23 December 2016

Bundestag and Bundesrat agree to a reform of the publisher participation

In the last week of sessions held by the Bundestag and the Bundesrat in 2016, both houses adopted the amendment of the copyright contract law and the new regulations of the VGG [CMO Act] relating to publisher participation. By way of this legislative change, which GEMA had been supporting since the summer of 2016, a safe legal basis for publisher participation within GEMA is reinstated.
The text of the decision can be retrieved here. We assume that any further formalities relating to the law taking effect will now be swiftly fulfilled and the legislative reform will enter into force in the course of January 2017. The most important consequences of this legislative change are summarised for you below. What does the legislative change entail for future pay-outs by GEMA to publishers? The reformed regulation in Art. 27 para. 2 VGG means that payments to publishers for exploitation rights will, in future, be possible again based on the distribution plan irrespective of any specific provisions of the publishing agreement. The sole prerequisite is the mere existence of a valid publishing agreement for the work. Nevertheless, we recommend due to reasons of legal certainty that authors and publishers agree to a confirmation of the publisher participation and submit it to GEMA via the electronic confirmation process. A template of the confirmation declaration ( Convenience Translation – German version prevails - Do not sign) is available for download. Such confirmations do, however, not constitute a prerequisite for the future participation of a publisher. Should an author object the participation of a publisher for the future, the publishing share will be blocked for pay-out until the author and publisher have achieved clarity on whether a valid publishing agreement for the work has been signed. Art. 27A VGG provides in terms of the publisher participation in statutory remuneration entitlements that the author must expressly agree to the participation of the publisher after the publication of a work, or during the work registration process. Publishers now have to obtain the authors’ agreement for works that have already been registered. The electronic confirmation process mentioned above can be used for the latter, too. Only if the publisher participation is confirmed during the electronic confirmation process, will the publisher continue to participate in the statutory remuneration entitlements.

What does the legislative change entail for past pay-outs by GEMA to publishers? Since the legislative change does not affect the past, the past is governed by the previous legal situation, which the judgement of the Higher Regional Court on the publisher participation is based upon. This means that publishers may only keep the pay-outs received since July 2012 if the authors confirm this. For the purpose of such a confirmation, the template provided by GEMA of a confirmation declaration may also be used. Publishers need to submit the confirmation to GEMA in the course of the electronic confirmation process. Should the author not confirm the publisher participation, the payment must, in principle, be reversed, i.e. GEMA must reclaim the payments made to the publisher and pay to the author. More specific details on the exact procedure shall be determined after the electronic confirmation process has been concluded, at a later date. What are the consequences of the legislative change for the electronic confirmation process and the payment date 01/01/2017? In principle, nothing changes regarding the suggested procedure. The electronic confirmation process shall continue to be carried out. For the past overall and for future pay-outs for statutory remuneration entitlements, the process is indispensable as a payment basis. For future payments for exploitation rights, the process will - once the legislative change has been implemented - no longer be essential, but it is recommended to be continued as a precaution. The payment as of 01/01/2017 shall be carried out in the previously announced manner i.e. Full pay-out to authors and sister societies and, if the relevant minimum income is met, payments on account to publishers amounting to 60% for original repertoire and 80% on sub-published repertoire.