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Music Licensing and Sustainable Nightlife: Germany’s “GEMA- Tarifreform” Debates – Luis-Manuel Garcia


Our latest guest post is by Luis-Manuel Garcia, of the Max Planck Institute for Human Development, Berlin. It provides a brief overview of the author’s in-depth article for Resident Advisor, “GEMA and the Threat to German Nightlife”. Further details about the GEMA- Tarifreform controversy can be found in the original article. Here he explains the background to the dispute that has erupted regarding the German royalty collection society’s proposed tariff reforms and their potential effect on the nightclub scene.

“Without nightclubs, my life would have no meaning,” read a sign held aloft at the Gemeinsam Gegen GEMAinheiten rally in Berlin’s Schöneberg district, one of a number of demonstrations held simultaneously across Germany on September 6th 2012 to protest GEMA’s planned changes to licensing fees for music events. This slogan alluded to GEMA’s own recent public-relations campaign, “Without music, my life would have no meaning,” which chided music consumers to accept, observe, and—most importantly—pay the various fees that the organisation charged every time music is played, performed, covered, and copied. The protesters’ subversion of this slogan suggested that music events were just as important to music-lovers, implying that GEMA’s new system of tariffs threatened the music scenes that produced music in the first place. This “day of action” was the culmination of a long summer of protests and demonstrations — online, in print, and in the streets — against GEMA’s tariff reforms. How did a debate about the intricacies of licensing fees for musical usage-rights become so urgent that it made national headlines, circulated around the international electronic dance music community, and brought most of Germany’s underground music scenes out onto the streets?

Before answering that question, it is probably best to answer a more basic one: what is GEMA, anyway? The Gesellschaft für musikalische Aufführungs-und mechanische Vervielfältigungsrechte (Society for Musical Performing and Mechanical Reproduction Rights) is a collecting society for music licenses, otherwise known as a “performing rights organisation.” It collects fees for the use of copyrighted music and then redistributes them as royalties to the music’s authors. In Germany, if you’re running any sort of business that uses music — whether it’s a nightclub, a dance school or a supermarket — you’re legally required to pay licensing fees to GEMA. The organisation currently represents approximately 64,000 composers, lyricists and music publishers based in Germany as well as approximately 2,000,000 international rights-holders. For most of its existence, GEMA has enjoyed something of a monopoly position for musical rights-management in Germany: no other organisations exist to represent the intellectual-property rights of music producers, and the German government has granted GEMA the power to use legal force to collect its fees.

Some music producers have good reason to wish they could choose another organisation to represent their creative works, since GEMA’s structure is one that favours the interests of high-earning, “mainstream” artists signed to major recording labels over underground, independent ones. Membership in the society is organised into a hierarchy of “full members,” “extraordinary members,” and “associated members.” Only the tiny minority of full members (3,323 out of approximately 64,000) can vote directly on decisions and hold positions of power within the organisation. Gaining full member status currently requires that you earn more than €30,000 in fee-revenues from GEMA over five years, which places it out of the reach of most underground music-makers. This mainstream-elite has the power to determine the licensing fees and revenue-sharing for all of its members; unsurprisingly, this often results in decisions that benefit full members and leave the rest of the membership dissatisfied, to say the least. Added to this is the fact that GEMA has the legal power to assume that all music being played at a music event belongs to GEMA’s catalogue of protected works, even without a detailed list of what music was played. For underground music venues that mainly feature non-mainstream and independent artists — like many dance music clubs — this means that a portion of the fees collected for these events will likely find their way into the bank accounts of mainstream artists and advertising jingle writers, whose music was never played during the event, while some artists will never see a single cent for their music, however often it may be played at such events.

That’s GEMA in a (very small) nutshell, but what gave rise to the nation-wide debates of 2012? Well, that’s a long story that extends well before 2012, but the current debate was sparked on April 14th 2012, when GEMA announced a new system of licensing fees. They announced that the new fee structure was simpler, scaleable, and more proportionate to the size of music venues and their events. The new tariff system would indeed be simpler — two new fee rates would replace the previous eleven — but whether it was accurately scaleable and proportionate remained a hotly-contested question. For example, the new rates for discotheques were calculated based on the surface area of the venue and the cost of entry, aiming to take 10% of the gross ticket sales. However, this rate assumed that: a) the venue’s capacity was equal to one person per square-metre; b) every square metre of the venue was useable (e.g., not blocked by walls, the bar, toilets, backstage spaces, etc); c) every event was at full capacity; and d) everyone in attendance was paying full price. Once local venue managers started doing the calculations, many estimated yearly fee increases of anywhere from 200-1000%. Sure, the more extreme estimates were probably exaggerated “worst-case” calculations, but even conservative estimates still predicted at least a doubling of costs for most venues. But perhaps the most galling detail for music-event organisers was the fact that GEMA published this new tariff system directly in the Bundesanzeiger (Federal Gazette), which made it legally binding: this was a fait accompli, not a proposal open for negotiation.

There’s still some debate as to what GEMA thought to accomplish, PR-wise, with this move, but the ultimate result was a great deal of public criticism and increasingly negative press coverage. Much of this was shaped and amplified by various actors in the music scenes of Germany (especially nightclubs), who quickly learned to coordinate their efforts and act strategically. Regardless of whether one supports GEMA or its opponents in this debate, it’s hard to deny that the anti-GEMA side outmanoeuvred them in the public-relations game. In fact, it’s noteworthy that, by the end of 2012, the debate had shifted from merely opposing the tariff reforms to challenging the existence of GEMA itself.

In any case, the rest of the spring of 2012 saw increasingly vocal opposition to GEMA’s Tarifreform, starting first with nightclub promoters, music producers, DJs, and label managers, but soon spreading to music fans and the wider public. Germany’s electronic dance music scenes were the most vociferous in their opposition, since nightclub events serve as crucial hubs for networking, discovering new talent, testing new tracks, popularising new music, making music-production financially viable, and (last but not least) dancing. Since GEMA’s new fees seemed to pose an existential threat for nightclub venues (especially the mid-sized ones with narrow profit margins), many saw them as a threat to music scenes as a whole. Somehow, rumours started circulating that foretold the closure of high-profile nightclubs in Berlin, such as Berghain, Watergate, and Weekend. These turned out to be mostly unfounded, but the buzz surrounding these rumours garnered wider attention for this issue.

In the meantime, Germany’s nightlife industry began to work together to organise protests that would make the concerns of underground nightlife more visible to normal “daylife” society. But they struggled to inspire party kids to take to the streets; the first protests in June were sparsely attended and unfocused. As the summer progressed, however, they adapted their format, combining protest and partying by featuring performances by well-known DJs between political speeches and advertising the events as if they were open-air parties. By the time the Gemeinsam Gegen GEMAinheiten protest took place on September 6th, approximately 25,000 people took part in protests Germany-wide, with 10,000 in Berlin alone (according to estimates from organisers).

So, how did this conflict resolve? Well, the short answer is that it hasn’t yet. Although the new tariffs were set to come into effect on the first day of 2013, they have been postponed several times due to developments in an arbitration process between itself and BVMV, the association that represents music-event organisers. At the moment, nightclubs are paying their licensing fees according to the old tariff system with a percentage-based surcharge, but sooner or later something new has to be put into place. This case is much, much more complex than this story can tell, although you can read my more in-depth article on Resident Advisor for a more detailed picture.

Luis-Manuel Garcia

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