GEMA (Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte) History

Address:

Bayreuther Strasse 37
D-10787 Berlin
Germany

Telephone: (49) (30) 21245-00
Fax: (49) (30) 21245-950

Not-For-Profit Company
Incorporated: 1903 as Anstalt für musikalisches Aufführungsrecht (AFMA)
Employees: 1,110
Sales: EUR 813.6 million ($1.2 billion) (2003)
NAIC: 813920 Professional Organizations

Company Perspectives:

GEMA remains the indestructible bastion of musical creativity, from which the beacon of acceptable compensation for the use of creative works sends out its light. It has achieved this position through more than 100 years of struggle, and it will continue to defend it in the new information age. And it will--in the interest of its members, the composers, lyricists and music publishers--not give up a single piece of the hard-won territory, namely the high level of copyright protection. This, in the end, because the issues always extend far beyond questions of payment rates. In the second century of GEMA's existence, the fundamental issue is still the legal and economic protection of musically creative people, and hence the future of musical culture in Germany and Europe.

Key Dates:

1903:: Genossenschaft Deutscher Tonsetzer (GDT) and Anstalt für musikalisches Aufführungsrecht (AFMA) are established in Berlin.
1910:: GDT sets up a department for mechanical rights.
1915:: Genossenschaft zur Verwertung musikalischer Aufführungsrechte (GEMA) is founded.
1933:: Government-controlled Stagma replaces former agencies for musical performance rights.
1947:: Stagma is renamed GEMA.
1951:: AWA is founded in East Germany.
1977:: GEMA pays 60 percent of mechanical royalties to authors and 40 percent to music publishers.
1990:: GEMA becomes Germany's only musical performance rights agency.
2004:: Record companies demand significant cuts in mechanical license fees.

Company History:

GEMA (Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte) is Germany's equivalent of BMI or ASCAP in the United States, an organization that protects and promotes the creative work of composers, songwriters, and lyricists. The nonprofit association educates music users about copyrights, lobbies for a high level of copyright protection in Germany, and collects fees for the public performance of copyright-protected musical works in live settings, through the media, in movie theaters, shopping malls, bars, dance clubs, and even doctor's offices. GEMA also issues licenses for the mechanical reproduction of such works in exchange for a license fee and receives a percentage of the sale price for music copying devices and storage media such as CD-burners, blank CDRs, and cassette tapes. Traveling employees and independent contractors constantly monitor musical activities in Germany and make sure that every public performance of one of the roughly six million GEMA-protected works is properly registered and paid for. The collected fees are distributed to GEMA's 60,000 members in Germany and many thousands of copyright owners abroad with the help of a sophisticated computer system and according to a complex distribution scheme. GEMA cooperates with 117 similar organizations around the world and is overseen by Germany's patent office and antitrust agency.

Difficult Early Years Following Establishment of AFMA in 1903

The 1901 amendment of the German copyright law reestablished the exclusive right of composers to control the public performance of their works. On this legal foundation the collection of royalties for public performances of copyrighted music became possible. In the first half of the 19th century, Ludwig van Beethoven was among the few self-employed German composers to make a decent living. Most composers of classical music achieved a rather modest level of popularity and many of them struggled to make ends meet. As early as 1898, a group of German composers of classical music had established a cooperative to protect and exploit their public performance rights, the Genossenschaft Deutscher Komponisten (GDK), as an answer to a similar organization founded by leading German music publishers and sheet music retailers. Richard Strauss, a popular composer of classical music, together with a handful of composer friends who were knowledgeable in legal matters and driven to secure an economic basis for themselves and their colleagues for the long term, took the lead in setting up their own organization. In 1899 the Genossenschaft held its constituting general meeting and registered about 240 composers as members. Their first task--to boycott the music publisher's organization and to bring the publishers in line with their own ideas--was successfully accomplished. Music publishers entered negotiations and finally agreed to jointly found a new organization in which both parties were represented.

