GEMA General Meeting on 27 June 2007

Ladies and Gentlemen,

A year ago, Jürgen Becker and I presented you with a prospect of the immediate future. Our basic message was: just like all the other collecting societies, GEMA has to reckon with greater competition. And our forecast has turned out to be right:

• The implementation of the Online Recommendation of the European Commission of October 2005 is well under way. Best examples of this are newly established enterprises such as CELAS (Central European Licensing and Administrative Service), GEMA's joint venture with our English sister society for the pan-European exclusive licensing of the Anglo-American online and mobile repertoire of EMI Music Publishing (I shall go into details later), and a planned company of our French and Spanish sister societies by the name of "Armonia" for the European-wide licensing of online and mobile repertoires as well.
• The anti-trust proceedings that have been under way for more than a year now with the European Commission are still keeping us busy (more about that later).
• In certain areas, several sister societies have joined forces in order to reduce administrative costs, that is, especially, personnel costs, or are outsourcing these operations to other third-party companies.
• The big music publishers and labels are continuing to buy one another up, with all the effects on the collecting societies that this entails.

The environment for copyright and collective rights administration is undergoing a radical change. The possibilities for the use of works protected by copyright continue to increase, making new demands on the collecting societies and their international collaboration. GEMA has prepared itself for this.

Our new corporate planning, which we presented to you last year, is, and was also in retrospect, the right action for us to take; more about that later, as well.

The rapid change especially in the economic framework conditions must not, however, obscure our view of the fact that GEMA is not merely a business-oriented enterprise. We are not a public company. Or, to quote my honoured predecessor Reinhold Kreile: "GEMA is a commercial enterprise just like any other - only quite different."

If we are going to lead GEMA safely into the future, we must inevitably raise the question of values. Starting out from the author, who is at the centre of it all, there are, as I see it, two absolutely clear answers to this:

1. We must preserve solidarity among the community of authors.
2. We must continue to emphasise, even more clearly than in the past, GEMA's contribution to the social and cultural development of our country and our musical life.

So - and I'm confident of this - GEMA will continue to be successful in future when it comes to laying the foundations for sustained and solid growth and when it comes to demonstrably living our values - namely solidarity and creative work - as one of the bases of our culture!

This prompts me first of all to look back at the Financial Year 2006. The documents accompanying your invitations already provided you with a number of figures on last year's economic results. Before I go into this briefly, allow me to make some general remarks on the last financial year and its framework conditions:

Neither the development of the economy as a whole nor the economic development of the music industry were characterised by what one could call a self- sustaining recovery. The situation of the music industry must not, however, be confused with the use of music in its various forms. This use continued to increase noticeably last year as well. This, however, has not been accompanied by adequate revenue, especially for the usage of music via the Internet and online. So far, we have only been marginally successful in using these new sources of income to compensate for the constant decline in revenues in the audio carrier segment. There are still Influential opponents at work here such as, for example, the BITKOM federation, whose leading member companies, although doing a good trade at home and abroad, are using every possible legal and political means to fight against the fair remuneration of creative people. So appropriate royalties in this sector have to be recovered repeatedly by means of arbitration and court proceedings at considerable expense in terms of time and money.

Against this background, GEMA achieved extremely respectable economic results in the Financial Year 2006. We cannot, however, be truly satisfied with these, for the reason mentioned above.

Now to the results which the individual collection sectors worked for - I use the word quite deliberately here - last year:

We were able to record total revenues amounting to EUR 874.4 million for rights owners from all over the world; after EUR 852.2 million in 2005, this amounts to an increase of 2.6 %. GEMA is thus consolidating its role as an internationally leading authors' society for music.

Now to the individual segments:

• Industry:
  
  Total earnings for audio carriers, audiovisual carriers, data carriers, online and ringtone melodies amounted to EUR 235.1 million, a decline of EUR 2.8 million (= 1.18 %) compared with 2005. Especially remarkable in this context is the substantial drop in sales of audio carriers in Germany (by 14.1 % from EUR 119.3 million to EUR 102.5 million).
  
