An Uneasy Compromise

German promoters have stopped slugging it out with GEMA over the royalty rates charged on live shows, although the collection agency is likely to be happier with the pre-Christmas truce.

Both sides managed to get around a table to thrash out a compromise based on what the Deutsches Marken und Patentamt (German arbitrary court) advised at the end of November.

Had they failed to cut a deal before the arbitrary court’s deadline, the matter would have been referred to the High Court of Munich – and both sides would have faced huge costs and no guarantee of a favourable outcome.

The German promoters – led by the company’s two major promoters’ associations, Der Verband Der Deutschen Konzertdirektionen (VDKD) and Der Bundesverband der Veranstaltungswirtschaft (IDKV) – have at least managed to get the rate hike lowered from the 10 percent across the board that GEMA was seeking.

The fact remains the new basic rates are still nearly double the 3.86 percent they were paying on larger shows and almost four times the 1.87 percent they were paying on smaller ones. The levy is charged on the gross including VAT.

The main concession the promoters won is in the smaller show bracket that goes up to 2,000 capacity, where – rather than pay the 10 percent GEMA wanted to charge – they have negotiated a rise to 3 percent this year and increase by annual increments to 5 percent in 2014.

Promoters who are members of the associations can also benefit from improved discounts on the basic rate, depending on the number of shows they do.

Those doing less than 15 shows per year will pay the full amount, those doing between 16 and 40 are entitled to 15 percent on all shows, and those doing between 41 and 80 qualify for a 12.5 percent reduction. Those who do more shows than that will have the first 80 shows taxed at 12.5 percent, while additional shows will be entitled to a 15 percent discount up to 200 shows. At 200 shows there is a further rate reduction as any additional shows attract a 17 percent discount.

The only question left unresolved is whether sponsors’ contributions should be considered part of the show gross.

“The problem there is that most shows need some sort of sponsorship or they make no financial sense, but the questions will be how this is calculated,” explained IDKV chief Jens Michow. “If the sponsorship is in the form of 20 free radio slots, will GEMA want to add up the value of those slots and charge us on what they say we’ve saved?”

Both sides have agreed to further talks on the matter, although it’s likely that the arbitrary court will be called into action again before the end of 2010.