GEMA Under Fire For Royalties Dispute With YouTube
GEMA Under Fire For Royalties Dispute With YouTube

BERLIN - GEMA, the German collection society, has come under fire in recent days from the music industry as it attempts to settle a two-year long dispute over royalties with Google by preventing access to music videos on YouTube. The issue is set to be taken up by a California court.

Many music industry sources are taking a stand against GEMA as it is trying to impose what is seen as unreasonably high royalties on new technologies preventing new sources of revenues.

"I suspect that some members of GEMA's supervisory board have not yet arrived in the digital era," said Edgar Berger, CEO of Sony Music Entertainment GSA in Munich, to Billboard.biz. "We want to see streaming services like Vevo and Spotify in the German market. [These platforms] must not be blocked by GEMA any longer. Artists and music companies are losing sales in the millions."

Frank Briegmann, President of Universal Music Germany, Austria, Switzerland and the Deutsche Grammophon label in Berlin, is also frustrated that agreements are being reached between collection societies and YouTube everywhere else in the world except Germany, the world's third largest music market. "Germany is a developing country in the digital music market," Briegman said. "GEMA apparently has not yet understood the new developments in the international music market."

GEMA has also had to contend with other concerns since Friday (June 17) when a hacker named "Anonymus" allegedly hacked GEMA's website. In a statement, GEMA spokeswoman Bettina Mueller said: "The reasons for this attack are being investigated. GEMA systems are not affected and are not at any risk."

In an online statement, the anonymous hackers warned GEMA, stating: "We are observing with concern your excessive demands with regard to copyright-protected material on YouTube and other platforms. If there is no change in this attitude, we will be forced to take further measures."

A Google spokesman Kay Oberbeck told Billboard in Hamburg that YouTube had entered into 20 agreements with collection societies from 33 countries. "We therefore regret all the more that GEMA has decided to commence legal proceedings against us despite the promising talks which we have held, thus removing the basis for conducting any further negotiations in a spirit of mutual trust. A solution can only be found at the negotiating table without any legal proceedings. We are prepared to resume negotiations at any time."

In a statement, Alexander Wolf, GEMA's counsel for international legal matters, rejected the criticisms: "There is no sudden escalation between YouTube and GEMA. There has been no change in the situation for months. The suit was filed in late 2010. Only the statement of claim was served on YouTube United States at a later date in April 2011. The 12 works of music which we have submitted in the proceedings against YouTube will not restrict the YouTube users given the existence of millions of music videos."

It is frequently claimed that GEMA is seeking royalties of 12 cents per video stream, Wolf added. In actual fact, however, GEMA entered the negotiations offering the standard single-digit cent rate per video stream. "As we are bound by the terms of a confidentiality agreement, we are not able to disclose any further information or details on the contract to the public," said Wolf.

According to off-the-record sources, YouTube is interested in paying solely a flat-rate fee. GEMA is requesting more precise information on the titles accessed and the number of files streamed so as to assess the reasonable fees. The demands made by GEMA, that the new fee arrangements with YouTube should not only include advertising revenue but also take account of YouTube's business performance, have so far been ignored.

There is no further comment from either party

In Germany, GEMA represents the copyrights of more than 64,000 members (composers, lyricists, and music publishers) and over 2 million copyright owners worldwide. It is also is one of the world's largest societies for authors of music works. In 2010 GEMA had revenues of 863 million Euro, an increase of 2.6 per cent to 2009.