  The total collection for ringtone melodies/online amounted to EUR 3.5 million (2005: EUR 5.5 million). There are positive indications to be seen in the market development of legal music downloads, but there is a downward trend with ringtone melodies. The particular problem we are facing in this segment is that two thirds of GEMA's royalty claims are disputed. As a consequence, in 2006, the sum of EUR 6.3 million was deposited on escrow accounts owing to arbitration proceedings in the ringtone-melody segment and EUR 2.5 million in the music-on-demand segment. This part of the remuneration can be decided on only after the completion of the pending legal proceedings.
  
  Let me go briefly into detail about the problems GEMA has to contend with especially in this field: the tariffs in the online and mobile segments - as you know - have been repeatedly, and still are, the object of fierce disputes between GEMA and the licensees or their associations. Despite long and intensive negotiations, the users are not prepared to recognise the claim of GEMA members to fair remuneration, so that we were forced to resort to the courts time and again.
  
  The Arbitration Board of our supervisory authority, the German Patents and Trademarks Office, made a number of decisions in 2006 that take account of GEMA's claims for an appropriate remuneration for its members. For example, in October 2006, the Arbitration Board mainly agreed with GEMA's arguments in our proceedings against BITKOM concerning the royalty level in the ringtone-melody segment. The Arbitration Board unequivocally rejected BITKOM's claim for royalties of only 4 % of the end user price and held more than double that amount, namely 8.36 %, to be appropriate. At the same time, the Arbitration Board fortified the moral rights of GEMA members by acknowledging the authors' adaptation right in the field of ringtone melodies.
  
  The decisions taken by the Arbitration Board in the field of Music-on-demand with Download can also be regarded in a very positive light. At the end of 2006, after numerous individual proceedings by GEMA against Deutsche Telekom and AOL, for example, the Arbitration Board determined a royalty of 11% of the end user price and a minimum royalty of almost 13 cents for each download. This is especially significant because the respective licensees had objected to the application of a minimum royalty. The licensees have, however, filed an objection against these decisions, which are so very positive for you as a GEMA member; both proceedings are currently pending in the second instance.
  
  Another claim by GEMA that we had to enforce by taking legal proceedings concerns Web 2.0-based Internet platforms. As so-called "sharehosters" these providers make memory capacity available to their users, who feed in whatever contents they like, thus making them publicly accessible to other users. Of course these providers are, we are convinced of this, also answerable under copyright law and therefore obliged to conclude licensing agreements with GEMA. Several providers, however, rejected our offer of licensing negotiations thereby forcing GEMA a few months ago to instigate injunction proceedings against these providers - exemplary names in this context are Rapidshare or Usenext. So far, GEMA has won all of these proceedings and it will continue to make use of all possibilities to defend your position and your interests in this field as well. After all, what we are talking about here is that these providers either discontinue their services or pay the appropriate remuneration to the authors.
  
  After this brief digression, let me return to the collection segments and their results last year:
• Radio and Television:
  
  Total earnings amounted to EUR 241.5 million, an increase of EUR 8.5 million (3.63 %) compared with 2005. This increase can probably be attributed mainly to the general recovery of the advertising market.
• Field Service:
  
  The collection carried out by the Regional Offices amounted to EUR 279.2 million, an increase of EUR 12.3 million compared with 2005 (4.63 %). Mention should be made here of a new collection mandate but also the positive effect of the World Cup last year.
  
  In 2006, expenses rose only by 1.11 % (above all for material costs) and were thus significantly lower than the increase in revenues, so for the first time in GEMA's history the distribution sum exceeded the EUR 750 million mark. It has gone up to EUR 752.7 million, the highest level ever. At the same time the general cost rate fell to below 14 %, namely 13.92 % after reaching 14.12 % in the previous year - in international terms a very respectable figure.
  
  At first glance, these figures sound extremely positive. A closer look, however, shows that unfortunately, they are not characterised by the desired and necessary sustainability. For example, the proportion of revenues for which we have to compete - these are mainly earnings from collection mandates for other collecting societies that have to be negotiated individually and which could be cancelled at short notice - amounts to more than EUR 207 million. Last year GEMA was once again able to extend this segment at home as well as abroad through the central licensing that GEMA is currently carrying out. The increases from these collection mandates are thus rising faster than the total revenues. As welcome as this is, of course, it also involves the risks that are typical of competition.
  
