The German affiliate of the International Federation of the Phonographic Industry has lost its battle to reduce authors' mechanical royalty rates.
HAMBURG -- The German affiliate of the International Federation of the Phonographic Industry has lost its battle to reduce authors' mechanical royalty rates.
The arbitration tribunal of the German Patents and Trademarks Officer ruled April 14 that the mechanical royalty rate would remain fixed at its current level of 9.009% of PPD (published price to dealer).
German labels had been attempting to cut the royalty rate on CDs to 5.6% since January 2004. German authors rights society GEMA clashed with the IFPI over the issue and took it to arbitration through the Munich-based regulator.
In proceedings in October 2004, the tribunal found no justification for the major decrease. The parties were then given until Feb. 24, 2005, to make submissions ahead of the final decision.
Since the dispute began in early 2004, the difference between the previously agreed-upon mechanical rate and the new rate has been held in escrow by the record companies until the arbitration committee's decision was reached. That money will remain frozen until the IFPI decides whether to appeal the decision.
"This [decision] did not take account of the fact that retailer rebates had consistently widened over the past few years," IFPI Germany says in a statement. GEMA declined to comment on the ruling.
Sources estimate that GEMA's 60,000 members and their publishers could have lost more than €200 million ($248 million) over five years if the reduced rate was introduced. The current agreement between GEMA and IFPI expires at the end of 2005.
In a show of solidarity in May 2004, Marius Mller-Westernhagen, Xavier Naidoo, Nena and James Last were among more than 3,000 songwriters who signed a document protesting the record industry's plans to cut royalty rates.