Reform of the rules on distribution share splits

Working group for the operational implementation begins its task

With the adoption of the motion regarding agenda item 19, the 2020 GEMA Members' Assembly decided on a fundamental reorganisation of the distribution share rules.  In order to accompany the process of the operational implementation of the new rules, a technical working group made up of representatives of publishers and GEMA has been set up. The task of this working group is, in particular, to support the data reconciliation between the GEMA documentation and the IT systems of the publishers as well as to coordinate a smooth and seamless implementation of the new rules in the digital work registration process.

For this purpose, the working group mainly focusses on the two central elements of the new scheme which should be regarded separately in the technical implementation process:
 

  1. Enhancement and simplification of the free agreement on the share split within the performing rights area (AR)
    The new scheme makes it possible that the author shares in performing rights (AR) for all newly registered works can be integrated as standard into the work registration process. This new service is scheduled to be operationally introduced for our members as from 1 July 2021, via the work registration channels IWA, IWA web service and (partially) the CWR. 
     
  2. Introduction of a deduction logic
    The second element of the new scheme is the introduction of a deduction logic. This makes it possible to replace the current logic of the distribution plan with its roughly 1,500 different distribution keys for the various constellations of the participating parties by way of a few rules that logically build on one another in order to determine the distribution shares.  The deduction logic shall apply to the existing repertoire as well as all works that are newly registered. At this time, it is envisaged that it will be applied to the distribution dates from 1 June 2022.  The operational challenge for this changeover will mainly be the migration of the existing repertoire into the new share images.

 

Background

The enhancement and simplification of the free agreement on the share split in the performing rights (AR) and the introduction of a deduction logic are an important contribution for the sustainability of GEMA in the digital age. The new share rules simplify the GEMA distribution plan in a significant way and remedy existing inconsistencies. As a result, they entail a considerable gain in traceability, efficiency and transparency in the work documentation and distribution. At the same time, the new scheme also manages to bring GEMA closer to international standards, enabling it to secure and expand its leading market position (e.g. via cooperation initiatives such as ICE Copyright).
 

Progress report

After a kick off on 19 October, another meeting of the working group took place on 2 November.  In order to clarify open questions in preparation of the implementation, meetings of the working group were scheduled in a two-weekly cycle.

The focus of the coordination was the clarification of the administrative basic requirements for a successful implementation of the new scheme and rules, ensuring that the go live dates were feasible on the publishers’ side, and the technical implementation of the free agreement on the share splits in the various work declaration channels, especially the CWR.

We will inform you on any further activities of the working groups via this platform. You can send your questions about the activities of the working group at any time to this email address: neueanteilsregeln@gema.de.
 

Download further information

(With the exception of the Technical Specification on Agreed Shares in CWR2.1, the texts are in German)


Deviation Reports

Explanation of the Deviation Reports

Explanation of the contents of the individual columns

Comparison of old and new shares

Help with processing in Excel:
Excel template for processing the Deviation Reports
Instructions for converting the CSV format


General information on the reform of the rules on distribution share splits

Explanation of the reform: background, contents of the rules, advantages of the new system

Webinar: Information on the reform of the rules on distribution share splits (12 February 2021)

Information on the operational implementation of the resolution of the General Assembly 2020


CWR works registration channel

Technical Specification on Agreed Shares in CWR2.1

CWR Examples

 

FAQs and answers

Dates

For operational reasons, the new allocation rules cannot be implemented immediately: On the one hand, GEMA must adapt its IT systems to the new rules. On the other hand, publishers shall also be given the opportunity to adapt their own systems operationally to the new division rules in good time, and to align the changes in the GEMA system with their own data. Against this background, the following schedule has been set for the operational implementation:

  • The new system for notification of works with freely negotiated music and lyrics portions pursuant to § 191 para. 1 of the GEMA Distribution Plan shall be introduced from 1 July 2021.
  • The new allocation keys will be applied for distributions that take place at distribution dates from 1 April 2022.

In essence, the reform of the allocation rules is an adaptation of technical systems which is specifically designed to

  • keep the financial implications for entitled parties to a minimum and
  • avoid fundamental shifts between professional categories.

The quota of 64:36 the rules stipulate for the basic division between music and lyrics in the AR distribution categories (distribution categories of rights of communication to the public) is the result of a comprehensive projection calculated on the basis of these principles. The reform of the allocation rules is thus not expected to give rise to significant shifts between professional categories.

