200999426

Music & The Legal System

Assignment 2

In the UK and in many other societies, attempts have been made to

make copyright infringement via the internet a criminal offence. Discuss
one such measure (for example, the UK Digital Economy Act of 2010) in
the context of the concept of copyright, more generally
INTRODUCTION
Copyright was created around the time of the printing press and came about as a result of King Charles
II's concerns about the unregulated copying of books. He passed the Licensing of the press act in 1662.
The justification of copyright is that it enables the creative types to support themselves financially in
order to carry on creating. In modern times copyright is used to protect artists, composers, publishers,
lyricists and musicians amongst others. Almost every country on earth has its own organisations which
collect fees and redistributes the monies amongst its members in a similar way companies redistribute
profits amongst shareholders. These fees are normally collected by contacting business' where music is
played and could potentially be deemed as public performances. This can include every kind of
business imaginable from pubs and clubs that offer live bands and DJ's right down to corner shops and
clothes stores. Anywhere that is deemed to have public transmissions of music can be required to pay
fees.
Since the advancement of the internet these fee collecting agencies, societies and organisations have
been confronted with a number of logistical and ethical problems such as the ones which have arisen
through people uploading copyright protected music to online websites such as YouTube and Vevo.
Several countries have drawn up their own laws in order to aid in the fight against illegal use of
copyrighted music, most notably they include the UK Digital Economy Act of 2010, The Digital
Millennium Copyright Act (DMCA) in the USA and the German Copyright Act (UrhG). None of the
other laws have seen the mass protests and the general public disapproval as the attempts in Germany,
through GEMA to aggressively pursue and prevent the breach of these laws.

Who are GEMA?

GEMA stands for the Gesellschaft fr musikalische Aufhrungs- und mechanische
Vervielfltigungsrechte which translated means Society for Musical Performing and mechanical
Reproduction Rights. GEMA collect fees for the use of copyrighted music which they then redistribute
to the authors of the copyrighted music. Although GEMA are a for-profit organisation, in 2012 the
German government set a precedent by allowing GEMA to use legal force in managing the interest of
their, approximately, 64000 members. It is one of the largest societies of authors for works of music
worldwide. GEMA receive their legitimacy from the from the German authors rights which grants
authors a range of exploitation rights. Most of the members transfer their rights as it is much easier to
exercise these rights through GEMA. This law is governed under the law concerning the exercise of
authors rights or in German Urheberrechtswahnemungsgesetz. Under article 11 or Abschlusszwang all
collecting societies must prosecute all rights transferred to them. This doesn't mean that they are
signing over all rights but instead means they are signing over usage rights. These rights mean that
GEMA has the legal power to manage and collect licensing fees on their members behalf. In effect
members are signing over their catalogues to be managed which means all decisions about their
catalogue are no longer theirs but GEMA's. This also has detrimental effects for musicians who may
want to grant a free license for events that could potentially advance their careers. Any touring
DJ/Producer will confirm that they will regularly give away some of their own music to certain blog
sites in exchange for interviews which can put them in the public limelight and thus increase their
bookings and sales.

GEMA VS Berlin Nightclubs

The biggest reaction against GEMA came through nightclub owners in Berlin. In the past nightclubs
were expected to pay around 7% of their door revenues as tax to GEMA. In 2012 GEMA reassessed the
situation and decided that a hike of 12% was necessary. They came to the decision that gigs in
nightclubs should be considered concerts and therefore it was deemed that they should not only pay

