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Annual Report 

2006

2 GEMA ANNUAL REPORT 2006 

At a glance 

2004 2005 2006 

€ mill. € mill. € mill. 

Income 806.208 852.224 874.378 

Expenditure 116.030 120.339 121.673 

Amount available for distribution 690.178 731.885 752.705 

Cost rate 14.4 % 14.1 % 13.9 % 

On the assets side: 

Analysis by rights 

Performing, exhibition, broadcasting and 

public communication rights 377.975 385.048 396.886 

Reproduction rights 198.270 220.092 201.488 

incl. – from audio carrier licences 102.718 119.335 102.471 

– from other categories 95.552 100.757 99.017 

Royalty entitlements 39.785 39.876 41.638 

Collections 159.420 178.275 207.336 

incl. – from central licensing of 

audio and audiovisual carriers 89.818 102.665 119.971 

– for other authors’ societies 69.602 75.610 87.365 

Other income 30.758 28.933 27.030 

806.208 852.224 874.378 

Analysis by category 

Live music 73.515 77.344 79.212 

Sound movie 10.790 8.631 8.657 

Mechanical music 111.591 115.678 119.351 

Royalty entitlements under § 27 UrhG* 

Audio carrier and audiovisual carrier 

6.640 6.749 6.703 

reproductions 208.434 242.192 240.609 

Collections for other authors’ societies 38.611 43.003 52.786 

Royalty entitlements under § 54 UrhG* 33.145 33.127 34.935 

Radio and television 232.711 236.533 245.015 

Foreign countries 60.013 60.034 60.080 

Other income 30.758 28.933 27.030 

On the liabilities side: 

806.208 852.224 874.378 

Personnel costs 64.283 65.196 66.750 

Material costs 51.747 55.143 54.923 

* German Copyright Act 

116.030 120.339 121.673


Table of contents 

Foreword 4 

Honorary Members 6 

Honorary Presidents 6 

Board of Supervisors 7 

Executive Board 8 

Organisation Chart of GEMA 9 

International Organisations 10 

Report of the Executive Board 

Management Report 12 

Income, Expenditure – Development and Structure 18 

Distribution to Members and Other Rights Owners 21 

Staff 25 

Financial Statements 

Balance Sheet 27 

Income Statement 32

Dr. Harald Heker 

4 GEMA ANNUAL REPORT 2006 Foreword 

A fair relationship between music use 

and remuneration 

GEMA’s positive financial statements 

for 2006 demonstrate that the German 

authors’ society for music is operating 

successfully in an era of radical changes in 

the domestic and international music 

licensing markets, and is thereby administering 

the interests of all music authors 

and rights owners reliably. But we are 

increasingly concerned over last year’s 

widening gap between omnipresent music 

consumption and a lower rate of income 

development for music authors.There continues 

to be a clear imbalance between 

the steady increase in the uses of music 

and the problem at hand, namely the 

need to enforce equitable remuneration 

for the music authors for the quantitatively 

and qualitatively enhanced possibilities 

of music consumption. GEMA will 

always insist on highlighting how harmful 

this contradiction is for the music 

authors, for musical life, and for the entire 

musical business. The technical possibilities 

for the mass use of intellectual property 

must not end up forcing the special 

value of musical creativity into oblivion. 

Imaginative creators producing something 

original with their music have a right 

to fair compensation for their work. 

Financial year 2006 

In the past financial year 2006, GEMA 

was basically able to generate satisfactory 

economic results,even though the situation 

in the music business in Germany and 

Europe is still dominated by the negative 

trend in CD sales and by unsolved licensing 

problems in the field of Internet/online 

use of music.The 2.60 % increase in revenue 

must be considered insufficient, however, 

in light of the drastic increase in music 

uses in many segments, in particular in 

online business. GEMA’s total revenue 

for 2006 amounted to € 874.4 million, i.e. 

€ 22.2 million or 2.60 % higher than in the 

previous year. By the same token, GEMA 

operated efficiently and cost-consciously, 

so it was able to bring the cost rate below 

the 14 % mark to 13.92 % (compared to 

14.12 % in 2005). Thanks to these positive 

developments in income and expenses, 

the amount available for distribution rose 

by € 20.8 million, or 2.84 %, to € 752.7 

million altogether, and has therefore 

reached its highest amount ever. 

Revenue-generating segments at GEMA 

The figures for the domestic audiocarrier 

market show clearly that the drastic 

decline in the income of music authors 

in this area continued during the last 

financial year as well. Revenue dropped by 

€ 16.8 million (- 14.13 %) from € 119.3 million 

(in 2005) to € 102.5 million in 2006. 

So far, music authors have not partaken 

commensurately in the booming business 

of Internet music distribution. GEMA’s revenue 

figures here express this very clearly. 

In the areas of music downloads and 

ringtone melodies, GEMA revenue has 

declined from € 5.5 million (2005) to € 3.5 

million (2006). Because of the arbitration 

proceedings, € 6.3 million were deposited 

in an escrow account for ringtone melodies 

and € 2.5 million for music-on-demand. 

