the management from the costs of compulsory collective f) Percentage of the cost of rights account for the following year, unless the management. For the second category, management and other services General Assembly decides to allocate Sacem essentially manages their provided by the organisation to it following a proposal by the Board distribution. The cost of distributing rights holders relating to revenue of Directors; a decision that can only compulsory collective management from the exploitation of rights for the be taken if the management account is marginal compared to the cost of relevant financial year, by category balance and Sacem’s continued activity voluntary collective management. of rights managed; where the costs are guaranteed. are indirect and cannot be attributed b) Amount of operating costs and to one or more categories of rights, The amount of operating costs relating to financial expenses corresponding an explanation of the method used cultural and educational services (cf. c) is solely to the management of rights, to allocate them is also given; financed by the amounts under article L broken down by category of rights 324-17 CPI. managed, highlighting the amount of The average percentage is 14.6%, management fees deducted or offset calculated according to the method from revenue from the exploitation that appears in annex 16-6 of the of rights or income from investing Sacem accounts. this revenue; where the costs are indirect and cannot be attributed to Providing a breakdown of the rights by one or more categories of rights, an category is not economically viable due to explanation of the method used to the marginal cost of mandatory collective allocate them is also given; management. Cf. a) The full transparency report will be available on sacem.fr after the Sacem General Assembly.

1 Definitions according to rule no. 2017-07 of 01/12/2017 issued by the French accounting standards authority on the harmonisation of accounting standards and presentation of collective management associations’ summary documents of authors’ rights and other related rights.

Annual Report 2017 Sacem 57 Transparency report

Statutory auditor’s report on the transparency report For the year ended December 31, 2017

Statutory auditor’s certificate on Our audit, carried out in accordance with On the basis of our work, we have no the information provided for under the professional standards applicable matters to report on the information 1°, 7° to 10° of II and III of Article in France, was intended to express provided for under 1°, 7° to 10° of II an opinion on the financial statements and III of Article R. 321-14 of the French R. 321-14 of the French intellectual taken as a whole, and not on specific intellectual property code mentioned in property code mentioned in the items of these accounts used for the annual transparency report set out in annual transparency report set the determination of this information. Article L. 326-1 of the same code. out in Article L. 326-1 of the Therefore, we have not performed our same code. audit tests and our samplings for this Without qualifying our opinion expressed purpose and we express no opinion on above, we draw your attention to the To the Sacem these items taken individually. absence of details regarding certain information set forth in the above Shareholders’ Meeting, We performed the procedures that we mentioned articles, in particular the In our capacity as Statutory auditor deemed necessary in accordance with breakdown of certain information of Sacem and in accordance with the professional standards applicable in according to category of rights and Articles L. 326-8 and R. 321-14-IV of France in relation to this engagement. types of use, due to their unavailability the French intellectual property code, These procedures, which don’t constitute in the internal management data or in we have prepared this certificate on the an audit or a limited review, consisted, the financial statements. information provided for under 1°, 7° on a test basis or through the use of any to 10° of II and III of Article R. 321-14 of other selection methods, in: This certificate serves as a special report the French intellectual property code • Gaining an understanding of Sacem’s within the meaning of Articles L. 326-8 mentioned in the annual transparency procedures to support the information and R. 321-14 IV of the French intellectual report set out in Article L. 326-1 of provided for under 1°, 7° to 10° of property code. the same code for the year ended II and III of Article R. 321-14 of the December 31, 2017. French intellectual property code Paris, April 18, 2018 mentioned in the annual transparency French original signed by This information has been gathered under report set out in Article L. 326-1 of the the responsibility of your Manager from same code; Didier KLING the accounts used in the preparation of Anne NOUQUATI the financial statements of your company • carrying out the necessary The Statutory auditor CRCC of Paris for the year ended December 31, 2017 reconciliations between this and the internal management data of information and the accounts from Sacem related to the accounts. Our role which it derives and checking that they is to certify this information. are consistent with the elements used as a basis for the preparation of the The transparency report was approved financial statements of Sacem for the by your Board of Directors. year ended December 31, 2017; • verifying the consistency of this As part of our auditor’s duties, as information with the internal statutory auditor, we have audited the management data of Sacem related to financial statements of your company for the accounts; the year ended December 31, 2017. • checking the arithmetic accuracy of the information provided; • assessing whether this information achieves fair representation.

This is a free translation into English of the Statutory Auditors’ certificate on the information provided for under 1°, 7° to 10° of II and III of Article R. 321-14 of the French intellectual property code mentioned in the annual transparency report set out in Article L. 326-1 of the same code, issued in French and it is provided solely for the convenience of English speaking readers. This certificate should be read in conjunction with, and construed in accordance with French law and professional standards applicable in France in relation to this engagement.

Sacem 225, avenue Charles-de-Gaulle 92521 NEUILLY-SUR-SEINE

58 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

STATUTORY FINANCIAL STATEMENTS

60 Income and expenses statement 61 Balance sheet 63 Notes to the statutory financial statements 66 Appendices 76 Statutory auditor’s report

Annual Report 2017 Sacem 59 Statutory financial statements

Income and expenses statement at 31 December 2017

2017 2016 €000 €000

Operating income Other operating income 13,985 25,804 Deductions 164,507 153,345 Reversal of provisions 2,218 385 Transfer of expenses 1,836 1,563 Total I – operating income 182,545 181,096

Operating expenses Purchases and other external expenses 44,501 44,825 Taxes and duties 6,360 6,320 Personnel expenses 137, 228 134,728 Amortisation and depreciation 16,776 16,398 Net provisions 612 1,483 Other operating expenses 3,619 3,895 Total II – Operating expenses 209,097 207,650 Operating result (I – II) -26,551 -26,553

Financial income From shareholdings 4,740 3,887 Interest and related receivables 31,465 31,006 Total III – Financial income 36,205 34,894

Financial expenses Interest and related receivables 0 0 Total IV – Financial expenses 0 0

Financial result (III – IV) 36,205 34,894

Net income from ordinary activities (I – II + III – IV) 9,653 8,340

Non recurring income Non recurring income 1,268 807 Total V – Non recurring income 1,268 807

