German Collection Society GEMA Tops Billion Mark in Revenue

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Berlin, Germany photographed on Oct. 29, 2013. 

For the first time in its nearly 80-year history, the German collection society GEMA generated more than one billion euros, or €1.024 billion ($1.10 billion), on behalf of its 70,000 members and rights owners. That's compared to €893.8 million in 2015.

The reason: GEMA's settlement with YouTube. The fees, determined as part of a new license agreement from November 2016, were retroactively incorporated into the annual accounts for the period 2009-2016. "Intensive growth in the usage of streaming services also had a positive effect on the income:  A total of €81.6m was yielded in terms of online music usage -- resulting in a doubling of figures compared to the previous year (2015: €40.4 million)," said GEMA CEO Dr. Harald Heker.

"GEMA was the only performing rights society in the world to have the courage and endurance to stand up for itself and gain a good agreement," said Prof. Dr. Rolf Budde, chairman of the German Music Publishers Association (DMV) and member of the GEMA advisory board. "It is now a question of breaking the enormous volume of data down into accountable units. This is something that must be done quickly as streaming figures are rising all the time."

While the income generated from physical sound recordings such as CDs or vinyl has slightly decreased by 5 percent, it can still be regarded as stable compared to international developments. The result of EUR 104.9 million in financial year 2016 reflects a continued high level of interest in physical sound recordings in Germany (2015: EUR 110.3 million).

Furthermore, the agreement by the Zentralstelle für private Vervielfältigungsrechte (Central Collection Agency for private copying rights, ZPÜ) with the associations of the hardware industry for smartphone and tablet products had a positive effect due to the fact that a share of the resulting income is allocated to GEMA: Its income from remuneration claims increased to EUR 97.9 million (previous year: EUR 16.3 million).

What are the three largest challenges facing GEMA in the near future? "We need to secure income, the expansion of all forms of music exploitation, i.e. live music, on TV and on the radio, and digital exploitation," said Budde when reached by Billboard. "Income from digital exploitation in particular is very small compared with the income earned on the masters. Given the market clout that the majors have with respect to masters, vendors are forced to accept royalties that do not leave them with any reasonable leeway for payments on the copyright side."

Moreover, the quantity of data arising from digital exploitation poses a major challenge for all market participants, particularly the performing rights societies, whose members are dependent on precise accounts following the decline in royalties on CDs. "An interface must be created here quickly," said Budde.

Further positive aspects: The income for Radio and TV were €286.2 million, up from 280.6 million, International Royalty Income €73.5 million, up from €71.3 million. There was a slight decline for the income of Recordings (€104.9 million, previous year: €110.3 million).

Prof. Dr. Enjott Schneider, Chairman of the German Composers Association (DKG) and member of GEMA’s advisory board, said to Billboard: "While the permanent availability of music on the Internet has led to greater music consumption, it has also been accompanied by a downward spiral in remuneration due to free offers and dumping-price subscriptions. The classic importance of physical audio and video media has become marginal. They are losing their formerly stabilizing effect for authors. We composers are trying to join forces to oppose individual exploitation by implementing collective tariff rates through our association."