GEMA calls on sharehosters,Usenet access 

providers and Internet radio recording 

services not to shirk copyright responsibility 

for their offers and to enter into 

appropriate licensing agreements for the 

use of GEMA's repertoire. 

Total earnings in the field of radio and 

television climbed by 8.5 million, from 

€233.0 million for the financial year 2005,

5 GEMA ANNUAL REPORT 2006 Foreword 

to € 241.5 million for the financial year 

2006. This corresponds to an increase of 

3.63 %. GEMA improved the revenue situation 

in all segments. Following a slight 

decline in income from the private television 

licensing segment in 2005, the advertising 

market recovered somewhat, leading 

to growth in revenues of € 2.2 million. 

The increase in the public broadcasting 

licensing area was € 3.1 million. In 2006, 

this licensing segment once again reached 

the level of the boom years 2000/2001. 

This means that the losses sustained by 

the music authors in past years, in particular 

following the drop in advertising revenue, 

could be recovered. 

In the traditional sector of music usage, 

revenue increased in the financial year 

2006 mainly in the categories of light 

music (3.66 % up from the previous year at 

a total of € 65.9 million), communication 

of audio carriers and radio broadcasts 

(4.07 % up from the previous year at a total 

of € 94.6 million) and communication of 

television broadcasts (+31.05 % compared 

with the previous year at € 12.5 million in 

total). The sharp rise in the broadcasting 

of television programmes is largely due to 

the increase in broadcasts to the public 

during the 2006 Football World Cup in 

Germany. 

The competition challenge 

After the discontinuation of the nationally 

defined territories of administration 

for authors’ societies in Europe, GEMA 

successfully re-positioned itself in the 

new competitive situation for authors’ 

rights. Thus, the German authors’ society 

for music has taken on a leading role in 

the future market for cross-border licensing 

of digital music rights. On the basis 

of a recommendation by the European 

Commission in October 2005 on the crossborder 

licensing of online rights, GEMA is 

now awarding music licences Europewide 

in the online sector. In collaboration 

with the British MCPS/PRS Alliance, 

GEMA has set up CELAS (the Centralized 

European Licensing and Administration 

Service), a model licensing system for 

Europe.The first step,beginning in January 

2007, was GEMA’s Europe-wide licensing 

of the Anglo-American repertoire of EMI 

Music Publishing through CELAS as a onestop 

shop. 

GEMA has therefore accurately implemented 

the competitive situations in 

Europe’s music licensing business. Our 

strategy is geared towards optimising 

today’s core business, internationalising 

our administration of rights and providing 

new services.Thus, GEMA will continue to 

play its tried and true role as an internationally 

respected advocate of all music 

authors and rights owners. 

GEMA, the globally renowned German 

authors’ society for musical works, will 

continue taking advantage of the future 

competitive conditions in the international 

licensing business in the interest of 

music authors. The music markets will be 

changing; what will remain the same is 

the legitimate right claimed by creative 

music authors to a reasonable living from 

their work. By participating flexibly and 

prudently in the shaping of these changes 

in the interest of musically creative people, 

GEMA is living up to its mandate as 

an advocate of composers, lyricists and 

publishers. 

Harald Heker

6 

GEMA ANNUAL REPORT 2006 

Honorary Members 

Prof. Harald Banter 

Prof. Jürg Baur 

Prof. Christian Bruhn 

Klaus Doldinger 

Dr. Peter Hanser-Strecker 

Hans Hee 

Kurt Hertha 

Karl-Heinz Klempnow 

Prof. Dr. Hans Wilfred Sikorski 

Prof. Karl Heinz Wahren 

Hartmut Westphal 

Bruno Balz † 

Richard Bars † 

Prof. Werner Egk † 

Dr. Hans Gerig † 

Prof. Dr. Dr. h. c. Joseph Haas † 

Heinz Korn † 

Peter Jona Korn † 

Eduard Künneke † 

Dr. Willy Richartz † 

Prof. Dr. Georg Schumann † 

Günther Schwenn † 

Dr. Hans Sikorski † 

Dr. Dr. h. c. Ludwig Strecker † 

Honorary Presidents 

Prof. Dr. Reinhold Kreile 

Prof. Dr. jur. h. c. Erich Schulze

Prof. Christian Bruhn 

Frank Dostal (left), Karl-Heinz Klempnow (right) 


Board of Supervisors 

Chairman: Prof. Christian Bruhn 

Vice-Chairmen: Frank Dostal (from 28 June 2006) 

Hans Hee (up to 28 June 2006) 

Karl-Heinz Klempnow 

Prof. Gottfried Böttger (up to 28 June 2006) 

Burkhard Brozat (from 28 June 2006) 

Prof. Dr. Rolf Budde (from 28 June 2006) 

Klaus Doldinger 

Frank Dostal (up to 28 June 2006) 

Peter Ende 

Jörg Evers 

Egon L. Frauenberger (from 28 June 2006) 

Dr.Peter Hanser-Strecker (up to 28 June 2006) 