Non recurring expenses Non recurring expenses 449 242 Total VI – Non recurring expenses 449 242

Non recurring result (V – VI) 819 565

Total income (I + III + V) 220,018 216,797

Total expenses (II + IV + VI) 209,546 207,892

Excess of management levies at 31 December 10,472 8,905

60 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

Balance sheet at 31 December 2017

Amortisation 2017 2016 Gross and depreciation Net Net Assets €000 (to be deducted) €000 €000

Fixed assets Intangible assets: 151,647 94,185 57,462 47,3 0 5 Concessions, patents, licences, brands, processes, software 124,079 94,185 29,894 30,360 Advance payments and instalments 27,56 8 0 27,56 8 16,945 Tangible assets: 132,434 93,856 38,578 40,251 Land 557 0 557 557 Buildings 66,072 38,560 27,512 28,089 Other tangible assets 65,212 55,296 9,916 9,255 Advance payments and instalments 593 0 593 2,351 Investments: 31,484 0 31,484 29,822 Shareholdings 10,645 0 10,645 10,645 Long term receivables from investments 14,290 0 14,290 12,417 Loans 5,950 0 5,950 6,150 Other financial assets 599 0 599 610 Total I – fixed assets 315,565 188,041 127,524 117,378

Current assets Receivables: 388,497 2,189 386,308 261,501 Clients and related accounts receivables 220,301 0 220,301 212,356 Other receivables: Members 34,707 2,189 32,517 26,010 Other operating receivables 4,007 0 4,007 3,755 Miscellaneous receivables 129,482 0 129,482 19,381 Transferable security investments 864,859 0 864,859 875,877 Available funds 140,933 0 140,933 132,053 Total II – current assets 1.394,289 2,189 1.392,100 1.269,431

Accruals and deferred income Miscellaneous advance expenses 3,218 0 3,218 2,880 Insufficiency of levies 0 0 0 0 Total III – accruals and deferred income 3,218 0 3,218 2,880

Total assets (I + II + III) 1.713,072 190,230 1.522,842 1.389,689

Annual Report 2017 Sacem 61 Statutory financial statements continued

Balance sheet continued at 31 December 2017

2017 2016 Liabilities €000 €000

Equity Capital 13,118 12,955 Total I – Equity 13,118 12,955

Provisions Provisions for contingencies and expenses 2,893 3,039 Total II – Provisions 2,893 3,039

Debt Bank loans and debts 227 190 Sundry debts 1068,084 973,108 Deposits received (gifts and bequests) 3,548 3,285 Collections to be distributed 839,573 758,179 Users – foreign societies 5,742 9,751 Non-paid notified rights 182,101 165,759 Members 37,120 36,134 Trade payables and related accounts 12,450 11,110 Tax and social security debts 72,364 62,597 Other debt 19,082 21,945 Excess of the social aid of members’ fund 293,560 269,199 Cultural aid (25% Private Copying levy) 30,592 26,639 Total III – Debt 1.496,359 1.364,790

Accruals Excess of management levies at 31 December 10,472 8,905 Total IV – Accruals 10,472 8,905

Total liabilities (I + II + III + IV) 1.522,842 1.389,689

62 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

Notes to the statutory financial statements

Accounting rules Depreciation is calculated according to f) Marketable securities and principles the linear method based on the expected The portfolio consists mainly of bonds useful life of the asset: The Sacem annual accounts are drawn and negotiable debt securities that can • buildings – 30 years up according to the standards defined be easily converted into a known amount. by ANC French accounting standards • fixtures and fittings – 3, 5, 10 or 20 years These are kept until maturity. This portfolio is therefore recorded as cash authority regulation no. 2014-03 of • transportation equipment – 5 years 05/06/2014, modified by ANC regulation and no depreciation is established on • office furniture and equipment – 3, 5 the basis of closing market prices. no. 2016-07 of 26 December 2016 or 10 years concerning the general accounting plan, • computer hardware – 3 or 5 years and all regulations by the accounting For information, potential capital losses regulatory committee subsequent to on investments amounted to €4,445,611 this date, and are in accordance with Equipment with a unit value of less than as of 31 December 2017 and capital generally accepted principles, subject to €500 (excl. tax), is recognised as an gains to €60,762,948. the specific provisions prescribed by the expense for the year. CNC French accounting standards body Securities deposited with the Pallas Stern notice no. 2008-04 of 6 March 2008. c) Investments bank that were totally depreciated have Financial assets are shown in the been removed from the assets since no Sacem has decided against advance balance sheet at acquisition cost. recovery can be expected. application of ANC regulation no. 2017-07 Where their present value is lower of 1 December 2017, ratified by a decree than this, a depreciation is recorded. The corresponding depreciation of of 26 December 2017. €1,731,610 was reversed in full for d) “User” receivables the year. Principal accounting rules User receivables are recorded at g) Provisions nominal value. These correspond to and principles invoices for rights that are issued to Sacem records the following provisions a) Intangible assets users. Receivables that carry a risk of on the liabilities side of the balance sheet: Software is recorded at its purchase not being recovered are not recorded • Long service awards: these are given value, or, where developed internally, as depreciation, since rights are only paid in recognition of long-term service with at a conservative estimate of the cost to rights holders after they are received. Sacem. Presentation of an award is of production. accompanied by payment of a bonus Thus, where rights fail to be recovered, for 20 and 30 years of service. The provision is determined using the Depreciation is calculated using the linear a reduction in receivables is recorded “projected credit unit” method. method over 2, 3, 4 or 5 years depending as an asset and offset in liabilities by a on the probable period of use. reduction in the item “fees notified to • The other provisions relate to users but not paid”, without having any individually-identified risks impact on the management account. b) Tangible assets and charges. Tangible assets are valued at acquisition e) Other receivables h) Non-recurring result cost (purchase price plus ancillary costs). User receivables are recorded at nominal Income and charges which do not form Since the 2013 financial year, costs value. Depreciations are accounted for part of Sacem’s ongoing activities by their related to the acquisition of tangible on the basis of estimated risk. These nature, circumstances or significance are assets have been recorded on the assets mostly involve accounts receivable from recorded as non-recurring items. side of the balance sheet and written off members who no longer receive rights. over the life of the corresponding asset. i) Non-balance sheet commitments The commitment to retirement benefits is calculated using the projected unit credit method.