  So, if we look at the figures as a whole, it becomes clear that there were a number of special effects last year - from the World Cup to the central-licensing successes. Without these special effects, revenues in 2006 would have dropped and the figures I am able to present you with today would have been far less satisfactory.
  
  A complete and realistic report also needs to include
• Personnel costs:
  
  The union ver.di cancelled the collective salary agreement with GEMA as of the end of last year and at the same time demanded a 6 % increase in salaries. As a result, GEMA also cancelled this salary agreement. We do not intend to continue the existing company pay agreements and will no longer negotiate salaries with the union in future. Over many years and decades the employees' collectively agreed provisions have developed in such a way and have become so set in their structure that in many respects they can no longer meet GEMA's future requirements.
  
  Instead, for this year, GEMA decided a linear increase of 1 % in its employees' basic salaries. A sum amounting to an additional 1 % is also being made available and will be distributed on a performance-related basis. By means of this salary increase, GEMA intends to implement its first step towards payment based on results and in future to allow employees to participate more strongly in GEMA's success. After all, there are also many among the employees themselves who wish for a system of payment that is more strongly related to performance.
  
  GEMA has drawn up a new system of pay for those who have been employed by GEMA since the beginning of this year and for future employees, which will mean that the fixed salaries will be reduced by 10 %. On the other hand, an additional variable payment will be offered. Furthermore new employees will no longer have security of tenure from the age of 55 onwards. The background to this is that, under the present system of collective pay agreements, GEMA employees in this tariff sector earn substantially more than what is paid to people working in service-sector companies. This has been demonstrated quite clearly by a salary analysis.
  
  We have the chance to secure jobs in GEMA in the long-term. We will, however, only succeed in doing this, if we are and remain competitive from the point of view of costs as well. Our Dutch sister society plans to move approx. 40% of its jobs from the documentation and IT segments to the Czech Republic with the aim of substantially reducing its costs; it is farming these jobs out to the Accenture company, which is getting ready to compete with the collecting societies in the foreseeable future. Our English and Swedish colleagues are acting in a similar manner by planning to build up a completely new documentation system on a greenfield site in Sweden - and not in London, because it is so expensive. This is exactly what we want to avoid with GEMA! But only a GEMA that is competitive will be able to secure jobs in the long term. The experience of other companies (such as recently in the case of Telekom) shows that a postponement of reforms would in the end necessitate far more radical measures - and ultimately, ones that are even more distressing for our employees. This is what concerns the Executive Board and the Board of Supervisors. Misguided compromises, below-the-belt accusations and the fomentation of fears do not help, even if we and I myself have to bear the brunt of the criticism and malice. And if, in this context, a press article maintains that almost all GEMA employees had to fear for their jobs, exactly the opposite is the case.
  
  Fact remains that we have to limit personnel expenses in order to take at least one step towards the market standard by adopting comparatively very moderate measures. If we agree that the aim is to keep costs in GEMA under control in the medium to long term, our decision is one that will have the least distressing consequences. Our employees, for example, who had a contract of employment with GEMA before 31.12.2006, are not all affected by the future reorientation. For these employees the collective salary agreement will remain in effect as long as they work for GEMA. Our concern is the large number of future employees who will succeed those retiring for reasons of age in the coming years
  
  Certainly, communicating this to the employees and especially to the members of the works council is an extremely demanding task and in this respect GEMA is also a part of society: reforms are being called for everywhere, but if at all possible they should affect others and not oneself. In our view, to say this once more, there is no alternative - most of all, no alternative that is less distressing for the employees - to the course we have taken. We will continue to talk with the employees and the works councils and I hope very much that at the end of this process there will be a solution that is acceptable to all parties involved.
  
  But of course we are not reducing questions of personnel simply to questions of salaries. GEMA owes the great reputation it enjoys in Germany and throughout the world especially to our committed and competent employees. For this reason we have developed a concept consisting of a number of staff measures with the aim of promoting our employees and strengthening their own responsibility. In particular, these include advanced training and development activities.
  