Prof. Klaus-Michael Karnstedt 

Rudolf-Günter Loose (up to 28 June 2006) 

Prof. Dr. Enjott Schneider 

Dagmar R. Sikorski 

Prof. Lothar Voigtländer (from 28 June 2006) 

Stefan Waggershausen 

Dr. Ralf Weigand 

Deputies: Burkhard Brozat (up to 28 June 2006) 

Egon L. Frauenberger (up to 28 June 2006) 

Dr. Peter Hanser-Strecker (from 28 June 2006) 

Frank Ramond (from 28 June 2006) 

Prof. Dr. h. c. Wolfgang Rihm 

Prof. Manfred Schoof 

Peter F. Schulz (up to 28 June 2006) 

Gabriele Schulze-Spahr 

Hans-Ulrich Weigel (from 28 June 2006) 

Legal advisor: Prof. Dr. Dr. Ernst-Joachim Mestmäcker 

(up to 31 December 2006)


Prof. Dr. Jürgen Becker 

Dipl.-oec. Rainer Hilpert 


Executive Board 

up to 31 December 2006: 

Spokesman of the Executive Board: Prof. Dr. Jürgen Becker 

Member of the Executive Board: Dr. Harald Heker 

Chief Financial Officer: Dipl.-oec. Rainer Hilpert 

from 1 January 2007: 

Chief Executive Officer: Dr. Harald Heker 

Executive Vice-President: Prof. Dr. Jürgen Becker 

Chief Financial Officer: Dipl.-oec. Rainer Hilpert

9 

GEMA ANNUAL REPORT 2006 

Organisation Chart of GEMA As of: 31.12.2006 

Field Service with 

Regional Offices 

General Meeting 

Executive Board Board of Supervisors 

Field Service 

Legal Affairs 

Communications and 

Public Relations 

Music Service 

Industrial 

Affairs 


Field Service 

Accounts 


Accounting 

Department I 

Documentation Membership Distributions 

Accounting 

Department II/ 

Foreign 

Accounts 

Dipl.- Oec. Rainer Hilpert 

Members’ 

Committees 

Data Protection Officer 

Collecting 

Mandates 

Delegate of the 

Executive Board for 

Distribution Issues 

General Administration 

Finance and 

Accounting 

GEMA Welfare Fund 

Board of Trustees 

Broadcasting 

and New Media 

Auditing and IT Controlling 

Personnel 

Welfare Fund 

IT and 

Organisation


International Organisations 

CISAC 

Confédération Internationale 

President: Prof. Christian Bruhn 

des Sociétés d’Auteurs 

et Compositeurs, Paris 

German member of the Board of Directors: 

German members of the International Council 

of Authors and Composers and of the 

International Council of Authors of Dramatic, 


Literary and Audiovisual Works: Prof. Christian Bruhn 

Hans Hee 

German member of the Legal Committee: Prof. Dr. Jürgen Becker 

Member of the Common Information System 

Supervisory Board (CSB): Prof. Dr. Michael Karbaum 

BIEM Honorary Presidents: Prof. Dr. Reinhold Kreile 

Bureau International des Prof. Dr. jur. h. c. Erich Schulze 

Sociétés gérant les Droits Prof. Dr. Hans Wilfred Sikorski 

d’Enregistrement et de 

Reproduction Mécanique, President of the Management Board: Prof. Dr. Jürgen Becker 

Paris 

Vice-President of the General Meeting: Karl-Heinz Klempnow 

German delegates to the General Meeting: Prof. Christian Bruhn 

Hans Hee 

GESAC Vice-President: Prof. Dr. Jürgen Becker 

Groupement Européen des 

Sociétés d’Auteurs et 

Compositeurs, Brussels

Report of the Executive Board 

Management Report 

Income, Expenditure – Development and Structure 

Distribution to Members and Other Rights Owners 

Staff

12 GEMA ANNUAL REPORT 2006 Report of the Executive Board 

Management Report 

1. Course of business in 2006 

1.1. According to provisional figures released 

by the Federal Statistical Office, overall 

economic development for 2006 in the 

Federal Republic of Germany proved to be 

much better than originally forecast. In 

real terms, the gross national product 

expanded by 2.7 %, which was the highest 

rate of growth since 2000. After it had 

been widely reported in the last few 

months that the improved economic 

trend was also due to consumers anticipating 

the forthcoming increase in 

value-added tax by 3 percentage points on 

1 January 2007, the figures now published 

have shown that exports were still the driving 

force with an increase of 12.5 %. 

Private consumption, on the other hand, 

is only 0.8 % up on 2005. Neither does the 

still high saving rate of 10.5 % (2005:10.6 %) 

imply that the domestic economy is experiencing 

decisive impetus towards expansion. 

However, the positive balance for the 

year 2006 was also influenced by the fact 

that,at 9.6 %,unemployment in December 

2006 was well below the previous year’s 

level of 11.1 %. And the net new public debt 

of the local and regional authorities (1.7 % of 

the gross national product) was also substantially 

down on the previous year, so that 

the Maastricht criteria could once more be 

complied with for the first time in 5 years. 