Annual Report 2017 Sacem 63 Statutory financial statements continued

Notes to the statutory financial statements continued

Highlights of the Elimination of the delay in distribution Sacem invoices SDRM for the amount Accounting year of DR rights distribution in order to align of expenditure incurred in respect of DEP public performance with DRM staff and structural costs for Sacem’s a) Introduction of streamlined cash allocations has had a positive impact on support activities. This invoicing will be flows between Sacem and SDRM rights allocated to rights holders to the reassessed annually depending on how Following various decisions made in 2016 tune of €40,100,000. Sacem’s staff costs evolve. and 2017 concerning the management of DRM (mechanical reproduction rights) In addition, standardisation of the The protocol establishes a limit for this cash flows between Sacem and SDRM, treatment of cash flows has given rise to contribution in order to achieve financial the accounts for the year are affected a comprehensive accounting of collection balance for SDRM. by implementation of various measures receipts, particularly online mandate designed to streamline these flows. contracts and foreign phono-subsidiary The invoice for 2017 amounts to centralisation contracts, which has had €4,258,000. In line with recommendations from a positive impact of €56,454,000 on the supervisory bodies for collective Sacem’s 2017 collections. c) Introduction of the new management organisations, cash flow distribution application: FELIX This effect on collections is partly the management, and in particular DRM, This new tool for calculating collection result of modifying the contractual has been reviewed in order to improve and distribution fees became operational relationship between Sacem and SDRM, flows and meet the new requirements for the October 2017 distribution round, which focuses its role as a collection for transparency. for all rights except phono and agency on reproduction rights. private copying. To ensure traceability for flows as In order to streamline cash flows, as of decreed by ordinance no. 2016.1823 of Amounts processed in distributions are 1 January 2017 Sacem invoices for all 22 December 2016 and implemented now combined in gross. Deductions DE and DR rights due from private local by Directive 2014/26/EU, the full amount for collection and distribution are thus radio stations. of authors’ rights collected by SDRM is taken at the end of the distribution now transferred to Sacem, and the latter process for rights distributed and not for This arrangement is formalised with a makes deductions for collection costs. rights allocated for distribution, as was debt transfer agreement between Sacem previously the case. Rights collected by SDRM are transferred and SDRM, by which SDRM transferred all its local private radio receivables for immediately to Sacem for recording in the In order to take this new calculation €3,644,000 on 1 January 2017. DR production rights accounts, except method into account, rights that were for rights from private copying and the previously allocated and not distributed These were received during the year. media, which are transferred to Sacem during the distribution process prior At the time of collection, SDRM’s share after an interval of 3 months following to October 2017 are tracked by date of DR rights is recorded on a monthly receipt by SDRM. of distribution, so they do not become basis as 33% in SDRM collections. subjected to further deductions. The distribution of rights formerly The 2017/2016 variation reflects the new undertaken by SDRM has been For closure of the annual accounts, arrangements. entirely taken over by Sacem since provisional deductions are calculated for 1 January 2017. collection and social works charges on b) Memorandum of understanding the various suspense accounts both for The transfer of accounts from SDRM between Sacem and SDRM DE and DR rights, taking into account the on this date, all the suspense accounts Following the implementation of cash above regulations. and the change in frequency of transfers flow streamlining measures, a new of DRM to Sacem, generated a positive agreement has been signed between d) Amendment of Sacem’s statutes impact of €73,372K on collections in the the two organisations specifying, as concerning operating surplus financial year for Sacem. of 1 January 2017, the methods for The amendment to the Statutes states invoicing and provision of human and that “in the event that the excess at This transfer amount makes up the material resources required by SDRM 31 December of a financial year majority of the current account with the to accomplish its collection of authors’ exceeds 5% of the total costs for that SDRM, which appears on the assets rights activities. side of Sacem’s balance sheet in various financial year, the relevant amounts will receivables for €101,456,000. be distributed in 2018, by analogy, in accordance with article 52 (2) of the General Regulations, in order to comply with the 5% ceiling”.

64 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

Application of this rule for the 2017 Regarding the structure and layout of the i) Company Agreements financial year has resulted in the amount building, the work will be divided between In December 2016, Sacem signed a of €3,690,000 in outstanding “non- Sacem and SCI Neuilly. new three-year incentive agreement with distributable” rights being recorded on employee representative bodies for the the liabilities side of the balance sheet as A distribution of work agreement was years 2017 to 2019, which replaces the of 31 December 2017, in order to meet signed on 17 December 2015, which sets previous incentive agreement (the last the 5% threshold. the proportion of costs for the work at payment in respect of which was made 54.19% for SCI Neuilly and 45.81% in May 2017). e) Private copying collections for Sacem. The €16 million increase in collections The organisation’s good performance from private copying in 2017 follows the This allocation is subject to revision over the 2017 financial year enables resolution of litigation in favour of Copie following receipt of the final accounts payment of the incentive calculated on France against debtors who refused to from the companies. the basis of achievement of the objectives pay fees. of 3 criteria: collections, management Works undertaken in 2016 (4th and 5th ratio, and distribution, in accordance f) RAES floors) for part of the headquarters were with the terms of the new agreement and completed in early 2017. In the accounts restatement of the effects of streamlining. The reform of Sacem’s Régime at 31 December 2017, the respective d’Allocations d’Entraide Mutual Aid share represents Allowance Scheme, adopted at the A total provision of €10,574,400 (including ordinary general meeting on 20 June employer’s contribution and social €1,277,293 for SCI Neuilly and €1,100,765 security payments) was recorded in the 2017, which broadens the scheme’s for Sacem. operating parameters, comes into effect financial statements for the year. on 1 January 2018. In addition, SCI Neuilly has granted a In addition, an amendment concerning rent reduction of €1,059,000 in 2017 for g) Share capital and admission fees the Quatrem pension contribution was rental of the head office in respect of the signed in December 2016 between A decision by Sacem’s Board of Directors renovation work being carried out and the Sacem and representative trade on 24 January 2017 sets the conditions additional costs incurred by Sacem due unions, to set the annual contribution for admission of future Sacem members, to the premises being unavailable. at €8,000,000 for 2016 and €5,200,000 who will pay a contribution of €10 (as starting 2017. capital) and membership fees of €144 for The renovation works that started in 2017 creators and €522 for publishers, to cover (2nd floor) will continue in 2018 and are administration costs (in management included in tangible assets (advances account resources). and prepayments) in the accounts at 31 December, for an amount of h) Work carried out on the Head €453,431 (Sacem’s share). Office building in Neuilly The head office at 225 Avenue Charles A new allocation agreement for works De Gaulle in Neuilly has been undergoing on the 2nd floor was signed on 15 June restructuring and redevelopment on a 2017, setting SCI Neuiily’s share at number of floors since 2015, and this will 42.49% and Sacem’s at 57.51%. This continue for several more years. allocation is subject to revision following receipt of the final accounts from the companies. Acting on its own behalf and that of SCI Neuilly, Sacem has entered into a project management agreement with an architectural firm, and an agreement with companies for completing the corresponding sections of work.