  In this context, I should like to mention briefly that we already started forming accruals for the pension commitments to the employees in 1990 - Professor Kreile rendered us a great service in this respect. The volume of these accruals meanwhile amounts to almost EUR 60 million. But even this amount is not sufficient, because the problems here are no different from other spheres of our society, which is getting older and older. Depending on the way it is calculated, at least EUR 35 million to EUR 70 million in additional accruals would be necessary to satisfy the future pension claims of our employees; these would otherwise have to be paid from current expenses. Given this background, we also have to exhaust every possibility to secure, on the one hand, appropriate and performance-oriented payment for today's employees; on the other hand, we also have to be able to guarantee, in the days to come, the expenditure for payments to employees already retired or soon to retire, without the future cost rates exploding and leading to an excessive reduction in the distributions to you as rights owners.
• Welfare Fund:
  
  Let me go briefly into detail on the financial aspects in GEMA's social and cultural sphere. Owing to the favourable developments in the field of revenues as well as expenses, it has once again been possible to increase allocations to the funds for social and cultural purposes. They now amount to EUR 53.8 million. We were able to make EUR 6.6 million available to the Welfare Fund.
  
  I should also like to mention the international aspect in connection with this topic: at a meeting in Britain a few weeks ago, a member of the local sister society told me that if he had a choice he would prefer to be a member of GEMA. The main reasons he gave were the special social benefits GEMA is offering its members.
  
  To sum it up: GEMA can be proud of its social institutions and achievements. We shall continue to safeguard them and develop them further even if framework conditions have changed!
  
  All in all, for 2006 we can say that, despite all reservations, this has been the most successful year in the society's history in terms of revenue, distribution sum and costs. The past year thus fits in with the history of the recent successful years.
  
  This is the opportunity for me to thank my two colleagues on the Executive Board, Jürgen Becker and Rainer Hilpert, for their support. My thanks also go to the Members of the Board of Supervisors headed by its Chairman Christian Bruhn and his two Vice-Chairmen Karl-Heinz Klempnow and Frank Dostal for their constructive cooperation and the occasional quite emotional debate about the future.
  
  Last but not least, I should like to thank all the GEMA employees in the Regional Offices and the Head Offices. The good result of 2006 can be attributed mainly to their work and commitment.
• Prospect for 2007
  
  No matter how good a year 2006 was for GEMA in terms of the figures, 2007 will still prove to be a difficult one; we already foresaw this in autumn 2006. So we are planning for a revenue in 2007 that will be EUR 5 million lower than that of the previous year's, with corresponding effects on the distribution sum and cost rate. The figures we have so far for 2007 unfortunately more than clearly confirm these negative trends. Of course, this will not remain without an effect on the distribution sum and the cost rate.
  
  The factors which we had to take into account in our planning include especially:
  • The decline in the traditional audio-carrier business continues unabated both on the international markets (e.g. Canada, France) and in Germany.
  • There is no sign of any compensation through revenues from the online business in the audio-carrier segment.
  • Special effects such as those in 2006 are not to be expected this year.
  Instead we have to contend, for example, with the cable network operators. Owing to the price increases they have pushed through on the market, and in view of future developments, they ought to be paying increased royalties to all rights owners. Their standpoint, however, is exactly the opposite, which is why they have even reduced their payments on account by 40% compared with the royalties that have been agreed for many years. In this case as well GEMA will not allow itself to be put under undue pressure but will fight for an appropriate increase in the royalties. It goes without saying that we want to achieve this, if at all possible, by means of negotiations but we will also not shy away from pressing our claims by means of the arbitration board and the courts.

Along with its day-to-day business, which is often in fact far more than just that, GEMA has challenges to face in numerous other fields. These include, for example, the amendment of the German Copyright Act and the anti-trust proceedings instigated by the European Commission against all European collecting societies. These points in particular reveal another role that GEMA has to play: that of the representative of the authors in the political arena. Apart from safeguarding the justified interests of our members, what are required here are both a sense of proportion and a firm grip on reality, an ability not only to find acceptance as advisers to the politicians, but to be actually involved in the decision-making process as well. Our new Liaison Office in Berlin, which we officially opened last week, is already rendering us valuable service in this respect.

