Like 2020, 2021 was again a special and challenging year, primarily because of Covid-19. A great deal was asked of the Netherlands, of music users and certainly of our members as well.
At the end of 2020, we determined four (Covid-19) scenarios that could occur and have significant effects on the fees we collected. We decided to postpone the investments in pursuing our strategy with the aim of limiting costs. For restaurants and bars and shops and stores, the fees collected for 2021 were indeed in line with one of these adjusted scenarios; for live performances and events, the reality was even worse than any of the scenarios outlined. The total collection figures were better than anticipated, however, because the further rise of online and powerful recovery in radio and television income more than compensated the decline in the other business lines.
In total, the royalties of BumaStemra amounted to €204.7 million in 2021. That is up 0.6% from 2020, but down 6.8% from the record year of 2019. In 2021 as well, the agreement in principle applied that, among others, bars and restaurants, shops and stores and cultural institutions did not need to pay for copyrights over the period in which the organisation was required to close.
Distribution and initiatives
In 2021, a new record amount of €196.2 million was paid out in total. Of this, €188.2 million was paid out in copyright royalties to rights owners in the Netherlands and abroad. The remainder of €7.9 million was added to the Fund for Social and Cultural Purposes. This was an increase of €3.5 million compared to 2020. However, the income per music maker varies greatly.
In order to limit the impact of Covid-19, BumaStemra took action by reducing outages in the distribution process. Stemra also paid an extra €4.3 million from the continuity reserve.
In addition to the distribution mentioned, BumaStemra opened a second Music Investment Fund in 2021, with the cooperation of the Ministry of Education, Culture and Science. In supplement to the €2.5 million in 2020, €2.3 million was made available for this second round, thus contributing to the continuity of the creative process and realisation of new cultural productions. A third investment round has since been announced for 2022.
Net cost effectiveness and provision for temporary differences
From 2021 onwards, the administrative fees withheld on grounds of the amended Distribution Regulations are determined in a different manner. All withholding rates will be set in advance from now on, as part of the budget. This ensures that the net amount of collected royalty income available for distribution will be known earlier.
As a result of the implementation of the new withholding method, BumaStemra realised a total of €12.6 million in extra, one-off income. The investment result realised for 2021 was also €4.1 million higher than the (budgeted) normative investment result, so that the administrative expenses were partly covered. The programme to replace our IT system was started at the end of 2020 and continued in 2021. We postponed other strategic initiatives in 2021, also deferring the filling of a number of vacancies in order to save costs. In total, the administrative expenses for 2021 were €3.3 million under budget.
Partly as a result of the results mentioned above, a total credit balance cost coverage of €18.4 million was achieved in 2021. Together with the appropriated reserves present at the end of 2020, this amount was included in the provision for temporary differences in cost coverage at the end of 2021. The balance of the provision allows for an additional payment to rightholders of Stemra in 2022.
Despite the negative impact of Covid-19 on some of the collection, in 2021 BumaStemra satisfies the standard that stipulates that costs may not, in principle, amount to more than 15% of the fees collected. BumaStemra also complied with the standard that costs may not exceed 15% of the amount in copyright royalties distributed. The administrative expenses rose less quickly in 2020 than the consumer price index, so this standard was also met.
We are optimistic about the future and believe we are on the way to an ‘open, resilient and shockproof society’ in which restrictions no longer prevail. Once events and festivals can again be organised, the income from live performances will again be back on level, which would mean that, on balance, the royalty income will be higher than in the pre-Covid-19 period. Whether that will already be the case in 2022, we cannot say for certain, but we are confident recovery is on the way.
Hoofddorp, 25 May 2022
Bernard Kobes, CEO
Marleen Kloppers, CFO