Annual Report 2017 Sacem 65 Statutory financial statements continued

Appendices

Ratio between net costs and collections % in relation to all collected rights (performing, Mechanical Reproduction/Common User and Mechanical Reproduction)

2016 €884,333 2017 €1,043,217 2017 2016 2017/2016 €000 % % % €000

Gross costs for the accounting year 209,546 207,892 to be deducted: – Transfer of costs -1,836 -1,563 – Re-invoicing -13,958 -25,765 – Other operational revenue -27 -39 – Provision write-backs -2,218 -385 – Non-recurrent costs -449 -242

Net costs 191,058 179,898 – Financial revenue -36,205 -34,894 – Member subscriptions, unclaimed fees, sundry -2,508 -1,897

Total net costs 152,345 14.60 -1.58 16.18 143,107 Extraordinary income 819 565 Net cost of extraordinary income 151,527 142,542

Deductions from rights (withheld and undistributable) 153,093 145,655 Surplus (insufficiency) for the accounting year 1,566 3,113

2017(*) % of collection 20161 % of collection Collections 969,846 949,562 Financial income 31,465 31,006 Collections + financial income 1,001,311 100% 980,569 100%

Total expenses 209,546 207,892 Re-invoicing & transfer of expenses, financial income from shareholdings, reversal of provisions, non recurring income, member contribution and other income -26,554 -34,343 Net expenses 182,992 18.28% 173,548 17.70%

Collections 969,846 100% 884,333 100%

Deductions 127,78 3 13.18% 106,556 12.05% Financial Income 31,465 31,006 Undistributable amounts 25,311 39,099 Annual excess of management levies -1,566 -3,113 Total income 182,992 173,548 1 Excluding extraordinary effects of 2017. 2016 amounts were restated to take into account contract amendment.

66 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

Statement of fixed assets Acquisitions, value creations, accruals and Disposals, spin-offs, increases by transfers Decreases by deactivations, Gross values at between line items, transfers repayments of loans, Gross values at 1 January new loans, increases between reductions of 31 December 2017 of accrued interests line item accrued interests 2017 €000 €000 €000 €000 €000

Intangible assets Concessions, patents, licenses, brands, processes1 112,415 11,861 – 197 124,079 Advance payments and instalments1 16,945 22,111 11,488 – 27,56 8 129,360 33,972 11,488 197 151,647

Tangible assets Land 557 – – – 557 Buildings2 64,979 1,323 – 229 66,072 Technical facilities, industrial plant and equipment – – – – – Other tangible assets3 63,500 3,450 – 1,738 65,212 Advances and instalments (tangible assets) 2,351 1,610 3,368 – 593 131,387 6,383 3,368 1,967 132,434

Investments Shareholdings4 10,645 – – – 10,645 Investment-related receivables5 12,417 5,845 – 3,972 14,290 Loans 6,150 – – 200 5,950 Other financial assets 610 20 – 31 599 29,822 5,865 – 4,202 31,484

Grand total 290,568 46,220 14,857 6,367 315,565

1 The main movements are the result of software creation and commissioning of applications (CANDI, CRMRE batch 1, HDGEN, OEUV, SMART batch 3, WSPRO, HCINE, etc.) and current projects (CHEBS, HCOPR, HGLDA, HPHVI, NOPAP, OINTE, HOTSA, URIGHTS, etc.) 2 Property investments for the year relate to the purchase of car parks in Reims for €134,000 and work at the Lieusaint, Toulon, Chambéry, Lyon, Nice, Montpellier, Greater Bordeaux, Caen, Reims and Nantes delegations amounting to €1,066,588, and €122,384 for air conditioning works at the Rue de l’Eglise head office. Property transfers for the year relate to the sale of premises in Reims (Rue des Trois Raisinets). 3 The main investments are the purchase of computer hardware (€1,058,021), office equipment (€73,634), office furniture (€480,068), various items of technical equipment for the head office (€52,126) and cafeteria equipment (€46,701). Building work accounts for €1,739,399, of which €1,100,765 for the head office (4th and 5th floors), €176,425 for the cafeteria, €126 832 for La Tour Initiale at La Défense, €60,242 (7th floor), €66,765 (6th floor) and €208,370 for various works at head office. Outflows relate to the auction of Sacem artworks for €154,790, the disposal of office equipment for €2,816, office furniture for €125,725, miscellaneous equipment for €17,930 and computer equipment for €1,436,552. 4 No movement on shareholdings for the year. 5 Movement on holdings-related receivables relates to income, calls for funds and reimbursements from the SCIs in Neuilly, Châteaudun and Villette.

