Wednesday, April 19, 2017

YouTube settlement helps push GEMA collections up 15% in 2016 | Music Business Worldwide

German collection society GEMA increased its collections by 15% in 2016, cracking the one billion Euro mark for the first time.

The PRO collected €1,024.4 billion on behalf of its 70,000 members and rights owners last year. That’s up 15% — or £130.6m — from 2015’s €893.8m.

Online revenues more than doubled to total €81.6m — up €41.2m on 2015.

These collections were significantly boosted by retroactive licence payments from YouTube that date back to 2009 – the product of settlement signed in November last year.

While we don’t know how much the YouTube payout totalled, GEMA says income from streaming (including YouTube) was up €55.5m to €70.5m in 2016, from €15m in 2015.

Income earned from hardware that hosts music increased to €97.9m, up 500% (or €81.6m) from €16.3m in 2015.

That huge rise was down to the ‘iPhone tax’ – levies placed on smartphones and tablets paid to GEMA thanks to an expanded agreement with the Zentralstelle für private Vervielfältigungsrechte (Central Collection Agency for private copying rights, ZPÜ).

Revenue from downloads was worth half what it was in 2015 at €13.2m, down from €26.9m.

GEMA’s income increase coincided with a reduction of its total cost-to-income rate, down to 15.4% (2015 was 16.3%).

Its operating cost rate stood at 12.6% (2015 was 13.2%).

In 2016, the Act on Collective Management Organisations came into force, triggering an increase in pension liabilities and associated tax charges totalling several millions.

Despite the YouTube agreement, GEMA CEO Dr. Harald Heker (pictured) called for a legal framework that “adequately” remunerates creators for the use of their work.

“In the rather fast growing streaming sector, authors still do not participate adequately in the economic gains and successes of the providers,” he explained.

“Online platforms can still refer to an unclear legal situation. Politicians are more than ever called upon to create a fair legal framework.”

harald heker, gema

“Online platforms can still refer to an unclear legal situation. With the distribution of works protected by copyright, they yield a high turnover, yet without adequately remunerating authors for this.

“Politicians are more than ever called upon to create a fair legal framework.”

GEMA’s income from public performance was up 1.2% last year and represents its strongest sector at €370.1m (up €4.6m from €365.5m in 2015). 

Income from radio and TV usage increased by 2% to €286.2m (up €5.6m from €280.6m), while earnings from physical sound recordings decreased 5% to €104.9m in 2016 (down €5.4m on 2015’s €110.3m).

International royalty income was up 3% to €73.5m (an increase of €2.2m on 2015’s €71.3m).

Heker added: “This rather positive result is an incentive for us to keep investing in the future sustainability of GEMA.

“We focus on asserting authors’ rights in a music marketplace subject to dynamic change, and to realise a stable earnings trend in future, compensating for financial losses in national and international sound recordings’ markets by increasing the income from live music and online exploitation.”

Part of that investment is a one-stop licensing service across Europe that is being created by GEMA alongside PRS for Music (UK) and STIM (Sweden).

It was in November that YouTube and GEMA finally reached a licensing agreement after seven years of negotiations.

The deal means that scores of previously unlicensed – and therefore previously unavailable – music videos will now be playable in the region.

YouTube users in Germany will no longer see a blocking message on music content that contains GEMA repertoire.

Later last year, GEMA was hit by a court ruling that said it can no longer distribute a share of authors’ royalties to its music publishers.

Publishers were asked to return all payments received since 2010.

The court is said to have based its ruling on the fact that the existing publishing contracts do not include any clear provisions on the publisher’s share.

Publishers are now hoping for a legislative solution at EU level.

Music Business Worldwide


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