The arbitration tribunal of the German Patent and Brand Office in Munich today (Nov. 20) announced that it had ruled to allow collecting society GEMA to increase concert license rates.

After a breakdown in negotiations between both sides, the two concert promoters associations had called on the arbitration tribunal to establish that rates which had been payable for concerts up until February 1, 2009 would continue to apply in the future. The arbitration tribunal rejected this motion.

The arbitration tribunal decided that the license rates are to be increased. This will be done on a graduated basis over a period of six years. A rate of 7.2% of gross takings will apply for concerts with an audience of up to 15,000 in 2014 (5.76% net of all discounts, up from the current rate of 1.872%). The license rate for concerts attended by more than 15,000 people will be 7.65% of gross takings (6.12% net of all discounts, up from the current rate of 3.58%).

GEMA welcomed the ruling, although it had originally sought a new rate of around 10% of gross takings.

The arbitration tribunal's decision means that in the future additional income from sponsoring and advertising will constitute a cash benefit and also be included in the calculation of the fee. This is also what GEMA had been seeking.

The decision states that only the gross takings from ticket sales, sponsorships and advertising can be used as the basis for calculating the fees. Both parties now have one month to accept the arbitration tribunal's decision or to lodge an appeal.

After months of negotiations with the concert promoters, GEMA had decided to increase its rates in February of this year. As the licensees were unable to reach an agreement with GEMA on the amount of the fees payable, the matter had to be referred to the arbitration tribunal of the German Patent and Brand Office.

Dr. Harald Heker, CEO of GEMA, commented: "The rate for small-scale concert promoters and clubs was outside the scope of this decision. This rate has not changed for years and is not affected by the arbitration tribunal's decision."

Frank Dostal, president of the association for lyricist and vice chairman board of Supervisors GEMA in Hamburg, added: "As this carefully considered result is not far off the last offer submitted by the concert promoters, the parties involved should find it that much easier to bury their hatchets once and for all and to return to the relations which they have maintained in a spirit of mutual trust and respect over the last few decades."

Jörg Evers, chairman board of Supervisors GEMA and president of the German composers club, added: "The arbitration tribunal's decision is a great result for GEMA as it vindicates and highlights the basic appropriateness and legality of the adjustments which GEMA is seeking. This is an important positive signal given the persistent hostility and public abuse coming from the various parties. It also shows that it has paid off for GEMA to remain as steady as a rock, as it were, and to resolutely pursue its line of argumentation in the interests of copyright holders undeterred by the populist manipulation of public opinion."

The German Federal Association of Concert Organizers (idkv) in Hamburg with 300 members, and the Association of German Concert Directors (VDKD) in Munich with 150 members, see this decision as being a "Pyrrhic victory" for GEMA.

In a joint statement, Jens Michow, president of idkv, and Michael Russ, president of VDKD, said: "The arbitration tribunal's decision is not materially different from the voluntary offer submitted by the concert promoters. GEMA should be asking itself whether it was really worth jeopardizing the good relations with the concert organizers by making such ridiculous demands."

The two associations have not yet stated whether they will be lodging an appeal against the decision.