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German Rights Body GEMA Applauds Europe-Wide Efforts to Curtail ‘Parasitic’ Value Models of Digital Services

The international music industry is in immediate need of fairer online distribution, declared GEMA CEO Dr. Harald Heker at the first Music Economic Summit in Berlin last week.

The international music industry is in immediate need of fairer online distribution, declared GEMA CEO Dr. Harald Heker at the first Music Economic Summit in Berlin late last week. Heker had been invited by the German newspaper Der Tagesspiegel and spoke in front of over 500 members of the German music industry. 

“Because fair online distribution is in a bad way, authors still only receive a small fraction of the profits, which online oligopolies generate by using works protected by copyright,” said Heker. “The main problem is that the creators cannot negotiate on equal terms with platform operators. Even a dominant streaming platform such as YouTube regards the remuneration for authors as a kind of voluntary act of letting them participate, without actually acknowledging a legal obligation.”

GEMA and other copyright societies in Europe have been fighting a so-called “value gap” for more fairness on the internet, while more than 28,000 artists and creators have also taken part in a petition to “Make the Internet Fair,” said Heker.

“A converging media landscape needs a clear regulatory framework which creates a level playing field for comparable online services,” he continued. Based on calculations by the German market research company Roland Berger, the market volume of online platforms in Europe amounts to €22 billion ($25.6 billion). Of that, about 23 percent — €5 billion ($5.8 billion) — is directly linked to the usage of cultural content. “And what about a fair remuneration for the creators of these contents? Nil points,” said Heker.

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He continued, “You could also refer to this situation as an exploitation of the creativity of others. An exploitation some online oligopolies expose music authors to by using legal loopholes and operating a parasitic value creation model. The argument of these platforms that they’re only responsible for the marketplace and not for the content cannot be accepted for the property rights of creators and artists, just like they cannot be accepted in the case of fake news or hate speech.”

As access to musical works increasingly takes place via online platforms, said Heker, they cannot simply nullify democratically decided rules such as copyright, media regulation, data and youth protection or tax legislation. In essence, online platforms ought to have the same responsibilities as anyone else. 

Heker welcomed that a “Draft Directive on Copyright in the Digital Single Market” is currently being discussed in Brussels and said it would hopefully create the legal requirement that any online platform benefitting economically from the exploitation of creative contents will have to fairly remunerate the creators of such contents.

“Platforms that actively present user-uploaded contents by way of optimizing or advertising them may then no longer rely on the liability privilege. They do, quite simply, require a license,” Heker remarked. “For the purposes of the fight for a fairer distribution on the internet, this Directive from Brussels is long overdue. That is because it enables music creators in an increasingly digitized world to continue to be able to live off their work. The Directive thus supports artistic freedom. This artistic freedom can only prevail if the existence of artists is secured.”

The Directive also helps users. While more music will be legally available, it will also oblige platforms to create licensing agreements designed to cover user’s actions and bring greater consumer protection. 

Heker appealed to politicians in the European countries to vote for a fair music distribution on the internet with involvement for the Directive, for consumer protection and for artistic freedom, to make certain that the pre-eminence of politics vis-à-vis an unregulated platform economy will be enforced, to deliver the obligation of the coalition agreement: “To promote a strong copyright for the protection of intellectual property which authoritatively sets out the responsibility of platforms.”

Heker continued, “Politicians should ensure that, as highlighted there, digital platforms are adequately involved in the refinancing of cultural and media content production.”

Dr. Florian Drücke, CEO of the association of the German Music Industry also spoke at the Berlin event and appealed to politicians to finally allow creatives greater participation in digital platforms’ value, saying “The Value Gap must disappear.” 

A legal situation out of the digital stone age still up to now enables user-upload-platforms such as YouTube to neglect the licensing requirement for used content because they represent themselves in negotiations and in court as technically neutral,” said Drücke. “The creatives and their partners are not fairly participating from the content they have generated. YouTube actually is not paying more than an obolus: per user and year 1 dollar and at Spotify per year and user 20 dollar. That is why in Germany half of the music-streaming takes place via video-streaming services such as YouTube, but that only adds 2 percent to the turnover, compared to 25 percent by audio-streaming services. Here is the value gap.”