In Germany as well as in the international 

sector, the situation in the music industry 

in the financial year 2006 was still overshadowed 

by the negative trend in CD sales 

on the one hand and by the unsolved licensing 

problems in the field of Internet/online 

music usage on the other.The trend towards 

mergers and sales continued not only 

among the major music groups but also 

with smaller labels and publishing houses. 

During the year under review, there were 

in particular reports of takeover talks by 

EMI and Warner, which are currently 

expected to continue. In concrete terms, 

BMG-Musikverlag was sold to Universal. 

The overall picture for the financial year 

2006 can on the whole be described as 

very satisfactory, since revenue is well up 

on the actual figures for 2005 and also 

above the estimates for 2006. When 

drawing a comparison with the previous 

year, it should be noted that in the financial 

year 2005 the revenues of the Industrial 

Affairs Department had been positively 

influenced by the release of accruals 

to the tune of € 16 million, which it had 

been necessary to form in 2004 for the 

still pending arbitration proceedings with 

IFPI. A comparison with 2005 therefore 

shows a plus for all collection categories, 

with the exception of Industrial Affairs 

with a minus of € 2.8 million. Expenditure 

is also well below the budgeted value and 

increased at a slower rate than income. 

Personnel costs only went up by € 1.6 million 

compared with the actual figures 

for 2005; this amount includes the accruals 

to be created for compensation payments 

and unscheduled subsequent payments 

for the Pensions-Sicherungs-Verein 

(Pension Security Association). After allowing 

for these two positions, the increase 

in personnel expenses amounts to € 0.4 

million. 

1.2. Income from copyright licences and 

royalty entitlements 

The total income from copyright licences 

and royalty entitlements amounted to 

€ 847.348 million during the year under 

review including € 1.780 million compensation 

in lieu of licences.The compensation 

in lieu of costs of € 1.915 million is shown 

under Other Income. Income in 2006, 

which amounted to € 847.348 million, 

is € 24.057 million higher than the previous 

year’s amount of € 823.291 million 

(of which € 5.150 million was compensation 

in lieu of licences). 

Income in detail:

Income from copyright licences and 

from royalty entitlements 

13 

GEMA ANNUAL REPORT 2006 Report of the Executive Board Management Report 

2005 2006 Difference 

€ mill. € mill. € mill. 

a) Income from the administration of performing, exhibition, 

broadcasting and public communication rights 385.048 396.886 + 11.838 

including compensation in lieu of licences 

b) Income from the administration of 

5.150 1.780 - 3.370 

reproduction rights 220.092 201.488 - 18.604 

c) Income from royalty entitlements 

including – under § 27 Copyright Act 

39.876 41.638 + 1.762 

(rental and lending rights) 

– under § 54 Copyright Act 

6.749 6.703 - 0.046 

(private copying) 

d) Income from the administration of 

33.127 34.935 + 1.808 

collecting rights 178.275 207.336 + 29.061 

including – for other collecting societies 

– from the central licensing of 

audio and video carriers (sales 

75.610 87.365 + 11.755 

territory abroad) 102.665 119.971 + 17.306 

823.291 847.348 + 24.057 

Revenue from the administration of 

performing, exhibition, broadcasting and 

public communication rights amounting 

to € 396.886 million (previous year: 

€ 385.048 million) includes the royalties 

from the regional cable companies KDG, 

ish, iesy and Kabel Baden-Württemberg 

for the use of musical cable retransmission 

rights for the year 2006 amounting to 

€ 10.314 million (previous year: € 10.314 

million). 

GEMA also licensed to the regional 

cable companies the cable retransmission 

rights of other rights owners, which had 

mandated GEMA to this effect, for these 

periods. Essentially, mandates had been 

received from the collecting societies 

VG WORT, GVL, VG Bild-Kunst, AGICOA 

GmbH, VFF, VGF and GÜFA. The royalties 

for licensing these rights totalled € 31.804 

million (previous year: € 29.950 million). 

The agreements with the regional cable 

companies expired at the end of 2006. 

So far, the working meetings and negotiations 

that have been in progress since 

the autumn of 2005 have not produced 

any results. 

1.3. Interest income and income from 

securities 

Income increased by € 1.339 million from 

€ 12.785 million to € 14.124 million. 

1.4. Expenses 

Personnel and material costs developed 

as follows over the last two years: 

Expenses 

2005 2006 

€ mill. € mill. 

Personnel costs 65.196 66.750 

Material costs 55.143 54.923 

Total 120.339 121.673 

1.4.1. In the past ten years the number of 

employees has decreased from 1,211 to 

1,128 (- 7 %). Over the same period, GEMA’s 

income rose from € 729.540 million to 

€ 874.378 million (+ 20 %). The number of 

GEMA members and rights owners has 

increased by 33 % during these 10 years, 

namely from 47,235 on 31 December 1997 

to 62,690 on 31 December 2006. 

In the 2006 calendar year, the number 

of permanent employees increased by 7 

from last year’s level,i.e.from 1,049 to 1,056. 