Roughly one year later, on January 14, 1903, Genossenschaft Deutscher Komponisten was transformed into the new Genossenschaft Deutscher Tonsetzer (GDT). On July 1 followed the establishment of the performance fee collection agency, which was named Anstalt für musikalisches Aufführungsrecht (AFMA). Whereas GDT remained a professional association of German composers of mainly classical music, its subsidiary AFMA opened membership to lyricists and music publishers. AFMA members had to sign a five-year contract with the agency in which they agreed to transfer the existing and future performance rights to their works to AFMA until they expired or until the agency ceased to exist. Composers received 75 percent of the collected royalties, and music publishers received 25 percent. For musical works that included vocal parts, composers received 50 percent and lyricists were given another quarter of the total. Revenues were distributed according to an evaluation scheme that took into account the kind and complexity of the respective work. A total of 10 percent of AFMA's proceeds went into GDT's pension fund, which supported low-income composers in old age.

AFMA took on the administrative tasks necessary to collect royalties. The agency began to build databases and infrastructure and to educate the public, especially venues, about its existence and purpose. Members registered their works with AFMA, which were then evaluated. For every performance of his or her work the author earned a number of points, which were added up at the end of each year. AFMA employees had to register all the music groups and venues, such as concert halls, theaters, coffeehouses, and cabarets, that were obliged to pay musical performance royalties. Those who were regularly involved with musical performances were issued an annual permit that allowed them to perform all the works on AFMA's list. Every permit was individually negotiated, according to the detailed information venue owners and musical directors submitted. As a rule of thumb, AFMA charged 1 percent of their revenues. Permit owners were obliged to use printed lead sheets and to perform the music in a respectful manner and setting. The agency hired independent traveling salesmen who negotiated contracts and were paid a commission according to their cash value. At the same time these individuals randomly visited musical venues to make sure that they paid their dues and to inform AFMA's Berlin office about any illegal performances.

Convincing the various players in the growing entertainment industry to pay for something for which they did not have to pay before was no easy task. In the beginning, AFMA was confronted with fierce resistance from performers and venues, and even from some composers, who were afraid that charging a fee would prevent venues from performing their works. Many large venues, such as the famous Gewandhaus concert hall in Leipzig, as well as smaller venues and musical groups, declared open opposition to AFMA and refused to pay royalties. A number of successful lawsuits, however, whereby venue owners were fined for illegal performances of copyrighted music, helped AFMA gain acceptance. Large and small venues began to negotiate contracts with the agency. In 1908 the association of German singers Deutscher Sängerbund negotiated a general agreement with AFMA. The Deutsche Gastwirtsverband, a large association of restaurant, coffeehouse, and bar owners, followed suit.

As the idea of paying composers for the public performance of their works took root in German society, AFMA's member roster and revenues began to grow. The number of AFMA members who were eligible to receive royalties increased from 174 in 1903 to 362 four years later. In 1914 AFMA represented 604 composers and 104 music publishers. The agency's revenues from performance fees grew tenfold between 1904 and 1913. AFMA also entered into mutual agreements with similar organizations in other countries, such as the French SACEM, to execute the rights of their members in their own countries and transfer the collected fees to the respective sister organization.

Competition, Scandals, and Legal Battles Leading to Reorganization in 1930

While AFMA was leaving behind the difficulties of its formative years, a new technological development presented the young organization with a new fundamental challenge. As Europe entered the age of industrialization, music composers witnessed the emergence and growing popularity of the mechanical reproduction of music. In the first decades of the 20th century, the formerly popular Hausmusik (playing music together in the home) went into decline and was replaced by the passive consumption of music through mass media, such as juke boxes, movies, and radio broadcasts. While the market for printed music began to shrink, the new market for recorded music boomed. In 1929 there were roughly 30 million records manufactured in Germany. The Bern Convention on international copyrights was revised in 1908, putting the performance of musical works by mechanical instruments under copyright protection. German copyright law followed suit in 1910, ruling that composers had to receive a share in the so-called "mechanical rights." Music publishers, however, resisted the idea of giving up a share of their revenues from this new lucrative source to composers.

