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Business News (more headlines) 12-28-2013

GEMA And The Federal Association Of Organizers Of Musical Performances (BVMV) Sign A General Agreement

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Following intense negotiations on royalty rates for musical performances, GEMA and the Federal Association of Organizers of Musical Performances (BVMV) have now reached an agreement. The general agreement, which has been signed by both parties, stipulates the royalties for the use of GEMA's musical repertoire at individual events with live or recorded music, as well as in pubs or clubs and discotheques. The general agreement enters into force on January 1, 2014.

GEMA, which represents over 65,000 music authors, and the Federal Association of Organizers of Musical Performances (BVMV), which has around 150,000 members and is Germany's largest association of music users, have signed a general agreement for the use of music in the event sector.

This general agreement divides the license fees paid to copyright holders and their publishers for the use of their musical repertoire into four types: individual events with live (U-V) or recorded music (M-V), and the use of music in pubs (MCD II 1) or clubs and discotheques (M-CD II 2). The newly agreed royalty structure is linear. This means that the larger the event space and the higher the admission fee, the higher the royalties that the event organizer must pay. The structural reform does not affect concerts. A separate royalty rate has applied for such events since 2010.

Commenting on the signing of the agreement, Georg Oeller of GEMA's executive board said: "Music plays a pre-eminent role in the event sector. During all of the talks, our focus was on finding a fair balance between copyright holders and music users. During the numerous negotiation rounds, both sides worked constructively on a new royalty rate structure. We are pleased that we have been able to implement a crucial aim of our royalty rate reform by taking a linear approach to royalties. In the interests of our members and customers, I welcome the fact that we have reached this conclusion amicably through negotiations rather than in court."

The compromise proposal published in April 2013 by the arbitration committee at the German Patent and Trade Mark Office, which deemed GEMA's linear approach to royalties for events to be "correct and appropriate", formed the basis for the negotiations on royalties between GEMA and BVMV. At the recommendation of the arbitration committee, the various types of events were more closely defined: in addition to the two rates for individual events, GEMA and BVMV jointly drew up a separate royalty rate for pubs and a separate rate for clubs and discotheques.

The new royalty rate structure enters into force on January 1, 2014, and includes the following provisions:

Royalty rates for using music at individual events (M-V and U-V rates):
- The new linear structure for royalties is calculated on the basis of the event venue's size (in increments of 100 m) and the admission price (in increments of 1).
- This royalty rate structure particularly reduces the burden on small and medium-sized event venues, thus benefiting a large number of community events.
- Incremental introduction: The increases in the royalty rates to be paid by larger, commercial events will be introduced incrementally over a five-year period until December 31, 2018.

Royalty rates for using music in pubs (M-CD II 1 rates):
- As recommended by the arbitration committee, the newly agreed royalties in this category apply to events featuring a significant amount of music - that is, not just background music - in venues without a dance floor or an admission fee. This category thus differs from clubs and discotheques.
- Incremental introduction: The increases in royalty rates will be introduced incrementally with discounts over an eight-year period until December 31, 2021.

Royalty rates for using music in discotheques and clubs (M-CD II 2 rates):
- The new linear structure for royalties is calculated on the basis of the event venue's size (in increments of 100 m) and the admission price (in increments of 2).
- Incremental introduction: The increases in royalty rates will be introduced incrementally over an eight-year period until December 31, 2021.

The incremental increases provide event organizers with greater planning certainty.

The royalties may not exceed ten percent of the gross ticket revenue for all types of event.

Where necessary, GEMA will discuss any corresponding adjustments with those associations with which it was able to conclude a new general agreement back in 2012.

As of December 12, 2013, customers of the regional offices are welcome to call a toll-free hotline (0800 440 8000) for advice on the new royalty rates for musical performances.

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