The GEMA Grinch New Fees Could Destroy Famed Berlin Club Scene

Whether it's in music clubs, churches or video porn stalls, wherever music is played in Germany, fees must be paid for its use. Authorities claim they are just making sure artists get their due, but many worry that new music fees for clubs will spoil the party.

By Jochen-Martin Gutsch and Wiebke Hollersen

A few weeks ago, Steffen Hack called GEMA, Germany's leading performance rights organization. There had been rumors and a lot of noise on the Internet about rate reforms. Hack wanted some answers, especially because he didn't really understand what the rate reforms meant.

Hack contacted the GEMA regional head office in Berlin for advice. He gave the person on the phone his GEMA number and, after a series of lengthy calculations and estimates, Hack was quoted a figure: €140,000 ($173,000).

Hack, the co-founder and operator of the Watergate, one of Berlin's best-known dance clubs, with fans as far afield as Australia, became a little shaky, out of both anxiety and rage.

After making the call, Hack searched through his club's records until he found his GEMA contract. It had been signed in 2004, but it was still valid, and it consisted of only one page, with a number in the bottom right-hand corner: €8,202.02.

Hack doesn't know much about contracts, but he does know that there have been a few minor increases since 2004, and that he paid about €10,000 to GEMA last year. In other words, the organization wants 1,300 percent more in the future.

A crazy number, Hack thought to himself.

The New Rules in Town

GEMA is a German performance rights organization that charges fees for the public use and reproduction of music and distributes the money it collects to the originators -- the composers and lyricists -- and to music publishers. In April, GEMA announced a fundamental rate reform that affects all discotheques and clubs. Under the new rule, people like Steffen Hack will be expected to pay more for the music played in their establishments. For GEMA, it's a matter of fairness. And, in the end, it's about setting an example at a time when copyrights are under threat and the question of what music is worth is begin renegotiated.

"€140,000?" asks Martin Schweda. He sounds more interested than bothered. "Sure, that's a lot of money."

Schweda, head of GEMA's regional head office in Berlin, is sitting at a conference table in his office on the eighth floor. He has a sweeping view of a city that has almost no industry anymore, but a lot of clubs and discotheques. Berlin is like a giant dance floor. "But it's also true that the discotheques were paying us far too little for years," Schweda says.

Schweda has laid out documents, including lists of figures, on the table. They are the new GEMA rates that will go into effect on April 1, 2013. The rates are the source of the dispute.

"Here," says Schweda, as he launches into a small speech in defense of his position. "Sixty percent of all music events will be cheaper after the reform, or prices will remain the same." He taps his finger on one of the lists. "Here, look at the area marked in green. It represents fee reductions, especially for small events. Then discotheques -- well, it will be expensive for them."

The old GEMA rate for discotheques was in effect for 30 years, since 1982. "It's the M-U III 1c, entitled 'Musical Reproduction in Discotheques,'" Schweda says, as if he were greeting an old friend. The M-U III 1c is about to be supplanted by the M-V, or "Compensation Rates for Entertainment and Dance Music Using Musical Reproduction Intended for Events."

GEMA rates often sound as if they had something to do with military parades and dancing horses.

So far, GEMA has had 11 rates as well as special rules applicable to events involving music. In the future, there will only be two rates: one for live music (U-V), and the other for discotheques and everything else (M-V).

"Everything will be fairer and clearer," says Schweda, whose knows nightlife from the 1980s, when he used to dance at the "Sloopy" in Berlin's Reinickendorf neighborhood.

'Dictatorship' and 'Disco Death'

"Isn't this rate reform unethical?" asks Hack, the club manager. He says GEMA does what it pleases.

Hack is sitting on a black couch on the lower level of the Watergate. Club interiors look pretty gloomy during the day.Despite being 48, Hack is well-known in Berlin's nightlife scene by his nickname "Stoffel" (or "boor") -- Stoffel from the Watergate. His reddish blonde hair sticks up from his head, which makes him look a little charged up. He does yoga to calm down and keep himself fit for long nights at the club.

Hack has recently been protesting, signing petitions and meeting with lawyers. He's in resistance mode -- resistance against what he calls the GEMA "dictatorship." He's also part of a resistance movement of Berlin club owners who have banded together to fight the new rates.

It's a strange battle. It isn't a fight between rich and poor, or between the lower and upper strata of society. In fact, it's more of a culture war, one in which the goal is to come to grips with changing times.

"We're the scapegoats now," Schweda says. "On the other hand, a debate is being initiated. What is the copyright law? What is GEMA doing? That's the positive aspect, as I see it."