1.4.2. The year under report was once 

again marked by extensive project and 

system work.

14 GEMA ANNUAL REPORT 2006 Report of the Executive Board Management Report 

The data migration and program porting 

tasks for the IT systems running under 

the mainframe system were completed by 

the end of 2005, so that now all the operational 

IT applications are uniformly run 

on Unix servers with the Oracle database 

system under the Solaris operating system. 

A new operator agreement was concluded 

with the current computing centre 

service provider SBS (Siemens Business 

Services) for a further five years starting in 

February 2006. 

The contractual negotiations for the 

implementation of the newly designed 

field service system (AS/AIDA) were completed 

in January 2006 with the commissioning 

of T-Systems. Implementation of 

the software is scheduled for the end of 

2007 and will take place over 8 milestones. 

Each milestone has a testable software 

version with new functions added, which 

is checked against the fine concept by 

GEMA’s staff in a results and function test, 

and the expected results are verified on 

the basis of predefined test cases and test 

data. In the year under report, all the contractually 

fixed services of T-Systems and 

all the contributory services of GEMA were 

performed on time and to the requisite 

quality. 

In order to be able to set the debit balances 

of the members’ accounts to zero 

more promptly, default reminder functions 

and a direct debit facility were added 

to the membership accounting system 

commissioned in 2005. The first written 

reminders were sent out in November 2006. 

Within the scope of the Document 

Management System ( DMS) ( = optical 

archive) the “work files” could be realised 

and the documents (notification forms, 

correspondence, etc.) migrated from the 

forerunner system. To archive the documents 

from the licensing transaction for 

the mechanical right, the “Licensee File 

Industrial Affairs” was created. In order to 

guarantee verifiability in the case of claims, 

all relevant documents will in future be 

linked via a transaction number. These 

additions to the optical archive will be 

completed in the course of the year. 

On 1 January 2006, the new IT system 

for accounting for usage of works abroad 

was commissioned. This new system 

called SCALA will enable the accounts 

prepared by sister societies to be tested 

and processed more cost-effectively and 

to a better quality. 

A licence accounting system for special, 

manually handled usages still existed 

from vinyl record days. This mainframebased 

EDP system was superseded in May 

2006 by a new browser-based system. 

In April 2006, a new facility was added 

to GEMA’s website in the form of the 

Licensing Shop. It enables the largely automated 

licensing of webradio, Podcasting 

and members’ websites. In future the 

Licensing Shop will form the basis for further 

flat-rate, non-work-related licensing 

of usages in the private sector. 

Shortly before the end of the year, 

GEMA’s Internet services were extended 

to include ILTIS, a facility for conducting 

searches for audio and audiovisual carrier 

data. ILTIS limits the scope of the data to 

the requirements of the defined user 

groups (central licensing partners, sister 

societies, public users). 

Beginning in July 2006, the draft, concept 

and implementation of an IT system 

not dependent on GEMA procedures were 

drawn up for the Pan-European licensing 

of online uses of EMI’s English-language 

repertoire (Sirocco, CELAS). This system 

covers all aspects of the collective administration 

business, from documentation 

of the relevant works, examination and 

handling of the uses notified by the 

providers, calculation and distribution of

15 


the royalties all the way to the subsequent 

booking procedures. In future, it will be 

possible to use the concept of this special 

IT system also for similar internal GEMA 

processes. 

2. Anticipated economic 

development 

According to present forecasts, the 

gross national product of the Federal 

Republic of Germany can be expected to 

expand by about 2 % in 2007; growth will 

therefore not be quite as high as in 2006. 

Due to the 3 % increase in value added tax, 

economic activity is not likely to be stimulated 

by private consumption in 2007 

either. 

The music industry also expects sales 

to stabilise over 2007 as a whole, especially 

with the prospect of the still 

unsolved licensing problems in the online 

sector. GEMA therefore anticipates that 

total revenues will stabilise compared 

with the previous year and that the cost 

rate will remain below the 15 % mark following 

the disappearance of the one-off 

and special revenues. IT investments will 

stay roughly at the same level as last year. 

It is still too early to evaluate the 

implications of the Statements of Objections 

notified by the European Commission 

to CISAC, GEMA and the sister societies 

in 2006; intensive negotiations are 

being held with the European Commission 

with a view to reaching a mutual 

agreement. Only then will it be possible 

to judge whether the case will have to be 

brought before the European Court of 

Justice. 

GEMA has founded a joint venture with 

EMI and MCPS/PRS (CELAS GmbH with 

registered office in Munich) for the online 

licensing of the Anglo-American repertoire 

of EMI. 

3. Legal developments 

3.1. New version of the EU Television 

Directive 

On 13 December 2006, the European 

Parliament adopted a proposal for an 

amendment to the “Television without 

Frontiers” Directive 89/552/EEC in first 

reading. 

3.2. New version of the Directive on 

Rental and Lending Rights 

For reasons of transparency and clarity, 

the Rental and Lending Rights Directive 

92/100/EEC of 19 November 1992 was 

recodified in 2006. This did not, however, 

involve any fundamental changes to its 

provisions. 