We already reported in detail about the plans of the Federal Government for amending the Copyright Act (the so-called "Second Basket") at the General Meeting last year. Once again I should like to summarise the changes planned by the Federal Government in the area of the regulations governing the claim to royalties for private copying under the following key headings:

• System change: royalties for private copying are no longer stipulated by the legislator itself - as was the case so far - but by the parties involved by way of agreement;
• Limitation of the claim to royalties on principle: a claim to royalties shall exist only if hardware or a storage medium is used to make copies "on an appreciable scale";
• Limitation of the claim to royalties in terms of amount: royalties shall be in an "economically commensurate relationship to the price level of the hardware or the storage medium", and the sum of the royalty claims of all rights owners shall not exceed 5% of the sales price.

On many occasions, including several top-level talks with the Federal Minister of Justice and the Federal Minister for Economic Affairs, GEMA has explained in detail the negative effects these regulations will have on the royalties levied on private copying. The ZPÜ (Central Organisation for Private Copying Rights) would have to face losses of up to EUR 50 million if the Government's draft bill were implemented unchanged. Throughout all its endeavours, GEMA has always had one main concern: if the legislator is going to leave it to the parties involved to come to an agreement on the royalties, then it cannot start off by imposing restrictions on one party alone - namely the authors. It is enough in this case for the legislator to stipulate that there is a claim for appropriate remuneration, leaving any further fine tuning to the Arbitration Board and the ordinary courts. This is the only way of ensuring that the authors' side can negotiate "at eye level" with those who owe them their remuneration.

Currently it looks increasingly likely that the authors will gain a hearing with their convincing arguments, at least to some extent. The legislator will, in all probability, no longer determine the royalties itself but will put this matter into the hands of the parties involved. The system change intended by the legislator will thus take place. At the same time it is becoming apparent that some of the restrictions named above might be dropped. Should this find its way into the final wording of the law the authors will be able to chalk up a considerable partial success in their efforts to improve the planned legal regulations.

Even if the overall situation in this field thus appears to be a good deal better than it was even one year ago, the envisaged change in the system away from royalties stipulated by law to agreed royalties will by no means make the overall situation in the field of private copying any easier. Based on past experience we can expect that the people who owe the remuneration - the manufacturers and importers of hardware and storage media - will make use of every means available to them to avoid paying the legally owed royalties or to delay the date of these payments as long as they can. Even today, so still on the basis of applicable law, the system of lump-sum royalties is being called into question as such by a number of internationally operating hardware manufacturers seeking to abolish these levies at European level. In their efforts to ward off these attacks on copyright last year, the European authors achieved a great success in convincing the European Commission to withdraw the draft it had already produced for a recommendation on a reform of copyright levies on hardware and blank media. The European Commission will, however, most certainly take on this subject again owing to the very strong pressure exerted by the industry. Regardless of the "Second Basket", GEMA and its rights owners will thus have the subject of private copying to contend with in future as well.

Already last year we reported to you about the anti-trust proceedings opened by the European Commission against the European collecting societies. To this very day, GEMA, just like the other collecting societies concerned, has been contesting vigorously the so-called Statement of Objections communicated by the Commission in January 2006. The matter is unfortunately not yet settled so that there is still the threat of an injunction, as well as a fine.

Our efforts concentrate first and foremost on defending the reciprocal agreements in so far as these have been attacked by the European Commission. Our views on this were expressed in detail not only in writing but also during a three-day hearing in Brussels in June last year. We have already reported on this as well, and especially on the outstanding role played by Christian Bruhn there. At this hearing, however it became apparent that the European Commission would adhere to its own position despite our arguments. It would take years before the courts clarified the legitimacy of the measures and fines the Commission is threatening to impose, so GEMA and the other four big European collecting societies (PRS, SACEM, SGAE, SIAE), together with CISAC, the international umbrella organisation of the collecting societies, have decided in favour of seeking a compromise solution with the Commission whilst safeguarding our interests to the greatest possible extent.

