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.
Von Jochen-Martin Gutsch und 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.

The All-Seeing Organization

Copyright protection, a healthy compulsion to control things and the feeling of being on the right side are part of the organization's identity -- the GEMA spirit. It's hard to say where it comes from, but part of it is certainly the fact that the organization is a giant machine that has been in steady operation since 1903. The machine is driven by 1,100 employees and has been fine-tuned over the decades.

Today, there are 11.5 million works registered in the GEMA database, with between 800,000 and 900,000 new works being added each year. For a €61 enrollment fee, any composer or lyricist can become a GEMA member and register his or her works. The organization then handles the rights to the works.

GEMA collects fees, based on 137 different rates, at about a million individual events a year. There are rates for "Music in Spas," "Music in Church Services," "Sharing Music in Retirement Homes" and "Erotic Film Performances in Individual Video Booths."

GEMA also has staff members who search websites for unregistered music. There are people at GEMA who read newspapers, magazines and ads searching for unregistered concerts and parties. And GEMA has people who work in a department called "Music Recognition," and who decide whether a work should be classified as "E-music" (clubs and discos) or "U-music" (live).

Distributing the Loot

The machine is all-encompassing, and sometimes it is adjusted. One such adjustment is a rate reform.

"Just think," says Schweda, as he begins to calculate. "If Mr. Hack was paying €10,000 a year until now, then, at three events a week, or about 150 events a year, he was paying about €65 an evening for the music he played. That's four cases of beer. Is music worth so little?"

Hack says that even the €65 doesn't get to the people whose music is played in his club. When asked where it does go, Schweda says, "the discotheque pot."

All GEMA fees paid by clubs and discotheques go into the discotheque pot. These fees amounted to about €6 million in 2011. To be able to distribute the money, GEMA prepares a top list of all songs played -- the GEMA disco charts, so to speak. Those at the top of the charts receive more money, and those at the bottom less. To provide an indication of what this means, for an artist to receive €500 a year from the pot, one of his or her songs would have to have been played for a total of 15,000 minutes.

In 2010, the No. 1 hit on the GEMA disco charts was "Memories" by David Guetta, a pop song that would never be played at Hack's Watergate club.

GEMA has come up with a monitoring system to compile its charts. Devices record music for one hour every night at 120 discotheques throughout Germany. The company Media Control analyses the recordings for GEMA. Instead of computers, the company uses ordinary human beings to analyze the music, and calls it "ear-ic analysis."

GEMA doesn't reveal in which clubs and discotheques the 120 devices are installed "to prevent manipulation," says Schweda. Hack says that he has only heard of one techno club in which one of the devices is installed.

Enough Is Enough

One of the goals of the GEMA rate reform is to ensure that the big clubs and discotheques pay more money into the disco pot. But why didn't GEMA demand more money earlier, in all the years when the "cheap" rates applied? "Perhaps we simply lacked the courage," Schweda says.

But a 1,300-percent increase for a club? Just like that? "We really wanted to negotiate all of this," Schweda says.

GEMA has negotiated rates with the Federal Association of German Discotheques and Dance Operations (BDT) since 1957. The negotiations resemble collective bargaining between employers and trade unions. The two sides meet, bargain and, in the end, reach a compromise. This approach has routinely led to minor increases in GEMA rates, most recently by 0.75 percent.

When the traditional rate negotiations began again at the beginning of the year, however, GEMA introduced a new basic concept: Instead of the old annual lump sums, each disco would pay 10 percent of its ticket revenues to GEMA for each day of operation. Ten percent is not uncommon in other countries. That was when the BDT, for the first time in a long history of amiable negotiations, walked out of the talks.

It wasn't pleasant for GEMA, but it wasn't a serious problem, either. It simple announced its new rates in April, without negotiations. This is permitted by law, and Germany's Patent and Trademark Office is still looking into whether the rates are reasonable. Put another way, GEMA established its major rate reform on its own, like a monarch or a dictator.

Of course, this hasn't been good for GEMA's image. People like Hack launched a protest campaign called "Against the 2013 Rate Reform," and they've already gathered almost 270,000 signatures.

Fighting on Many Fronts

"Who are actually the underdogs here?" asks Schweda. "The club owners, who are making money with music? Or the artists, who no one wants to pay fairly anymore?"

Schweda has removed his jacket and rolled up his shirtsleeves. He begins many of his sentences with the words: "I am convinced that…"

The odd thing is that Schweda is also waging a resistance campaign. Hack is fighting against the new rates, while Schweda is fighting a new era, one in which everyone listens to music, downloads, copies and films it, places it on the Internet and plays it. Meanwhile, fewer and fewer people want to pay for it.

The conflict revolves around the disco rate, but it's really about bigger issues, such as basic principles and GEMA's concept of morality.