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Assignment 2

19% of their door revenues to GEMA but also needed to backdate all revenues made from entrance fees
going back as far as 2005 which in some cases ran up into the millions.
GEMA makes its decisions through a hierarchy of full member, extraordinary members and associated
members. Of the roughly 64000 members only around 3200 are considered full members and can
therefore take part in decisions that are made. In order to be considered a full member one must have
earned 30000 in fee revenues from GEMA over the course of 5 years which makes it almost only
accessible to mainstream and commercial acts.
An issue which is still proving to be sore point for underground producers and nightclub owners is how
GEMA calculates fees and the distribution of monies through a sophisticated algorithm. Unfortunately
this algorithm accounts incorrectly for un-programmed musical events. In essence this refers to DJ's
playing a selection of tracks that are either not registered to GEMA, are unreleased tracks or there is
simply no set list/playlist. In order to counteract this GEMA's algorithm which measures airplay and
market sales. This means that much of the money collected from underground or non-mainstream
events will go to mainstream artists even though their music would never feature at these events.
GEMA operates as a monopoly within the German market and rather than being chastised as with other
monopolies, they have been granted GEMA-Vermutung which roughly translated means assumption.
According to this GEMA can assume all music played at these events are subject to licensing fees
unless organisers can prove that the music is GEMA-Free or in the public domain.
The classification of music is another area that has seen GEMA receive much criticism. They split
music into 3 categories; Functional music (Funktionsmusik), Serious music (Ernste Musik) and
entertainment (Unterhaltungsmusik). How they make decisions on what qualifies music to be
categorised is still somewhat unknown as it is extremely difficult to find any official documents that
explain these classifications in details.
The Berlin Club Commissions has hit back against the 12% tax hike by claiming that most people are
not going for the music but rather for the socialising. They stated that most of the public are not even
facing the DJ's during performances and are more-so there to socialise and drink alcohol.
By July 2012 the internet was awash with rumours that many of Berlin's infamous nightclubs, such as
Berghain, would close its doors permanently as they could no longer afford taxes imposed on them
through GEMA. Marcel Dettmann, the DJ, Producer and Berghain resident offers some insights from
his perspective calling the new tariff plan "a heavily simplified, clearly unbalanced and downright
unjust body of rules which massively threatens the whole event-scene in Germany". The issues
Dettmann raised where based on how they calculated dues from the nightclub. Their estimation is
based on 3 important factors:
1.
2.
3.

The capacity of the Venue - This is calculated as one person per square meter
The event is always calculated at full capacity
Everyone pays full price for entry

Naturally in Berlin this has been deemed as completely unfair and unrealistic by DJ's, nightclub
owners, promoters and patrons alike. Berlin has amongst the highest rates of unemployment in
Germany. In 2014 11.2% were registered as being unemployed, that is nearly 4% higher than the
average national rate of unemployment. With this in mind Berlin is a Mecca for the artistic,
innovational and inventive people. Many of these people have moved or are living in Berlin in the hope
of either making it as a creative or to simply soak up the artistic atmosphere. Berlin has always had a
liberal vibe to it, with art and music often being considered more important than making money. Most
promoters have extensive guest lists as well as giving away copious amounts of free alcohol to friends
and performers. They can also fess up to the fact that majority of their nights are nowhere near
capacity. If we take a venue with a square meterage of 500 we can quickly surmise that according to
GEMA it has a capacity of 500 people, if we take the entrance fee to be 10 that would mean GEMA
would demand 500 per night. This means that just to pay GEMA they would need to have at least 50
paying patrons. This seems very unreasonable seeing as there is a distinct possibility that a night could
clash with other events or could just be a flop. This doesn't matter to GEMA as they're making sure
they get their money regardless.
Berlin is well known for its clubs that stay open for prolonged periods of time, some staying open for
almost the entire weekend. A small paragraph within the new tariff states that any event lasting longer
than 5 hours will be hit with a fee increase of 50% within an additional 50% for every three additional
hours. This surcharge was later reduced to 25% for every additional 2 hours over an 8 hour minimum.
By November 2012 GEMA had introduced a new tariff known as VR- or the "laptop surcharge". This
surcharge is applied to all types of music and performances that use blank or writable media like blank
CD's, USB sticks and hard drives. This surcharge had previously been charged at a rate of 30% of the

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Assignment 2

GEMA licensing fee. The new reform would see each mp3 calculated at 0.13. This effectively means
that each mp3 file on the laptop, hard drive or USB being charged at that rate with every song that is
longer than 5 minutes being charged at an extra 20%. With all these new tariff in the works it has
become almost impossible to run and promote an underground or non mainstream events, pay staff and
DJ's a fair wage and still cover all the GEMA taxes.

