The ongoing dispute between German authors rights society GEMA and the local IFPI affiliate over the latter's plan to cut the mechanical rate is set to go before arbitration.

HAMBURG -- The ongoing dispute between German authors rights society GEMA and the local IFPI affiliate over the latter's plan to cut the mechanical rate is set to go before arbitration.

GEMA chairman Reinhold Kreile confirms that oral proceedings are due to commence before the German Patent and Brand Office on July 28.

Speaking before GEMA's annual general meeting June 30 in Berlin, Kreile told more than 800 members that the society would stand firm in its opposition to the IFPI's proposed royalty cut. According to Kreile, GEMA has the support of BIEM, the trade body representing European societies that collect mechanical rights.

"The willingness to negotiate cannot be imposed from above and certainly not by dictating the terms on a one-sided basis, as IFPI seems to think," Kreile said. "Authors' rights to reasonable remuneration will not yield to force."

The German chapter of the IFPI in January applied for the mechanical royalty rate to be slashed to 5.6% from 9.009% of the PPD (published price to dealers). Approval hinges on an arbitration tribunal decision that could take up to five years.

Kreile says he rejected an IFPI proposal for a "triple-eight agreement," which would provide for royalties of 8% for all types of utilization.

"In the interests of their composers, lyricists and publishers, GEMA will not be succumbing to the dubious charm of this offer, as it also entails a massive reduction to the tune of over 100 million euros ($121 million) in the remuneration previously paid," he said. Kreile added that it was unwise of the recorded music industry to attempt to restructure the market at the expense of authors.

"The structural crisis afflicting the record market for which the industry does not have any clear solution is of great concern to authors and their publishers who are unable to influence this situation," said Kreile.

Gerd Gebhardt, chairman of the German IFPI, would not comment on the negotiations other than to say, "It's an ongoing procedure."

GEMA recently reported total revenues of 813.61 million euros ($989.76 million) for 2003, up from 812.51 million euros ($988.42 million) in 2002.