To pursue its principles, GEMA isn't just tangling with clubs, but also with YouTube, which is owned by Google. It's a German association versus a global corporation.

GEMA wanted YouTube to pay it a reasonable sum of money  for the music that's played on the site -- and for which YouTube rakes in billions in ad revenues. But the two sides couldn't agree on what constituted a reasonable sum. Their respective definitions were too far apart.

Since then, YouTube sometimes posts the following note: "Unfortunately, this video is not available in Germany because it could contain music for which GEMA has not granted the necessary music rights." It's only a sentence, and yet it makes GEMA look like a spoilsport, a wet blanket.

At the moment, GEMA is fighting on many fronts, confronting YouTube, the clubs, the zeitgeist and changes in the way music is used. Sometimes it comes across as a desperate German machine, where the understanding of values, the approach to power and the sense of being on the right side become so confused that everything falls apart.

A Crumbling Empire

So far, GEMA has survived every sea change, including the cassette, the CD, German reunification and the USB flash drive. But now things are getting more complicated.

All of the registrations of compositions no one plays anymore today are stored in wooden drawers in GEMA's archives in Berlin. They include 1927 hits and songs with names like "The Farmer Has a Dovecote."

Silvia Moisig heads the Documentation Department. She can tell the story of German rock musician Udo Lindenberg, who came over from the Hotel Kempinski in the 1980s, rode around the hallways on roller skates and had a song registered. Or there's the story about TV host and musician Hugo Egon Balder, who once tried to register the musical scale as a composition because he wanted to prove that there were idiots at GEMA who wouldn't notice.

The world was clear and manageable in those days. Today, there are breakaway movements everywhere. The GEMA empire is beginning to crumble, at least along the edges.

A few weeks ago, a few Berlin club owners, including Hack, sent a stack of playlists to Schweda. They were lists of the songs that various DJs had played in a single night. The clubs were conducting a test. They wanted to know whether the old GEMA and today's electronic club music had anything in common anymore. They wanted to see whether the music played in the clubs that are soon supposed to pay higher fees was even registered with GEMA anymore.

Schweda looked at the lists and saw names of artists like Richie Hawtin, Peace Division, Phase and M.A.N.D.Y. Schweda, who likes to listen to Supertramp, gave the lists to Silvia Moisig. Moisig, a fan of aging German pop star Peter Maffay and a 27-year GEMA veteran, dropped off the lists in Room 165, which she calls "the youth room."

There are four young GEMA employees working in Room 165. They're disco experts. They spent a few days checking the playlists. They counted 542 songs, of which they found 287 immediately. There were traces of 76 other songs in the database. In the process, GEMA came to the surprising conclusion that, even in Berlin's wild techno clubs, more than 50 percent and possibly as much as 70 percent of the songs on the playlists are in the GEMA repertoire.

Next to Supertramp and Peter Maffay -- and Marco Resmann.

The Generational Divide

There were three songs by Resmann on the playlist submitted by the Watergate. He is 35 and has a studio in Berlin's Prenzlauer Berg neighborhood. The small room is crammed full of equipment, including synthesizers, a drum computer, a 32-channel mixer and shelves full of records. Resmann is a producer and a DJ, and he owns his own label, Upon You Records. He also composes techno tracks.

In other words, Resmann is an artist -- precisely one of those supposedly threatened figures needing protection for whom GEMA is campaigning, and for whom it is picking a fight with everyone.

Resmann produces five records a year on old-fashioned vinyl. If he's lucky, he'll sell 500 copies of each record. The money is about enough to pay for production, the record cover and possibly the studio -- but nothing else.

Resmann also signed the petition against GEMA. "Help, the rate reform," he says. Resmann, an artist, also feels threatened by the new rates.

He doesn't make his money selling records, but as a DJ, often working at the Watergate, where he is a resident DJ. He composes songs because it's required for getting good DJ gigs. If the clubs reduce his pay or even shut down as a result of the rate reform, Resmann will have to look for a new job.

Resmann has never had much use for GEMA, and now he sees it as a threat to his model of life.

For artist Konstantin Wecker, on the other hand, GEMA is a blessing. The 65-year-old singer-songwriter has been making music since the 1960s, including records, film scores, musicals and concert tours. He's a classic, old-school musician, and he's been a member of GEMA for 40 years. In June, when people were talking about "disco death," he became a member of the GEMA supervisory board.

Wecker is a traditional artist. On his website, he writes: "Without GEMA, I would have no security in old age and no social benefits for emergencies. If the day comes when I am no longer capable of playing more than 100 concerts a year, I won't be able to survive without this organization."

One can appreciate the positions of both Wecker and Resmann's. But no one can say what the future holds.

Translated from the German by Christopher Sultan