So, in the meantime, a draft of a so-called formal commitment has been drawn up together with the Commission concerning certain changes in the international licensing of performing rights - from the very beginning, reproduction rights had not been the object of the Statement of Objections - in the online, satellite transmission and cable redistribution segments.

GEMA considers the obligations taken on in the commitment to be acceptable because there would be no essential changes to the status quo. GEMA and almost all other European collecting societies have therefore told the Commission that they accept the negotiated text. As a result, the Commission published a summary of the facts and the contents of the planned commitment on 11th June 2007 in the Official Journal of the European Union. All market participants now have one month in which to express their views on this matter. Only after the completion of this so-called market test will the Commission ultimately decide whether it will cancel its proceedings against the collecting societies. We expect this decision to be available within the next few months. Until then it will not be possible to provide a final assessment of the outcome of the complaints procedure. What is at any rate positive, however, is that we have succeeded in creating the basic preconditions for an amicable settlement of the matter in such a way as to forestall the injunction threatened by the Commission and the imposition of a fine so far.

As we see, the framework conditions for GEMA are changing - legally, economically, technically, socially. GEMA has proved that it can handle these challenges successfully, as is also demonstrated by the consistent implementation of our medium-term corporate planning. We already presented you with its major points a year ago. Let me give a few examples:

1. If GEMA intends to continue to grow it needs to ally itself with other collecting societies in times of competition: it is not sufficient to restrict ourselves to Germany since our own German repertoire is too small; and the assumption that the rights of a work are administrated by GEMA can only be maintained if we continue to represent the worldwide repertoire in Germany.
   
   The first example of this type of alliance is our CELAS (Central European Licensing and Administration Service) project with the British MCPS/PRS: Since 1st January this year GEMA has been administrating the Anglo-American online and mobile repertoire of EMI Music Publishing throughout Europe. It is quite probable that in the coming months more rights owners will decide whether and how they want to have their online rights licensed on a European-wide basis in future.
   
   With CELAS GEMA also has the opportunity for the first time to exert a positive influence on the royalty rates in other European countries and thus to sustainably increase the foreign proceeds for our members. GEMA's successful efforts on behalf of higher royalty rates in Germany can now be extended to Europe - for the benefit of our members.
2. Another example of future collaboration with other collecting societies is a project currently being carried out by GEMA together with its two Austrian sister societies AKM and AUME. By the end of this year we shall ascertain whether it will be worthwhile for all three participating societies to cooperate much more closely in the fields of licensing and/or rights administration in future. The parties involved even consider it quite conceivable to combine certain fields. This project is especially important to us for two reasons:
   1. We should cooperate as closely as possible in the German-speaking area to strengthen the German-language repertoire.
   2. An alliance of this kind could enable GEMA to prove that it is possible for big and smaller collecting societies to collaborate successfully with all due mutual respect for the national, cultural and social peculiarities.
3. I am very keen to see the outcome of this project! Because securing the international repertoire, at least for Germany, is of existential importance for the members of GEMA. This is the only way to enable us to secure the distribution sum and our social and cultural achievements on a permanent basis.
   
   Our corporate planning, of course, also concerns the improvement of services for our members. This includes new activities in the monitoring field:
   
   For many years we have been expecting considerable improvements, especially as regards foreign proceeds. After careful preparation, the Board of Supervisors and the Executive Board plan to start a project this very year to monitor television broadcasts by technical means in selected foreign target markets so as to ensure that it will be possible to control the use of GEMA repertoire much better in future. Should this project lead at least to a more accurate or even to a greater distribution, we can well imagine our monitoring being extended to other markets as well.
   
   I can mention briefly in this context that, since 2006, we have been running an office in New York together with our French and Spanish sister societies in order to establish the extent to which GEMA can achieve results for its members directly on the spot.
   
   Our online licensing shop for web radio has already been operating very successfully for one year now. You know that GEMA is obliged to grant licenses to the smallest users as well, even if this regularly generates more costs than income. So last summer GEMA launched its Internet Licensing Shop which enables small web radio providers to acquire the necessary licence with just a few mouse clicks. We have already granted more than 1,100 licences in this cost-saving way. We are now planning to extend the Online Licensing Shop to other fields such as web-TV and private homepages.