In 1909, the association of German musical goods retailers established a new royalty collection agency for mechanical rights called Anstalt für mechanisch-musikalische Rechte (AMMRE). One year later GDT set up its own department for mechanical rights inside AFMA. In 1911 the Austrian agency AKM canceled its cooperation agreement with GDT and began to work with AMMRE instead. In spring 1913, 42 publishers and ten composers canceled their membership agreement with GDT, which allowed its members to transfer no more than a 50 percent share in their mechanical rights to publishers. GDT sued them for breach of contract. While World War I broke out, cutting AFMA's revenues in half, the case went into the German court system. In September 1915 Germany's highest court ruled against GDT. In the same year a group of publishers and composers, most of whom created popular music for entertainment, founded their own musical performance rights agency named Genossenschaft zur Verwertung musikalischer Aufführungsrechte (GEMA), which began competing with AFMA. With music publishers taking a leading role in the new organization, GEMA acquired its own catalogue of protected works and demanded that venues pay fees as they did to AFMA.

After the end of World War I in 1918 German composers had the choice between two performance rights organizations. Both of them barely survived the galloping inflation of the early 1920s and suffered financially from the loss of revenue caused by reparation payments. In the mid-1920s, however, AFMA's and GEMA's revenues slowly recovered. Yet, the parallel existence of two agencies with the same purpose increasingly frustrated venues. All parties involved realized that a better solution had to be found. Finding a workable compromise, however, seemed impossible. In addition, financial irregularities were uncovered in both organizations, leading to public protests and loss of members. Only a change in leadership in both agencies eventually made progress possible. After many hours of internal arguments, a number of lawsuits, weeks of public press wars, and many broken-off and re-entered negotiations, they, together with the Austrian AKM, founded a new association for the protection of public performance rights for Germany in 1930. GDT, GEMA, and AKM jointly established a new office for the collection of license fees from movie soundtracks. Long-term contracts were signed with Germany's state-controlled radio station, with the Ufa film studios, and with the German music orchestra association. The new compromise, however, was short-lived.

Nazi Government Taking Control After 1933

Shortly after Adolf Hitler became Germany's new Chancellor in 1933, the collection of musical performance rights (based on new laws) came under government control. A new organization called Staatlich genehmigte Gesellschaft zur Verwertung musikalischer Urheberrechte (Stagma) replaced the existing organizations, which were dissolved. Immediately, "non-Aryan" directors, committee members, and employees of the old agencies were removed from their positions and replaced by Aryans--often members of the ruling National Socialist Party or similar Nazi organizations. An exception was a number of highly specialized and experienced Jewish copyright lawyers who continued to work for Stagma for a period of time.

Richard Strauss, who had lost faith in democracy during the Weimar Republic, became president of the new Reichsmusikkammer, a department within the Propaganda Ministry that oversaw the musical life of the country. Strauss also headed the new trade organization for German composers. He quickly pushed through organizational changes toward a more authoritarian system. Stagma's board of directors was shrunk from eight to three members, each a representative of the trade associations of German composers, lyricists, and music publishers. If they could not agree on an issue or a decision, Strauss had the final say. After a couple of years, however, mounting protests against his authoritarian leadership finally resulted in Strauss's dismissal in 1935.

The young music publisher and Nazi conformist Leo Ritter, formerly chair of GEMA's advisory board and one of its directors, had become Stagma's executive director. The Nazi government demanded that music publishers publish and perform mainly works of German composers. Due to Germany's growing international isolation, the works of German composers were performed less often in other countries. In addition, many composers had left Germany for racial or political reasons and joined performance rights organizations abroad. Only German citizens whose compositions were not banned (as were the works of most "non-Aryans") were able to become Stagma members and to receive royalties. One prominent example, composer Kurt Weill, was "re-evaluated" in GEMA's distribution scheme from 125 to -5 points, which resulted in a decrease in royalty income from 4,000 marks to 150 marks after 1933. Weill, who compared this procedure with theft or expropriation, fled the hostile country. As many as 315 contracts with mostly Jewish members underwent the same "re-evaluation." Music publishing houses, such as the renowned publisher C.F. Peters based in Leipzig, were Aryanized in a similar fashion.