The projection suggests that individual authors too have to expect a reduction in revenue due to the reform only in very rare cases. The reform therefore includes a very comprehensive hardship provision: Each entitled party (author or publisher) who loses more than EUR 2,000 and more than 3% of their royalty income due to the reform shall be refunded 100% of this loss for three years (financial years 2021-2023). This provision allows for much greater protection than previous hardship provisions (e.g. under the reform of the distribution of broadcasting royalties).

In order to be able to assess the potential implications of the new allocation rules and to determine a quota for the basic division that does not affect income, a comprehensive projection was made on the basis of financial year 2018 in which the implications of the reform were evaluated for almost the entire GEMA repertoire. This projection took into account all distribution categories and all relevant combinations of shares, e.g.

  • Works without lyrics
  • Works including lyrics
  • Published, unpublished, partially published and split-published works
  • Combinations involving free (unassigned) authors
  • Participation of arrangers and lyrics adaptors of public-domain and copyright-protected works
  • Sub-published GEMA repertoire
  • Sub-authors

In principle, yes. The switch from the existing “pigeonhole scheme” to the “derived-shares scheme” requires a profound change in the IT systems that can only be made all in one go. GEMA cannot maintain the “pigeonhole scheme” for some works and introduce the “derived-shares scheme” for others.

The standard allocation keys according to the basic division shall therefore apply to all GEMA original works to which the quotas specified in the distribution plan have applied hitherto.

In respect of works for which the music and lyrics portions were freely negotiated in the past, the negotiated portions shall continue to apply without change. In respect of works notified on or after 1 January 1996, the option of freely negotiating the music and lyrics portions remains available as before.

It should be noted that the reform of the allocation rules has no or only minor implications in many respects (VR distribution categories (distribution categories of reproduction and distribution rights), sub-published repertoire, publisher’s share).

Existing rules:

  • The music and lyrics portions can be freely negotiated only for works of entertainment music, and only if they have a point value according to allocation key III no. 1, 3a or 3b. In other words, this possibility does in particular not apply to works of serious music and works of entertainment music with a higher point value.
  • In terms of administration, freely negotiated music and lyrics portions are a special case which always has to be processed manually. This makes the notification procedure complicated both for entitled parties and for GEMA. Online notification of works is not possible.
  • The time and effort involved is probably one of the reasons why the possibility to negotiate music and lyrics portions freely has so far hardly been used: Since 1996, the number of works notified with freely negotiated music and lyrics portions has not even reached 2,000.
     

New rules:

  • The music and lyrics portions can be freely negotiated for all newly notified works in all AR distribution categories.
  • Freely negotiated music and lyrics portions are technically easier to implement under the derived-shares scheme than what they used to be and can therefore be implemented as a standard into the online works notification process.
  • The intention is to make the process as user-friendly as possible for our members. To this end, we plan to include a kind of slider in the online form for notification of works via Internet that allows to enter freely negotiated music and lyrics portions. The basic division will only apply if this possibility is not used.

No, nothing will change for you. This also applies if you are the sole composer of a work and are published by one publisher.

The new share rules determine in the performing and broadcasting rights categories (AR) that the same shares between music and lyrics shall apply for all categories, i.e. 64% for all composers and 36% for all lyricists in the basic distribution split.  Parallel to that, the rule applies that composers and lyricists can freely agree upon their shares between music and lyrics, in which case a minimum of 35.2% must be allocated to the music share and a minimum of 19.8% to the lyrics share.

These freely agreed shares will also be applicable to all categories of the performing and broadcasting rights in line with the new scheme.
Under the old scheme, the so-called basic distribution split set a distribution split for unpublished works of 2/3 = 66.67% for the music share and 1/3 = 33.33% for the lyrics share.  Under the new basic distribution split, composers therefore receive 2.67% less and lyricists 2.67% more.  One exception occurs in the FS category: The old scheme provided for a 50% music and 50% lyrics split.  According to the new scheme the distribution split of 64% for the music share and 36% for the lyrics share shall now also apply to the FS category.

The basic distribution split between music and lyrics is referred to in cases where the quotas set by the GEMA distribution plan for the music and lyric shares are applied.  These are, according to the new scheme for the performing and broadcasting rights (AR) 64% for the music share and 36% for the lyrics share. In the mechanical rights (VR), 50% for the music share and 50% for the lyrics share.  In line with the GEMA distribution plan, shares between music and lyrics can be freely agreed upon, and can deviate from the basic distribution split for the AR categories.  In the VR categories, the basic distribution split shall always be applicable.