3.3. Services Directive 

On 12 December 2006, the European 

Parliament and the Council of the European 

Union adopted the Services Directive. The 

Directive standardises the principle of the 

freedom to provide services (Art. 16 of the 

Directive), which states that the target 

country may not on principle impose any 

restrictions on the service providers, unless 

they are justified for reasons of public 

policy, public security, public health or 

the protection of the environment. It is 

unclear whether the Services Directive 

also applies to collecting societies. 

3.4. “Cannes Extension Agreement” 

Proceedings instituted by the Commission 

regarding a possible violation by the 

“Cannes Extension Agreement” against 

Art. 81 EC Treaty were terminated in 

October 2006 by pledges on the part of 

the contracting parties pursuant to Art. 9

16 GEMA ANNUAL REPORT 2006 Report of the Executive Board Management Report 

of the Regulation (EC) No. 1/2003 (Council 

Regulation on the implementation of the 

rules on competition laid down in Articles 

81 and 82 of the Treaty). 

3.5. Recommendation on reform of the 

copyright levies on hardware and blank 

media 

In October 2006, the European Commission 

presented the draft for a recommendation 

to reform the copyright levies 

on hardware and blank media.The recommendation 

covered provisions for further 

defining the limitation in Art. 5 (2) b of 

Directive 2001/29/EG dated 22 May 2001 

in favour of private copying. In view of its 

potential negative impact for European 

authors and cultural diversity, the draft 

recommendation had provoked great resistance. 

For this reason, the Commission 

decided in December 2006 to defer adoption 

of the recommendation. 

3.6. Amendment of the German 

Copyright Act 

The wording of Art. 26 of the German 

Copyright Act (droit de suite) has been 

changed by the Fifth Act Amending the 

German Copyright Act (UrhG) dated 10 

November 2006. 

3.7. Draft of a Second Law to Regulate 

Copyright in the Information Society – 

“Second Basket” 

The so-called “Second Basket” is to 

implement the non-mandatory parts of 

the “Directive on the Harmonisation of 

Certain Aspects of Copyright and Related 

Rights in the Information Society” dated 

22 May 2001. In 2006, a second ministry 

draft and a government bill were submitted 

on 3 January 2006 and 22 March 2006 

respectively. The government bill was the 

subject of hearings in the Legal Affairs 

Committee of the German Bundestag on 

8 November and 20 November 2006. The 

provisions of the bill, in particular those on 

private copying, are still a matter of controversy. 

The legislative process could not 

be completed in 2006. 

3.8. Court Rulings 

3.8.1. European Court of Justice 

a) In its decision of 1 June 2006, Case 

No. C-169/05, the European Court of 

Justice (ECJ) interpreted Article 9 (2) of 

Council Directive 93/83/EEC dated 27 

September 1993 (Cable and Satellite 

Directive). Under this Directive, a collecting 

society, which is deemed to be mandated 

to administer the rights of a copyright 

owner or holder of related rights, 

which has not transferred the management 

of their rights to a collecting society, 

is also entitled to exercise the right of this 

owner, to grant the authorisation for cable 

retransmission of a broadcast to a cable 

company or to refuse such authorisation. 

As a consequence, the administration of 

the rights of the holder by this society is 

not limited to the financial aspects of 

these rights. 

b) In the legal dispute between the 

Spanish collecting society SGAE and a 

Spanish hotel chain, the ECJ decided by 

the preliminary reference procedure with 

its ruling dated 7 December 2006, Case 

No. C-306/05, that the private character of 

hotel rooms did not rule out the possibility 

of the communication of works in these 

rooms being a “communication to the public” 

within the meaning of the Directive. 

3.8.2. German Federal Constitutional Court 

In its decision of 22 August 2006, Case

17 


No. 1 BvR, the Federal Constitutional Court 

(BVerfG) held that the rulings of the 

German Federal Court of Justice (BGH) on 

the inheritability of pecuniary components 

of the moral rights of authors were 

not contrary to the fact that the courts 

must respect law and order. 

3.8.3. German Federal Court of Justice 

a) With regard to the decision of 

the BVerfG referred to under 3.8.2, the 

Federal Court of Justice had, in its ruling 

of 5 October 2006, Case No. I ZR 277/03, 

already imposed a time limit on pecuniary 

claims in the case of violation of the postmortal 

moral rights of authors, to the 

effect that such claims end 10 years after 

the death of the author. 

b) The Federal Court of Justice has 

decided that the first recording of a concert 

by way of filming should not be classified 

as an arrangement, but only as a 

reproduction. The Court of Justice has 

ruled that, where the filming takes place 

within the scope of a co-production within 

the meaning of Art. 1 i (3) of GEMA’s 

Deed of Assignment (decision of 19 

January 2006, Case No. I ZR 5/03, Alpine 

Symphony), the rights owners are vested 

with the right in this first reproduction. 