Track ID System
A lot of the problems concerning misappropriated monies which are distributed by GEMA stem from
the fact that many feel much of the fees collected are going to mainstream acts even though their music
rarely or never features in underground events. A Berlin based company developed a program which is
aimed at identifying the music played in these clubs.
"GTI is a combined system of hardware and cloud software for identifying music played in clubs. The
GTI music identification system consists of four core elements: Hardware interface, fingerprinting,
matching & identification and analysis & reports"
This system can also handle music being pitched up or down by the DJ, as often occurs during gigs
where beat matching is required. Currently they have a 90% success rate at identifying music, this
could potentially signify a much greater chance of small record labels getting a fair share of the
royalties. The main problem with this potential solution is that it can only identify registered music. In
effect in cannot identify music which is unreleased or unregistered. As many music and DJ culture
aficionado's can confirm many of the headline acts will often play music which has not yet been
released or registered. That is part of the draw of a headline DJ - Playing music no-one else has heard.
How does one overcome this obstacle?

Re-selling Digital Music

Redigi, a cloud storage provider began operations selling 2nd hand digital music and according to the
financial times may launch operations in the EU. According to Pinset Mason, the law firm that runs law
website out-law.com have claimed it would be difficult to prevent Redigi from carrying this out.
In July of 2012 EMI sued Redigi in the US, according to Indradeep Bhattacharya of Pinsent Masons
"The ruling by the Court of Justice of the European Union (CJEU) in the case of UsedSoft v Oracle
last year will be important in determining whether Redigi will be held liable." The court of European
justice said that software owners wore out their rights to control the resale of copyrighted products
whether they are in the physical or digital format. Redigi operate by allowing users to upload their
legally purchased music files which can then be streamed at the users convenience. Redigi do not allow
illegally downloaded files or copies from CD's to be uploaded. While Redigi admits it cannot guarantee
that users have not made copies of their legally owned files, the idea is that original purchaser can sell
on used copies providing they delete any other copies they may have made.
These new issues and ideas being developed by many companies around the world are without a doubt
the results of the attempts to prevent breaches of copyright and also to force people into using PRO
recommended streaming services. Every time organisations such as GEMA attempt to tighten their grip
over rights we can be sure another creative company will attempt to by-pass GEMA in order to create
work and make money through the distribution of music, video's and software.

Music Piracy and German Case Law

Unlike in many countries, German law extends to the fact that music piracy is not only the fault of the
ISP provider but also that of the downloader. According to German law there are legal provisions and
sanctions that may be imposed on third parties such as internet subscribers and thus can be held liable
in German courts. Under German law rights holders must first show that that copyright has been
infringed. This is still very much a grey area with some judges finding that any act of file sharing can
be deemed reason enough to qualify as copyright infringement and therefore they can demand that the
ISP provider discloses the details of the alleged customers data, this is known as disclosure. Once the

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Assignment 2

details have been disclosed claims can be made directly against the person(s) cited for copyright
infringement. This can then lead to the infringer being sued for actual loss, for an account of profits
received as a result of copyright infringement or compensation on the basis of license fees.
This has lead to many video's, which fall under GEMA licensing agreement, being removed or filtered
by YouTube. As previously discussed all music is deemed to be under GEMA's licensing agreement
unless it is proven to be GEMA-Free or in the public domain. In order for many of the smaller indie
labels with no ties to GEMA to have their content uploaded on YouTube and to be streamable to
people in Germany they must first prove that their music is not licensed under GEMA. This can be a
time consuming and stressful ordeal. Innocent until proven guilty doesn't seem to work here, its more
of a case of guilty until proven innocent.
While this legal wrangle has proven to be too difficult for many small record labels, they have offered
alternatives including a "Three strikes and you're out" rule similar to the HADOPI laws in France. All
of these alternatives have been rejected in Germany by GEMA with them citing the fact that streaming
services already offer a fair and legal way of accessing music without the risk of copyright
infringement.