Annual Report 2017 Sacem 67 Statutory financial statements continued

Appendices continued

Amortisation statement Amortisation Increases relating to Amortisation at Allocations assets removed 1 January during the fiscal from the balance Amortisation at 2017 year sheet abd reversals 31 December 2017 €000 €000 €000 €000

Intangible assets Concessions, patents, licenses, brands, processes 81,605 12,118 81 93,642 81,605 12,118 81 93,642

Tangible assets Buildings 36,890 1,900 229 38,560 Technical facilities, industrial plant and equipment Other tangible assets 53,536 2,759 1,577 54,717 90,425 4,658 1,806 93,277

Total amortisation of fixed assets 172,030 16,776 1,887 186,919

68 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

Provisions and depreciation statement Decreases reversals during Amount at Amount Increases/allocations the fiscal year €000 31 December at 1 January 2017 during the fiscal 2016 Sections and items €000 year €000 used not used €000

Provisions Contingency provisions Provisions for contingencies 581 49 – 230 400

Cost provisions Employee’s length of service award 2,299 33 – – 2,332 Others 159 2 – – 160 3,039 84 0 230 2,893

Depreciation On intangible assets2 450 93 – – 543 On tangible fixed assets3 710 – 131 – 579 On members’ debt accounts 1,880 436 – 126 2,189 On miscellaneous receivables 0 – – – 0 On traded debt securities4 1,732 – 1,732 – 0 4,771 529 1,863 126 3,311

Grand total 7,810 612 1,863 356 6,204

Of which additions and reversals – financial – operating 7,810 563 131 126 6,204 – financial – 0 1,732 0 – – non recurring – 49 0 230 –

1 Provision for disputes: This provision covers risks relating to current industrial tribunal files. 2 Provision for depreciation of assets: The launch of the Urights project with IBM in 2016 should replace the current SELOL application in 2018 and 2019 which is responsible for monitoring Online rights. Thus, the net accountable value as of 30 June 2019 for developments realised appears as an additional item of depreciation in the financial statement for the year, to reflect its short-term validity in respect of the period originally planned. 3 The provision for depreciation of artworks intended for sale is adjusted to the market value following expert valuation. Recovery for the year corresponds to the loss of value recorded on sales carried out in 2017. 4 The securities deposited with the Pallas Stern bank that were totally depreciated were removed from the assets since no recovery can be expected. The corresponding depreciation is therefore recovered in full on the year.

Annual Report 2017 Sacem 69 Statutory financial statements continued

Appendices continued

Statement of receivables and debts by maturity Gross Due within Due beyond amount one year one year Receivables €000 €000 €000

Fixed assets: Investment-related receivables 14,290 – 14,290 Loans 5,950 – 5,950 Other financial assets 599 119 480

Current asset: Receivables from users and related accounts 220,301 220,294 8 Other receivables 168,196 167,875 320 Prepaid expenses 3,218 2,873 346 Total 412,555 391,161 21,394

Loans due within one year 0 Loans due beyond one year 200

Gross Due within Due beyond amount one year one year Debts €000 €000 €000 Bank loans and debts 227 227 Miscellaneous loans and financial liabilities – – Trade payables and related accounts 6,270 6,270 Tax and social security debts 72,364 72,364 Debts on fixed assets and related accounts 6,180 6,180 Other debts: – Collections to be distributed 839,573 839,573 – Users 5,742 5,742 – Non-paid notified royalties 182,101 182,101 – Members 37,120 37,120 – Sundry debt1 346,782 48,779 298,003 Deferred income 10,472 10,472

Total 1,506,831 1,208,828 298,003

1 Miscellaneous payables = €346,781,764 of which €293,559,588 of collateral surplus for members’ charitable works. Regarding the mutual assistance allowance scheme of Sacem (RAES), who have acquired rights based on number of points may, under certain conditions, benefit from income support in the form of quarterly allocations. Each year, the Board of Directors reviews the points service value for the current year. Consequently, Sacem can provide no guarantee as to the value of future benefits that may be paid under the income support scheme. As a consequence, given the non-binding nature of this scheme, Sacem’s commitment is limited to the resources available in respect of “charitable works”.

70 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

Accrued income Amount of accrued income included in the following balance sheet items Amount €000 Accrued interest on obligations, vouchers and related stocks 24,088 Accrued interests on interest-bearing bank accounts 2 Other receivables: Social organisations, state and sundry debtors 7,319 Total 31,409

Expenses to be paid Amount of expenses to be paid included in the following balance sheet items Amount €000 Trade payables 1,936 Tax and social security debts 30,262 Debts on fixed assets 1,276 Other debts 2,101 Total 35,576

Prepaid expenses and deferred income Expenses Income €000 €000 Operating expenses/income Prepaid expenses 2,941 Inventory 278 Excess of management levies at 31 December – 10,472 Total 3,218 10,472

Composition of share capital The share capital is variable. It is made up of members’ admission fees at their original value. 3,968 admissions were registered in 2017. Sacem has over 163,036 members as of 31 December 2017. The admission fee was set at €128 then raised by €10 following a decision by the Sacem Board of Directors on 24/01/2017, for the 2017 financial year (€127 in 2016), with collection of an admission fees of €144 for creators and €522 for publishers.

Annual Report 2017 Sacem 71 Statutory financial statements continued

Appendices continued

Transfer of costs Since 2004, Sacem’s Board of Directors has reintroduced a withholding for the costs of administration relating to the management of “25% private copying” fund.

This reallocation appears as a transfer of costs.

Extraordinary income Extraordinary income represents €240,020 of revenue from the disposal of property assets of premises in Reims.

Extraordinary income also includes income from the sale of furniture (€10,372) and artworks (€24,180).

Other extraordinary income rose to €993,196 and corresponds to payment of claim refunds, recovery of bad debts by agents, miscellaneous adjustments and differences in currency/euro conversion.

This amount includes rebates from the tax authorities this year, among others, to the amount of €599,366 relating to Housing Tax for the years 2013 to 2016.

Extraordinary costs consist of the following elements: • €122,072 relating to the net accountable value of movable assets disposed of, and €154,790 relating to artworks sold. • €116,123 attributable to differences in currency/euro conversion. • €21,174 related to miscellaneous adjustments. • €35,094 relating to the settlement of legal disputes.

