German authors rights society GEMA has joined forces with the German Music Publishers Association (DMV) to oppose the German IFPI chapter's recent move to reduce the mechanical rate.

German authors rights society GEMA has joined forces with the German Music Publishers Association (DMV) to oppose the German IFPI chapter's recent move to reduce the mechanical rate.

Sources estimate that GEMA's 60,000 members and their publishers could end up losing more than €200 million ($248 million) over five years if the new rate is confirmed by the arbitration tribunal at the German Patent and Brand Office.

In January, the German chapter of industry trade body IFPI went to the tribunal and applied for the mechanical royalty rate on sound recordings to be slashed to 5.6% from 9.009% of the PPD (published price to dealers), effective Jan. 1.

Approval hinges on an arbitration decision that may take up to five years. Meanwhile, the difference between the previously agreed-upon mechanical rate of 9.009% and the new rate of 5.6% will be held in an account by the record companies until a final agreement is reached.

Reinhold Kreile, GEMA chairman of the management board, says that the record industry and the collection society agreed in 1997 on a royalty rate of 9.009% of the PPD. He insists that rate was "reasonable" and slams German labels for "unilaterally undermining this agreement."

Gerd Gebhardt, chairman of IFPI Germany and labels body BPW, comments: "This is a normal process when contracts expire and are up for renegotiation. However, it should also be remembered that the German record market is experiencing the worst slump in its history, while GEMA has reported its best-ever results. That is why the structures underlying the agreements must be reviewed."

Kreile argues that the labels' move is one way of solving "their problems on the back of and to the detriment of composers and authors" but forecasts that "it is doomed to fail."