Marketing:

New strategies not only call for new structures but also for a new culture. And this ultimately also requires a new kind of communication, internally with our members as well as externally with our licensees and customers. Here the main issue is to counteract the distortion of GEMA's image and that of the other collecting societies in the public eye as well as in the political sphere and to emphasise the positive aspects of the collective rights administration by GEMA in the interest of the authors, as well as its cultural and social commitment.

It is especially important in this allegedly brave new online world to address children and teenagers. They need to understand that the creative people who compose their favourite songs and who write the lyrics are entitled to fair remuneration.

So this year GEMA started a campaign together with Europe's biggest youth magazine, "Bravo". It presented itself as partner to the "Bravo Supershow 2007". The goal was to address young music fans directly in a highly emotional environment and to sensitise them to the protection of the creative work that is behind their favourite music. In doing so we are also seeking to counteract the increasing lack of awareness among people that they are doing anything wrong in acquiring music illegally, that is, by means of pirate copies and by exchanging works protected by copyright. The participation and interest in the various activities far exceed our expectations. The numerous and extremely positive responses are an impressive demonstration of how successful one can be in approaching young people. This is why we have to do much more, and also why we can achieve much more, in this field.

Cultural concept:

Closely connected with the subject of communication are also GEMA's cultural and social tasks. The fierce disputes about the "Second Basket" have made it all too obvious how little the public - and especially the political public that is so important for us - knows about this aspect of GEMA.

So in future we need to make even clearer what GEMA stands for. We are, after all, not a mere collection agency that is often confused with the GEZ (the German fee-collecting agency for television and radio) or similar institutions. GEMA is an alliance of authors, composers, lyricists and their publishers. And GEMA has always assumed a social and cultural responsibility: especially the Welfare Fund and the GEMA Foundation are beacons in their fields. These and other activities need to be clearly communicated to the public. This is our starting point, and this is what we have to communicate to the outside world. Only then will we be able to safeguard our special legal and political status as a collecting society in the long term.

This is why we have already been working on a cultural concept for quite some time. Our aim here is to underline more clearly than in the past GEMA's contribution to the social and cultural development of our musical life and of our country. Because this is the side of GEMA that can most certainly be described by the term "ethical" - and I use this exacting term quite deliberately.

Wolfgang Rihm once got to the heart of it with the sentence: "Authorship is the basis of culture." Authors, creatively acting persons, hand their works over to the public. These are communicative acts. And the sum of these works is what makes up our culture. GEMA needs to communicate this knowledge to the public time and again - yes, we are in effect obliged to do so. This will also secure our special legal and political status as a collecting society in the long term.

It is the intention of the Board of Supervisors and the Executive Board to adopt the necessary measures for a self-contained cultural concept of GEMA in autumn this year.

Ladies and Gentlemen,

Ingeborg Bachmann was the originator of the sentence: "People can reasonably be expected to accept the truth." Perhaps some of the developments I have outlined here in this report may strike you as unreasonable. But we are living in a time of fundamental change and we are experiencing a change that can scarcely be more fundamental to musical life. In this situation the following remark also holds good for GEMA: "Only those who change will prevail" - of course it is a sentence that has been flogged to death, but it describes the situation exactly as it is.

GEMA has been successful and it is successful. And I firmly believe that it will continue to be successful. Along with the indisputable risks, let us above all see the chances for GEMA - the chances of continued growth, not only in terms of economics but also in substance. And the very reason that GEMA is successful - and, who could be more aware of it than you yourselves - is that it is something special. And it is this 'something special' about our GEMA which we want to, and have to, put first and foremost, in spite of all change. But it is also our task, indeed our duty, to bring out, and define, again and again, what we find so special and creative in GEMA.

Something that more than 100 years ago brought the founding fathers of GEMA together was an event that has made history. And the founding fathers showed courage and took risks. Today these two qualities are still required, along with optimism and creativity. Let us have the courage to change, and let us have the courage to act!

Thank you for your attention!