Elements concerning related and associated companies Amounts relating to Companies in which Affiliates items the society has companies a shareholding Items €000 €000 Shareholdings 10,639 5 Investment-related receivables 14,089 Other receivables 102,248 889 Sundry debts 0 Income from investment in subsidiaries and associates 4,740

Financial commitments Amounts Commitments given €000 Bank guarantees for members – Lump sum retirement benefits1 14,048 Financial support commitment2 –

1 Retirement benefits are dependent on company agreements. Assessment of the amount is based on the following assumptions: • Sacem employees do not work beyond the age of 67, • there is a likelihood of employees retiring voluntarily between the ages of 62 and 64, • there is a likelihood of employees not retiring voluntarily between the ages of 65 and 67, • a discount rate of 1.30% (Iboxx AA + rate) and a social security contribution rate of 47.12%, • the turnover rate by age group as reviewed in 2017, • taking into account the TH0002 TF0002 male/female mortality table. 2 As the majority shareholder of SDRM, Sacem undertakes to implement the necessary measures to prevent the early sale of marketable securities intended to be held until maturity in the event of cash-flow difficulties, thus preventing capital losses for SDRM which would have a negative impact on the accounts for this category of assets.

72 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

Average headcount Indicator 114 of social sheet Indicator 123 of the human resources report, temporary workers

Employees made Salaried available to employees the company Managers 336 – Supervisors 231 27.0 0 Employees 881 – Total 1,448 27.0 0

List of subsidiaries and associated companies “Share of Result of the last Subsidiaries and associates Capital in euros outstanding capital” fiscal year in euros

A – Detailed information regarding the subsidiaries and associated compagnies 1. Subsidiaries (more than 50% of the outstanding capital ) SDRM 61 59 / 61 0 Sacem Luxembourg 10,000 75% 0 SCI 225-227 AVENUE CHARLES DE GAULLE 914,700 75% 5.553,763 SCI CHATEAUDUN 304,900 75% 371,621 SCI VILLETTE 2.286,735 2 / 3 443,637 2. Associates (10 to 50% of the outstanding capital) F.T. “The Digital Copyright Network” 37,000 14.40% Not disclosed

B – General information concerning other subsidiaries and associates 1. Subsidiaries not referred to in A: NONE NONE NONE a) French b) Foreign 2. Associates not referred to in A: a) French BIEM 412 1 / 27 Not provided b) Foreign NONE NONE NONE

Annual Report 2017 Sacem 73 Statutory financial statements continued

Appendices continued

Attribution of rights at the fiscal year end Outstanding rights on Outstanding 31 December of rights on the current year 31 December of Collections to (see liabilities the previous year be distributed in current fiscal (see Liabilities in online on Amounts Amounts year’s balance previous fiscal 1 January 2017 Management levy attributed to the attributed to Amounts sheet) year’s balance €000 Collectons of (see profit and aid for creation social, or attributed to €000 sheet) distributed the fiscal year loss statement) (Article L.324-17) cultural aid rightsholders1 (8) = €000 (Online) €000 €000 €000 €000 €000 (1) + (2)+ (3) Nature of payment (1) (2) (3) (4) (5) (6) (7) - (4 + 5 + 6 + 7) 1) Payments for which management is entrusted by rights holders: 626,015 10,107 944,081 137,894 – 44,894 742,993 654,423 Public Performance Rights and Normal Users 502,514 10,107 660,635 104,262 – 41,504 507,819 519,670 Mechanical Reproduction Rights 123,502 – 283,446 33,632 – 3,390 235,174 134,753 2) Payments for which management is entrusted according to the law/CPI 39,509 0 99,136 6,372 27,823 2,982 65,280 36,188 Article L.132-20-1 (right to authorise the retransmission by cable simultaneously, in full and without any changes, in the national territory, of a work televised from a Member State of the European Community) – DEP 3,239 – 2,362 727 – 268 2,122 2,483 – DRM 881 – 966 129 – 4 1,083 630 Article L.311-1 (for private copying of audio works) 27,022 – 70,933 4,338 19,782 2,346 46,712 24,778 Article L.311-1 (for private copying of audiovisual works) 8,368 – 24,875 1,178 8,041 364 15,363 8,297 3) Financial income allocated to rights holders – – – – – – – – Total 665,524 10,107 1,043,218 144,266 27,823 47,876 808,273 690,6122 Notes (Cf. balance (Cf. income (Cf. balance sheet statement) sheet liabilities n-1) liabilities n)

1 “Allocated amounts” refers to amounts recorded in right holders’ personal accounts. 2 Of which provisional amounts deducted for expenses (€39,083,870) and social services (€33,401,719).

74 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

Summary of the amounts remaining to be attributed to the rights holders Gross collections Outstanding amounts previous fiscal year current fiscal year previous fiscal year Current fiscal year Rights holders €000 €000 €000 €000

Total 884,333 1.043,218 36,026 36,874

Summary of amounts remaining to be attributed individually Payments for which management is entrusted by the rights holders:

This financial year €000 Public Performance Rights and Normal Users 454,172 Mechanical Reproduction right – Sacem management 163,954 Total 618,126

Summary of the amounts remaining to be attributed individually Payments for which management is entrusted according to the law:

Year of Amount collections Sections and items €000 €000 Article L.122-10 (reproduction by photocopy rights) Not applicable Article L.132-20-1 (right to authorise the retransmission by cable simultaneously, in full and without any changes, in the national territory, of a work televised from a Member State of the European Community) Not applicable Article L.217-2 (the right to authorise simultaneous, complete retransmission of an artist’s performance, audio recording or video recording from an EC member state by cable, without any changes, within France) Not applicable Article L.214-1 (the right to broadcast an audio recording published for commercial purposes in public) Not applicable Article L. 311-1 (for the private copying of audio works) 5,942 2017 4,041 2016 4,000 2015 Sub-total 13,984

Article L. 311-1 (for the private copying of audiovisual works) 1,424 2017 1,013 2016 1,041 2015 Sub-total 3,478

Total 17,461

Annual Report 2017 Sacem 75 Statutory auditor’s report on the financial statements

Statutory auditor’s report on the financial statements Year ended December 31, 2017

