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‘Tidy up the ship’: Calls for new inquiry into Buma

A coalition of musicians, songwriters, lawyers and accountants have called for further investigation into the accounts of embattled Dutch performance rights organisation (PRO) Buma/Stemra, in order to “heal the wounds” left by years of alleged financial mismanagement.

Buma/Stemra CEO Wim van Limpt in August announced a slate of reforms he said would transform the PRO into a more “market-oriented, viable and transparent organisation” after law firm NautaDutilh discovered €6m of irregularities in its 2015–16 books.

That, however, doesn’t go far enough, says KleanMusiK, a collective that assists songwriters in disputes with their publishers or PROs. Under the banner ‘Schoon schip maken’ – a Dutch idiom meaning to put one’s house in order (literally “tidy up the ship”) – the organisation has written a petition it intends to present to the Buma/Stemra board at the latter’s general meeting on 30 October, outlining nine motions it says, if adopted, would go some way towards regaining public trust in the PRO.

The motions include Buma sharing reports and financial data with members, appointing an external auditor to look into its accounts, answering members’ questions on the society’s financial status and providing data on royalty pay-outs.

More than 80 people have already signed the petition.

 


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Buma/Stemra delays annual report after financial “errors”

Buma/Stemra has postponed the publication of its 2016 annual report after an investigation turned up “errors” in its financial reporting, its CEO has announced.

Wim van Limpt, who has led the Dutch collection society since 2016, has promised a package of reforms to make Buma/Stemra a more “market-oriented, viable and transparent organisation”, after law firm NautaDutilh discovered irregularities – including unacceptably high costs, amounting to a “failure to comply with accounting rules” – in its provisional 2016 accounts.

“I regret the results of the investigation but am relieved that questions have now been answered and measures can be taken to fix the mistakes,” he told Buma/Stemra’s board and more than 26,000 members on Monday. “With the additional measures and the already initiated organisational improvements, nothing stands in the way of becoming the kind of organisation that should be expected of us.”

Van Limpt (pictured) brought in NautaDutilh as an auditor earlier this year after his queries about Buma/Stemra’s accounts “could not be answered internally”, he explains. The firm discovered Buma/Stemra’s board of directors were “not adequately informed about important financial decisions” – and, most damningly, that there was a “culture of budgeting” at the organisation that caused large amounts of money to be set aside as a ‘buffer’ in case of financial difficulties.

According to the NRC Handelsblad, the former management had, by the end of 2015 alone, managed to set aside around €6 million by not recording suppliers’ invoices in Buma/Stemra’s books.

“I regret the results of the investigation but am relieved that questions have now been answered”

“These costs […] were not included in the bookkeeping, and were not always recorded at the time that the costs were actually incurred,” says spokesman Frank Janssen.

Buma/Stemra declined to comment on any disciplinary action against the employees concerned.

Buma/Stemra’s former CEO, Hein van der Ree, left the organisation in early 2016 as his salary exceeded that allowed by a Dutch law regulating public-sector pay.

Van Limpt says the corrected annual report will be published shortly, following the implementation of a system of “high-quality, transparent and automated data processing” of its accounts. “The annual accounts will be drawn up on the basis of the findings and presented to members for approval at an extra general members’ meeting to be held soon,” he explains.

IQ revealed last year that Buma – the PRO component of Buma/Stemra, with Stemra overseeing mechanical rights – was to abolish its controversial practice of offering live tariff rebates to promoters after consulting with “all market players, including authors and performers”.

 


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Buma to drop controversial tariff discounts

Dutch performing rights organisation (PRO) Buma, one of several PROs known to be offering controversial live tariff rebates to promoters, is to abolish the practice from 1 January 2017.

Rates will remain unchanged from 2016 – a maximum of 7% for events with more than two-thirds Buma repertoire; 5% for between one and two thirds; and 3% for less than a third – but the practice of granting ‘volume discounts’, under which promoters receive up to 25% of money earmarked for songwriters and composers, will cease.

Buma – the PRO component of Buma/Stemra, with Stemra overseeing mechanical rights – currently offers rebates ranging from 10% (for license-fee invoices of between €75,000 and €250,000) to 25% (€1m+). Other PROs offering discounts to promoters include Sabam in Belgium, SIAE in Italy, Gema in Germany, Suisa in Switzerland and Sacem in France, with most justifying the practice by saying promoters are helping to administer public performance rights.

A spokesman for Buma tells IQ the plan to drop the current rebates took into consideration the views of “all market players, including authors and performers”, and has been approved by the Supervisory Board of Collection Societies (College van Toezicht Auteursrechten, CvTA).

While the volume discount will end, there will be a smaller discount of 5% available to promoters that organise more than 25 shows per year and pay more than €100,000 in annual Buma fees.

“The new tariff is completely transparent, and creates a level playing field for all promoters, venues and festivals”

To qualify for the discount, promoters will also, the PRO explains, need to “pay monthly advance invoices to Buma, provide financial security in the form of bank guarantees, report repertoire in a way that allows Buma to digitally fingerprint any songs played [and] provide backstage access to Buma to events for inspection purposes”. (The 5% deduction will therefore, says the spokesman, be a “fee for services rendered”.)

The PRO will also introduce a ‘special event’ tariff for festivals “with a significant share of the cost in an overnight stay: hotel, campsite, bungalow, etc.” The tariff – designed for events lasting at least two days and with minimum turnover of €1m minus VAT – will allow festivals to deduct 45% from tickets that include an overnight stay.

The new system, says Buma, is “completely transparent, and creates a level playing field for all promoters, venues and festivals”.

The practice of awarding rebates to promoters is among the factors contributing to the rise of direct licensing, in which performers cut out PROs to license their performance rights directly from festivals.

There have, however, already been signs of a pushback by festivals faced with the prospect of paying twice, with festival association Yourope advising its members against booking bands who choose to collect their royalties directly.

 


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