In 1938 the expansion of the German Reich began with the annexation of Austria. AKM President Bernhard Herzmansky was arrested and AKM as well as AMMRE were merged with Stagma. All occupied areas in Austria, Czechoslovakia, France, and Luxembourg were put under Stagma control. The new income streams from abroad helped offset both the agency's losses from dwindling activities in the entertainment sector and the "trade deficit" with foreign sister organizations. After the official outbreak of World War II in September 1939 Ritter entered active military duty and the number of Stagma employees continuously decreased. In 1940 Goebbels's Ministry of Propaganda abolished the so-called "Serious Third" rule. The rule preferred composers of "serious music"--mostly classical music such as operas, symphonic, choir, and church music--in Stagma's distribution scheme in comparison with composers of "light" or popular music on the grounds that the former was more valuable. After the change, composers of "light music" received more royalty income and the Nazi government began to subsidize composers of "serious music" from state funds. The year 1944 was the last year in which Stagma members received a regular royalty payment. In February 1945 Stagma's headquarters were bombed to ruins. Leo Ritter died in a Russian prisoner-of-war camp in August 1945.

Luckily, Stagma's card catalogue of members and registered works, as well as the transfer-of-copyright contracts, survived the war, hidden in an old mill where they were brought in 1944. Equipped with these crucial documents Walter Wechsung, a former Stagma accountant, continued the collection agency's work after the war. As had happened after World War I, the victorious Allied Forces seized a great number of copyrights held by German composers as war reparations and forbade Stagma to pay its members any royalties to prevent any payment to former Nazis. In 1947 composers, lyricists, and music publishers met with Stagma leaders to discuss the future of the collection agency. Stagma was renamed Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältingsrechte (GEMA) by Allied control order, and Erich Schulze, one of Stagma's former directors of sales, became the organization's executive director after Wechsung's death in 1949. For the next four decades, Schulze remained in this position, actively engaged in the reestablishment of the organization as a legitimate and intrinsic part of a democratic postwar society in Germany. In 1948 former Stagma employees and German composers went through the obligatory hearings before de-Nazification commissions. The death of Germany's most popular composer of "serious music" for many decades, Richard Strauss, in 1949 marked the end of the Nazi chapter in GEMA's history.

Coexistence and Reunification of Two Agencies After 1950

In 1949 two German states were founded. For the following four decades there were two German musical performance rights organizations--one in each state. In Western Germany GEMA continued to serve musical copyright holders and their heirs. The agency's new bylaws, however, made a minimum amount of royalties a condition for membership. The new commercially oriented concept put a higher emphasis on the market value of a composition than on its artistic aspects. Composers of classical music were still subsidized by revenues derived from popular music, but their relative importance slowly but continuously declined. In 1964 GEMA signed an agreement with its sister organization in Israel and established a fund for descendants of composers who fled Germany for racial or political reasons during the Nazi era.

East Germany's government-controlled musical performance rights agency was founded in April 1951. Based in East Berlin, the agency was named Anstalt zur Wahrung der Aufführungsrechte auf dem Gebiet der Musik (AWA). Composer Max Butting, who had served as GDT's executive director before the Nazis seized political power, became AWA's first chairman. Due to Butting's proposal, the quality of the compositions played a more important role in the distribution of royalties for AWA members. The principle of subsidizing composers of classical music with revenues from popular music was adopted. In 1953 GEMA and AWA signed a cooperation agreement that respected the territory of the respective agency and regulated the mutual exchange of royalties collected there. After East Germany had joined the Bern Convention in 1956 GEMA and AWA worked together remarkably smoothly through the political ups and downs between the two German states. A new law that obliged East German venues and radio stations to play no less than 60 percent for music by domestic composers in 1958 resulted in significantly less transfers from AWA to GEMA. The West German agency paid the East German "sister" one Deutschmark for one mark and received the same, although the East German currency was worth considerably less.