To the Sacem Shareholders’ accounting principles applied and on the our opinion thereon. We do not provide Meeting, reasonableness of significant estimates a separate opinion on specific items of used and on the overall presentation the financial statements. 1. Opinion of the accounts, particularly the In compliance with the assignment following matters: 4. Verification of the Management entrusted to us by your Annual Report and other documents General Meeting, we have audited the Management of revenue from the provided to Members accompanying financial statements of exploitation of rights Société des Auteurs Compositeurs et We have also performed, in accordance Your company, a collective management with professional standards applicable in Editeurs de Musique (Sacem) for the year organisation of authors’ rights, manages ended December 31, 2017. France, the specific verifications required these rights as part of the compulsory by French law. and the voluntary management. In our opinion, the financial statements We have no matters to report as to the give a true and fair view of the assets and As such, it collects from users the rights liabilities and of the financial position of fair presentation and the consistency relating to the exploitation of works with the financial statements of the Sacem as of December, 31 2017 and of belonging to rightholders, notably the results of its operations for the year information given in the Manager’s report its members, and to other collective and in the other documents provided to then ended in accordance with French management organisations, to which accounting principles. Shareholders with respect to the financial it applies deductions to cover its costs position and the financial statements. relating to management fees and to 2. Basis for Opinion social, cultural and educational services. It should be noted that our verifications Audit framework relating to the transparency report set We conducted our audit in accordance As part of our assessment of the forth in Article L. 326-1 of the French with professional standards applicable accounting treatment of these flows, intellectual property code and provided in France. We believe that the audit we verified the appropriateness of to the members are the subject of a evidence we have obtained is sufficient the accounting principles applied, in certificate established in application of the and appropriate to provide a basis for particular with reference to Article 621- provisions of articles L. 326-8 and R. 321- our opinion. 11 of the General chart of accounts 14 IV of the aforementioned code, distinct relating to the accounting of these flows from this report. Our responsibilities under those in accordance with Article L.324-9 of the French intellectual property code, standards are further described in the 5. Responsibilities of management “Statutory Auditor’s responsibilities for the and we assured ourselves as to their and those charged with governance audit of the financial statements” section correct application. of this report. for the financial statements Commitment for the lump-sum Management is responsible for the Independence retirement benefits preparation and fair presentation of the We conducted our audit assignment in Section “Financial commitments financial statements in accordance with compliance with independence rules (note 8)” of the notes to the financial the French accounting principles and for applicable to us, for the period from statements mentions the lump-sum such internal control as management January 1, 2017 to the date of our report retirement benefits which corresponds determines is necessary to enable the and specifically we did not provide any on December 31, 2017 to €14,047,974 preparation of financial statements that prohibited non-audit services referred and specifies the procedures for are free from material misstatement, to in the French code of ethics (Code evaluation, carried out by yourself, of whether due to fraud or error. de déontologie) for statutory auditors. this commitment. In preparing the financial statements, 3. Justification of assessments Our work consisted in examining the management is responsible for assessing data used, assessing the assumptions the Company’s ability to continue as In accordance with the requirements used and verifying that the above a going concern, for disclosing, as of Articles L. 823-9 and R. 823-7 of mentioned note of the notes to the applicable, matters related to going the French commercial code (Code de financial statements provides appropriate concern, and for using the going commerce) relating to the justification of information. Generally, we verified the concern basis of accounting unless it our assessments, we inform you that the reasonableness of these estimates. is expected to liquidate the Company most important assessments that we or to cease operations. carried out, in our professional judgment, These matters were addressed in the focused on the appropriateness of the context of our audit of the financial The financial statements were approved statements as a whole, and in forming by the Board of Directors.

76 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

6. Statutory Auditors’ • identifies and assesses the risks of • assesses the appropriateness of responsibilities for the audit of the material misstatements of the financial management’s use of the going financial statements statements, whether due to fraud or concern basis of accounting and, error, designs and performs audit based on the audit evidence obtained, Our role is to issue a report on the procedures responsive to those risks, whether a material uncertainty exists financial statements. Our objective and obtains audit evidence considered related to events or conditions that is to obtain reasonable assurance to be sufficient and appropriate may cast significant doubt on the about whether the financial statements to provide a basis for his opinion. Company’s ability to continue as a as a whole are free from material The risk of not detecting a material going concern. This assessment is misstatement. Reasonable assurance misstatement resulting from fraud based on the audit evidence obtained is a high level of assurance, but is not is higher than for one resulting from up to the date of his audit report. a guarantee that an audit conducted in error, as fraud may involve collusion, However, future events or conditions accordance with professional standards, forgery, intentional omissions, may cause the Company to cease to will always detect a material misstatement misrepresentations, or the override of continue as a going concern. If the when it exists. Misstatements can arise internal control; Statutory Auditor concludes that a from fraud or error and are considered material uncertainty exists, there is a material if, individually or in the aggregate, • obtains an understanding of internal requirement to draw attention in the they could reasonably be expected control relevant to the audit in order audit report to the related disclosures to influence the economic decisions to design audit procedures that are in the financial statements or, if such of users taken on the basis of these appropriate in the circumstances, but disclosures are not provided or financial statements. not for the purpose of expressing an opinion on the effectiveness of the inadequate, to modify the opinion expressed therein; As specified in Article L. 823-10-1 of internal control; the French commercial code (Code du • evaluates the appropriateness of • evaluates the overall presentation of commerce), our statutory audit does not accounting policies used and the the financial statements and assesses include assurance on the viability of the reasonableness of accounting whether these statements represent Company or the quality of management estimates and related disclosures the underlying transactions and of Company’s affairs. made by management in the financial events in a manner that achieves fair statements; presentation. As part of an audit conducted in accordance with professional standards Paris, April 18, 2018 applicable in France, the Statutory French original signed by Auditor exercises professional judgment throughout the audit and furthermore: Didier KLING Anne NOUQUATI The Statutory auditor CRCC of Paris

This is a free translation into English of the Statutory Auditors’ report on the financial statements issued in French and it is provided solely for the convenience of English speaking readers. The Statutory Auditors’ report includes information specifically required by French law, such as information relating to the specific verification of the management’s report and other documents provided to shareholders. This report should be read in conjunction with, and construed in accordance with French law and professional auditing standards applicable in France.