A few weeks ago, a few Berlin club owners took the elevator up to Schweda's office on the 8th floor to attend a roundtable discussion. The goal was to talk things over. Schweda showed the club owners his lists, complete with the areas marked in green.

When asked whether the meeting was worthwhile, Schweda says: "Well, maybe now they'll at least say: 'Well, Schweda isn't such a jerk, after all."

That would be progress, indeed. But, at the moment, not a day passes without someone expressing outrage toward GEMA. Newspaper articles mention the "GEMA disaster," referring to the organization as a "collection monster" and the "most hated association in Germany." Even German politicians are discovering their soft spot for discos.

David McAllister, governor of the northwestern state of Lower Saxony, has called for "concessions from GEMA," while German Family Minister Kristina Schröder has expressed her worries about "disco death."

Perhaps "disco death" will be the phrase of the year for 2012.

On Love and Money

GEMA is the German abbreviation for what translates as the "Society for Musical Performing and Mechanical Reproduction Rights," a mouthful that no one outside the world of Schweda's office is about to utter. GEMA, together with its precursor organizations, has been around since 1903. It is one of the 10 largest performing rights organizations in the world, representing the rights of more than 64,000 members in Germany and more than 2 million foreign artists.

GEMA's supervisory board includes musicians like Tobias Künzel of the German band Die Prinzen (The Princes), singer-songwriter Konstantin Wecker and Frank Dostal, who was a singer with the band The Rattles in the 1960s and, in the 1970s, wrote the lyrics for the song Das Lied der Schlümpfe (the German version of the "The Smurf Song").

For a long time, GEMA was a very inconspicuous German organization -- until it entered the current culture war.

"For years, I didn't even know it existed. It certainly didn't exist where I came from," says Hack. "I come from the basement."

Hack is from the southwestern city of Stuttgart. In the 1980s, when Schweda was dancing at the Sloopy, Hack was occupying buildings in West Berlin and playing in a punk band. When the Berlin Wall came down, he moved on to the former East Berlin. He opened an underground club called "Toaster" in the damp basement of an old building. It was the way things were done in those days.

It was the 1990s, and people like Hack were inventing the nightlife for which Berlin has become famous. A new sound developed -- fast, raw and electronic -- and, with it, came new clubs. People danced in basements and abandoned warehouses, where the ventilation was poor and hardly anything had been renovated. Glamour wasn't the point.

"Money wasn't the point, either," Hack says. "The club scene in Berlin didn't come about to make money."

Then what was the point?

"Love," says Hack -- love for the sound, the spaces and the night. The most important clubs in Berlin weren't opened by entrepreneurs, by millionaires buying discos. They were opened by the outrageous and the obsessed.

The Watergate is Hack's first legal club. His basement days are over.

A few days after the Watergate's opening party, a man from GEMA showed up, walked around the rooms -- the "Waterfloor" downstairs and the "Mainfloor" upstairs -- and asked how many "dancing events" were planned. Hack hadn't registered the club with GEMA; the organization had tracked him down.

The Watergate was given a GEMA number and assigned the M-U III 1c rate for "musical reproduction in discotheques."

Good Guys or Bad Guys?

Under the German Copyright Administration Act, GEMA is entitled to monitor all use of copyright-protected music and collect fees for such use. Those fees amounted to €825.5 million in the 2011 fiscal year. GEMA distributes 85 percent of the money to its members.

Viewed in this light, GEMA is a good German organization. Many people should be grateful to GEMA and treat it like an old dog, one that likes being scratched behind the ears, growls a little and occasionally bites people in the leg -- but is also a faithful watchdog. Without GEMA, many artists would probably be on unemployment or performing in pedestrian zones. Nevertheless, GEMA is generally about as popular as dog shit.

When asked whether that is frustrating, Schweda says: "I'm convinced that we're doing the right thing here."

Schweda, 47, joined the regional head office four years ago. He began his business career at Bolle, a now-defunct Berlin supermarket chain. He later moved to Bahlsen, a German food company, where he eventually became sales director in the "Salt Division," which markets products like potato chips, pretzels and peanut curls.

After 18 years in the Salt Division, Schweda received a call from a headhunter who wanted to know if he was interested in a management position at GEMA. Schweda doesn't play a musical instrument, he can't read music and he doesn't sing. But he accepted the job, nevertheless, and has since "become a dedicated GEMA person."

Whenever Schweda is in a restaurant, he looks around to see where the music speakers are. "You have to pay a fee for every room in which you play music, including the restrooms," he explains. When he goes to concerts, he sometimes tells people who are filming with their video cameras not to do it. And what do they say?

"They say it's just for personal use. And I reply: 'Okay, but please don't put it on YouTube." He can't help himself, Schweda says. He calls it an occupational hazard.

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