Beginning in the late 1950s more and more of GEMA's activities were moved to Munich, although the agency's headquarters remained in West Berlin. A new copyright law that protected melodies and parts of published works, extended copyright protection to 70 years after an author's death, and obliged manufacturers and importers of certain recording equipment to pay license fees, passed the West German parliament in 1965. West Germany's music industry participated in the "economic miracle" without having to suffer through any major economic crises afterward. Accordingly, GEMA's revenues roughly doubled every decade. New technologies, however, such as copy machines, cassette tape recorders, computers, and satellite and cable TV presented musical performance rights organizations with new problems during the 1970s and 1980s.

After the two German states were reunited in 1990, GEMA and AWA followed suit. Roughly 7,000 composers and lyricists from former East Germany were integrated into GEMA's membership roster. Erich Schulze was succeeded by Reinhold Kreile, a lawyer who was also a pianist and organist, a member of the German parliament, and a media law professor.

Digital Age Bringing New Challenges in the 1990s

After the two German performance rights organizations were successfully reunited, easy access to copyrighted music, which could be downloaded from the Internet as digital files onto computers and portable players and distributed widely, emerged as a major threat to musical copyright owners at the dawn of the 21st century. Feverishly, the music industry began to search for ways to get a handle on the inexpensive unauthorized copying and downloading of music recordings by hundreds of thousands of computer-savvy teenagers. Free online music exchanges were forbidden, new mechanisms that prevented the illegal copying of music CDs were developed, and an updated German copyright law tightened the rules for making private copies of music recordings. In spring 2003 Kreile told Süddeutsche Zeitung that he would dislike seeing GEMA become a sort of "digital police." The agency succeeded against the resistance of digital recording equipment manufacturers, who were obliged to pay license fees to compensate for losses through illegal digital copies.

Despite these serious challenges GEMA's revenues soared during the 1990s and beyond. By that time new technologies also had changed the way popular music was composed. Many contemporary songwriters were knowledgeable computer users, composing on their electronic keyboards without much theoretical and practical musical training. Since GEMA was obliged to represent anyone who registered a musical work and called himself a composer, the number of copyright owners the agency represented exploded. At the same time, more and more of these young composers performed their own music and reported those performances to GEMA. In 2003 the agency served more than 60,000 members and more than one million international copyright owners.

In 2004, GEMA's revenues declined for the first time in six years. Struggling with mounting losses from plunging sales, Germany's record companies demanded that in the future copyright owners should receive only 5.6 percent of the wholesale list price of a CD instead of the 9.009 percent that they had paid to GEMA since 1997--despite the fact that authors already suffered the same losses the music industry was experiencing. For music distributed online, record companies offered to pay GEMA 5.6 percent of the sale price--roughly one third of what GEMA considered a "fair compensation" for composers and lyricists. Although the conflict was brought before a litigation jury of the German patent office, GEMA's lost income from deteriorating CD sales was offset in large part by higher revenues from other sources, including television and radio, and license fees from mobile phone companies. GEMA's executive director of 15 years, Reinhold Kreile, who expected a solution of the conflict between the agency and the recording industry in 2005, was to be succeeded by 47-year-old Harald Heker, CEO of Germany's book publishers association Börsenverein des deutschen Buchhandels, in 2006. Heker's main focus was to convince policy and lawmakers at the European Union's Brussels headquarters of the crucial importance of high-level copyright protection in the digital age and to defend the quasi-monopoly GEMA before its antitrust authorities.

Although the future seemed somewhat uncertain, based on Germany's copyright law effective in 2005, Richard Strauss, the famous composer's grandson, could expect to benefit financially from the public performance of his grandfather's still popular classical works such as the opera Der Rosenkavalier, composed in 1911, until the year 2019. At the same time the majority of contemporary German composers of classical music still earned an income far below average standards of living, and about 600 of them received financial support from GEMA Foundation.

GEMA (Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte) History

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