Sacem 225, avenue Charles-de-Gaulle 92521 NEUILLY-SUR-SEINE

Annual Report 2017 Sacem 77 Glossary

Definition ACID French association of film directors ADAGP French Society of Authors of Visual Arts ADAMI French Collective Management Society for Performing Artists and Musicians ADSL Asymmetric Digital Subscriber Line Agessa Authors’ Social Security Management Association AKM Austrian Society of Authors, Composers and Publishers ANC French Accounting Standards Board ARMONIA First pan-European hub for licensing online services ASCAP American Society of Composers, Authors and Publishers BIEM International organisation representing mechanical rights societies BR Blu-ray CISAC International Confederation of Societies of Authors and Composers CMO Collective Management Organisation Copie France Collective management society that collects private copying levy CSDEM French association of publishers DEP Public performance rights DGA Directors Guild of America DRM Mechanical rights DSP Digital Service Provider FACF Franco-American Cultural Fund FCM Musical Creation Fund General rights Authors’ rights collected by the regional network (concerts, shows, background music, nightclubs, cinemas etc.) GESAC European Grouping of Societies of Authors and Composers IBM International Business Machines – IBM is an American multichannel technology company IFPI International Federation of the Phonographic Industry ISRC International Standard Recording Code. It is an international standard code for uniquely identifying sound recordings and music video recordings ISWC International Standard Musical Work Code. It is a unique identifier for musical works, similar to ISBN

78 Sacem Annual Report 2017 Strategic review Management report Transparency report Financial statements

Definition MIDEM Music event in France MPAA Motion Picture Association of America NPVR Network personnal video recorder Private Copying Private Copying is a system which allows private individuals to copy works for their own private use, while remunerating creators PRS for music Performing Right Society – PRS for music is a society of songwriters, composers and music publishers (UK) SACD French Society of Dramatic Authors and Composers SCAM French Civil Society of Multimedia Authors SCI French Property Investment Company SCPP Society of Phonogram Producers: collects and distributes royalties for its members for the exploitation of sound recordings and music videos SDRM French Collecting Society for Mechanical Reproduction Rights for Authors, Composers and Publishers SNEP French National Phonographic Producers’ Union Socan Society of Composers, Authors and Music Publishers of Canada SPEDIDAM Society for the Collection and Distribution of Artists’ and Performers’ rights SPPF French Phonogram producers’ collecting society SPPF/SCPP Representing record companies and ADAMI/SPEDIDAM representing artists/musicians SPRE French society managing neighbouring rights/equitable remuneration for its four members SVOD Subscription video on demand (SVoD) refers to a service that gives users unlimited access to a wide range of programmes for a monthly flat rate TNT French National Digital Terrestrial Television (DTT in English) UPAD Professional Union of dubbing authors VOD Video-On-Demand, which allows consumers to select and watch the video content they want, when and where they want WGAW Writers guild of America west

Annual Report 2017 Sacem 79 Credits

Front cover: Anitta: Michael Tran/FilmMagic, Jain: Paul & Martin, Kungs: Andrea Bielsa Inside front cover: Gaël Faye: Chris Schwagga P1: Salvatore Adamo: Claude Gassian, Jain: Paul & Martin P4: Jean-Claude Petit: Fred Thomas, Sacem building: Marc Chesneau P6: Jean-Noël Tronc: Jean-Baptiste Millot P8: Carlinhos Brown: Marc Chesneau, Gilberto Gil: Leo Aversa P9: Oum: Lamia Lahbabi, Oumou Sanagaré: Benoît Peverelli, Amr Diab: DR P10: T-mobile Arena: Kevin Winter P11: Philharmonie de Paris: Gil Lefauconnier, Royal Albert Hall: Dan Breckwoldt, Jain: Paul & Martin P12: Anjali Southward: Facebook P13: Eric Mackay: Warner Chappell P14: Vanessa Bertran: Marc Chesneau, Anonymous songwriters: Christophe Urbain P15: Patrick Lemaître: Thomas Bartel P16: Ibeyi: David Uzochukwu, David Guetta/Fréderic Rister: Jeaneen Lund P17: Fatoumata Diawara: Erika Goldring P18: Karol Beffa: Amélie Tcherniak, children picture: HighwayStarz P19: Matthieu Gonnet: DR P20: Voting hand: Bizoo, Bruno Cotte: Marc Chesneau, Pascal Roche: Marc Chesneau P22: Jean-Noël Tronc: Marc Chesneau P23: Fabrice Gadeau: Flavien Prioreau P24: Meet the authors: Deribaucourt, Fighting piracy: Richard Paoli P25: Quincy Jones: lensology.net, Anne Dudley: DR, Grand Prix Sacem: Salvatore Adamo: Claude Gassian, Aldebert: Sylvain Granjon, Karol Beffa: Amélie Tcherniak, Jean-Michel Bernard: Giovanni Cittadini Cesi, Bigflo & Oli: Fifou, Calogero: Laurent Seroussi, Tristan Carné: Sylvie Grosbois, Eric Debègue: Jean-François Augé, Gaël Faye: Chris Schwaagga, Pierre Grillet: Sidney Caron, Nora Hamzawi: Sylvain Norget, Jain: Paul & Martin, Mory Kanté: Marc Ribes, François Meïmoun: Catherine-Maria Chapel, Petit Biscuit: Jonathan Bertin, Soprano: Fifou – Justin Timberlake, Shellback, Max Martin: Dalle, Axel Öberg, Armando Gallo, Bojan Z: Elisabeth Anselin. Conception Belleville P26: Johnny Hallyday: Karwai Tang, Barbara: Philharmonie de Paris, Invitation Prévert: DR P27: Jorge Arriagada: Sacem, Salvatore Adamo: Claude Gassian, Marcel Azzola: Thomas Bartel, French Vip: Christophe Crenel P28: Pervenche Berès: Sacem, Piano robot: Sergey, Choir: College Lamoricière/Saint-Philibert de Grand Lieu P34: Board of directors: Lionel Pagès P35: Anonymous songwriters: Christophe Urbain P36: Bojan Z: DR Bojan Z P38: Justice: by So me, Alexandre Tharaud: Marco Borggreve P39: Pub: Jacob Ammentorp Lund, Restaurant: Christophe Urbain, Club: Tonis Valing, Mall: Zhu Difeng P40: Damso: Guillaume Durand P41: Vincent Peirani: Dean Benicci P42: Colcoa board: Valérie Macon P43: Kungs: Andrea Bielsa P44: Anitta: Isaac Brekken P45: Cléa Vincent: Marie-Lise Modat

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