3.8.4. Arbitration Board at the German 

Patents and Trademarks Office 

In the General Agreement proceedings 

of BITKOM vs. GEMA, Case No. 44/03, the 

Arbitration Board on 24 October 2006 

submitted its decision regarding the 

Royalty Rates Schedule VR-OD 1 for the 

downloading of musical works for use as 

ringtone melodies. The settlement proposal 

dated 24 October 2006 proposed 

10.45 % of the net end-user price as an 

equitable remuneration. No objection to 

this settlement proposal was filed. 

3.9. Statement of Objections by 

DG Competition 

On 31 January 2006, the European 

Commission had sent GEMA a letter with 

its Statement of Objections. A similarly 

worded communication was also received 

by CISAC and all the other collecting societies 

in EU and EEA states that administer 

performing rights in musical works. 

The Statement of Objections threatened 

a decision by the Commission under Art. 

7 (1) of Regulation (EC) No. 1/2003 (Council 

Regulation on the implementation of the 

rules on competition laid down in Articles 

81 and 82 of the Treaty). Such a decision 

would mean that the European Commission 

would prohibit GEMA and the other 

collecting societies concerned from 

exercising the practices specified in the 

Statement of Objections and impose fines 

on them. 

GEMA has submitted a written response 

to the Statement of Objections. Within 

the scope of a 3-day hearing in June 2006, 

CISAC and the collecting societies concerned 

were given the opportunity to 

make a oral statement on the points 

objected to. Following the hearing, a 

working group consisting of representatives 

of CISAC and the collecting societies 

concerned opened negotiations with a 

working group formed by the Commission 

with a view to reaching a decision under 

Art. 9 (1) of Regulation (EG) No. 1/2003 in 

the form of a so-called commitment. The 

subject of such a commitment is the offer 

made by the organisations in question to 

enter into obligations capable of overcoming 

the reservations notified by the 

Commission in the Statement of Objections. 

No agreement could be reached 

with the Commission in 2006 about the 

content of such a commitment.

Breakdown of revenues 

into expenses and 

amount available for 

distribution 

€ mill. 

800 

700 

600 

500 

400 

300 

200 

100 


0 

Income, Expenditure – 

Development and Structure 

13.5% 

86.5% 

Revenues 

Expenses 

Amount available 

for distribution 

13.8% 

86.2% 

14.8% 14.6% 

85.2% 

85.4% 

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 

€ mill. € mill. € mill. € mill. € mill. € mill. € mill. € mill. € mill. € mill. 

Revenues 729.5 748.9 774.4 801.4 810.5 812.5 813.6 806.2 852.2 874.4 

Expenses 98.5 103.4 114.9 116.9 117.9 118.7 119.4 116.0 120.3 121.7 

Amount available 

for distribution 631.0 645.5 659.5 684.5 692.6 693.8 694.2 690.2 731.9 752.7 

Cost rate 13.5 % 13.8 % 14.8 % 14.6 % 14.5 % 14.6 % 14.7 % 14.4 % 14.1 % 13.9 % 

14.5% 

85.5% 

14.6% 

85.4% 

14.7% 

85.3% 

14.4% 

85.6% 

14.1% 

85.9% 

13.9% 

86.1%

Radio and television 28.02 % 

€ 245.015 mill. 

[a] Radio and television 

Broadcasting and cable 

retransmission rights and 24.07 % 

rights of reproduction € 210.437 mill. 

[b] Collections 3.63 % 

Cable retransmission € 31.803 mill. 


Advertising € 1.575 mill. 


Europe I € 1.200 mill. 

Mechanical music 13.65 % 

€ 119.351 mill. 

Live music 9.06 % 

€ 79.212 mill. 

Foreign countries 6.87 % 

€ 60.080 mill. 

Sound movie 0.99 % 

€ 8.657 mill. 

Other income 3.09 % 

€ 27.030 mill. 

Collections for other 6.04 % 

authors’ societies € 52.786 mill. 

Audiovisual and audio 27.52 % 

carrier industry in total € 240.609 mill. 

[c] PHO VR 12.32 % 

€ 107.710 mill. 

BT VR 1.09 % 

€ 9.556 mill. 

[d] Online 

Ringtone melodies 0.08 % 

€ 0.711 mill. 

Other online 0.31 % 

€ 2.661 mill. 

[e] Central licensing 13.72 % 

Foreign sales territory € 119.971 mill. 

* German Copyright Act 



Income 2006 

Royalty entitlements 4.00 % 

under § 54 UrhG* € 34.935 mill. 

Private copying 1.46 % 

Audio € 12.757 mill. 

Private copying 2.54 % 

Video € 22.178 mill. 

Royalty entitlements 0.76 % 

under § 27 UrhG* € 6.703 mill. 

Rental and lending 0.00 % 

Audio € 0.011 mill. 

Rental and lending 0.73 % 

Video € 6.418 mill. 

Library royalties 0.03 % 

€ 0.274 mill. 

Total € 874.378 mill. 

[e] 

[a] 

[d] 

[c] 

[b]

Personnel costs 54.86 % 

€ 66.750 mill. 

[a] Salaries and wages € 48.977 mill. 