GEMA VS YouTube
The licensing battle between Google's YouTube and GEMA has been ongoing since 2009. The legal
battle started up in 2009 when Google's original contract with GEMA ended and GEMA suggested
YouTube should pay them 0.17 per play for GEMA licensed music. In comparison YouTube was
paying PRS, the UK performance right organisation $0.0034 per view. Once the initial negotiations had
broken down GEMA went on to sue YouTube in 2010 as a test case. GEMA held YouTube responsible
for any copyrighted material being uploaded by its users. The ruling in April of that year saw German
courts side with GEMA and ordered YouTube to install software filters which would prevent user
uploading material whose rights were held by GEMA. These software filter were then installed,
whenever a user in Germany attempts to access material which is deemed to be under the rights of
GEMA a message as shown below appears.

Figure 1 - YouTube

GEMA once again took YouTube to court claiming that they had been misleading German users and
was wilfully posting these just to stir up opinion. This was followed by an official statement from
Google.
"YouTube believes that rights holders and artists should benefit from their work. We have dozens of
collection society deals in place across more than 45 countries because we provide an important
source of income for musicians and a platform where new artists can be discovered and promoted.
Music labels are generating hundreds of millions of dollars on YouTube every year. Artists, composers,
authors, publishers, and record labels in Germany are missing this opportunity as a result of

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Assignment 2

GEMAs decisions. We remain committed to finding a solution with GEMA compatible with YouTubes
business model so that we can again provide a source of revenue for musicians and a vibrant platform
for music lovers in Germany."
On the 26th of February 2014 German courts once again sided with GEMA forcing them to change the
previous message German users would see when trying to access music whose rights are held by
GEMA. Sites, such as Grooveshark are voluntarily pulling out of the German market citing GEMA's
demands as being unreasonable and impossible to make a profit through distributing music and video's
online. This current case looks set to continue for a long time with neither side willing to give in to the
others demands.

Conclusion
The need for artists, composers, authors, publishers, and record labels to be financially compensated
for use of their works is important. The major issue will remain how this can be done so everyone from
users to artists are content. At the moment we are seemingly going through an intense, turbulent and
unknown territory. With technology and internet access improving daily many of the laws which rule
the many different countries of the world need to be looked at and updated.
GEMA's aggressive and ceaseless tactics will do nothing more than cause an expansion to the already
segregated needs and desires of both the major and independent labels and artists. Copyright will
always be an issue that needs constant addressing to ensure it is in line with technology. Suing
companies and persons should always be the last resort in settling disputes. As it stands GEMA are not
addressing the needs of the many but instead are addressing the needs of those who are already making
the most money. Monopolies, like the one GEMA currently operates in, is not healthy and will only
lead to disappointment by those who are not in the minority of high earners. The techniques and
algorithms used by GEMA cannot be deemed as valid or fair and through this we will see many more
protests and court cases take place, this wont result in a just society and fairness to all. Instead it will
bridge a gap between the have's and the have-not's. It is essential to German copyright law that another
PRO steps up to the plate and creates some kind of democratic competition rather than a monopolised
market. What we are seeing unfold in Germany is an attempt by major record labels to close the market
and give them a dictorial rule over how music is made, sold and consumed. It is unclear as to what their
end goal could be as by creating these severe restrictions in a country that has since long been a city
which has allowed liberties that encourage artists to be creative in every facet within the music
industry. As its stands now, if GEMA are to continue down this route they could make it completely
unfeasible for artists and label to work and create in the underground scene's. Rather than protecting the
rights of their members they are preventing new comers and up and coming artists to develop and
evolve in a natural and organic way. The choice should be that of the labels and artists to decide how
they would like their music to be heard. The current oporatus mirandi cannot be seen as anything other
than insane. One cant simply ban all music from being posted in case it may be under the rights held by
GEMA.

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Music & The Legal System

Assignment 2

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Citation
(Mason, 2013)
(Giletti, 2012)
(Stellpflug, no date)
(Garcia, 2013)
(Lynch, 2011)
(Koenitz, 2011)
(BERLINS PRINCE CHARLES NIGHTCLUB TRIALS TRACK ID SYSTEM FOR FAIRER FEE DISTRIBUTION, 2014)
(Garcia, 2013)
(Weitzmann, 2012)
(2013)
(Copyright FAQ, no date)
(Keating, 2015)
(Labour Market Information, 2014)
(Schwartz and Maushagen, 2012)