[b] Pensions € 7.032 mill. 

[c] Social expenses € 10.741 mill. 

Taxes 0.34 % 

€ 0.413 mill. 

Depreciation 5.69 % 

€ 6.918 mill. 

Other expenses 39.11 % 

€ 47.592 mill. 

[d] Third-party IT services € 9.869 mill. 

[e] Reorganisation 

measures € 1.431 mill. 

[f] Information and 

communications 

costs € 6.712 mill. 

[g] Office equipment € 1.893 mill. 

[h] Incidental 

collection costs € 15.921 mill. 

[i] Administration € 4.963 mill. 

[j] Financial expenses € 0.157 mill. 

[k] Other € 6.646 mill. 

Total € 121.673 mill. 



Expenditure 2006 

[k] 

[j] 

[i] 

[h] 

[a] 

[g] 

[f] 

[e] 

[d] 

[b] 

[c]

Under its Statutes, GEMA is granted the 

mandate to administer authors’ rights 

as trustee and may not make any profit. 

After deducting expenses, all revenues 

are distributed to the members and 

other rights owners. The amount available 

for distribution is shown below: 

Income € 874.378 mill. 

./. Expenses € 121.673 mill. 

€ 752.705 mill. 

This amount is transferred to the distribution 

accrual, thus giving the following 

picture in the various individual sectors: 

Performing, exhibition, 

broadcasting and public 57.20 % 

communication rights € 430.585 mill. 

[a] Germany € 315.991 mill. 

[b] Foreign countries € 39.263 mill. 

[c] Collections € 75.331 mill. 

Europe I 0.16 % 

€ 1.200 mill. 

Reproduction rights 42.64 % 

€ 320.920 mill. 

[d] Germany € 179.875 mill. 

[e] Foreign countries € 18.821 mill. 

[f] Collections € 122.224 mill. 

incl. foreign countries € 119.885 mill. 

Germany € 2.339 mill. 


Distribution to Members and 

Other Rights Owners 

[b] 

[c] 

[a] 

[d] 

[e] 

[f]

Members by groups 

Authors 

incl. composers 

lyricists 

Publishers 

Successors in title 

Total 

Members 

60,000 

58,000 

56,000 

54,000 

52,000 

50,000 

48,000 

46,000 

44,000 



Development and Structure of members 

Successors in title 

Publishers 

Authors 

full 

2,023 

428 

470 

32 

2,953 

5,978 

61,942 

3,408 

4,746 

53,788 

62,690 

3,472 

4,850 

54,368 

2005 2006 

31.12.2005 31.12.2006 

extraordinary 

288 

37 

6,303 

affiliated total 

45,359 

3,988 

3,339 

52,686 

53,788 

4,746 

3,408 

61,942 

full 

2,059 

427 

481 

33 

3,000 

extraordinary 

6,010 

276 

33 

6,319 

affiliated total 

45,872 

4,093 

3,406 

53,371 

54,368 

4,850 

3,472 

62,690

Members 

4,000 

3,500 

3,000 

2,500 

2,000 

1,500 

1,000 

500 

23 

0 

GEMA ANNUAL REPORT 2006 Report of the Executive Board 


New members admitted 

Publishers 

Authors 

2,413 

189 

2,224 

Authors 

(composers and lyricists) 2,224 2,067 

Publishers 189 188 

Total 2,413 2,255 

2005 

2,255 

188 

2,067 

The increase in total membership of 748 compared with the previous year is set 

off against 2,255 new admissions. The difference results from cases of terminated 

membership and early resignations. 

2006 

2005 2006

Revenue from sister 

societies 

Distributions to sister 

societies 

Distributions to special 

subpublisher accounts 



€ mill. 

220 

200 

180 

160 

140 

120 

100 

80 

60 

40 

20 

0 

Transactions with foreign countries 

(where distributions to sister societies abroad and subpublishers are affected) 

57.974 

220.593 

122.975 

97.618 

53.585 

209.376 

112.484 

96.892 

51.460 

207.865 

104.047 

103.818 

51.857 

220.090 

112.343 

107.747 

52.114 

2002 2003 2004 2005 2006 

214.435 

108.079 

106.356


Staff 

1,200 

1,000 

800 

600 

400 

200 

0 

Staff 

male 

female 

1,113 

336 

777 

780 

2004 2005 2006 

Employment contracts for 

an indefinite period 

Full-time staff: female 565 553 550 

male 279 282 283 

844 835 833 

Part-time staff 

Part-time employees approaching 

126 137 141 

retirement 38 43 40 

Trainees 29 34 42 

713 members of staff attended GEMA’s 

seminars as well as other job-related 

courses. 

1,122 

1,128 

31.12.2004 31.12.2005 31.12.2006 

1,037 1,049 1,056 

Employment contracts for 

a fixed period 

76 73 72 

Total 1,113 1,122 1,128 

346 

776 

348 

28 members of staff had completed 10 

years of service with GEMA and 32 had 

completed 25 years of service.

Financial Statements 

Balance Sheet at 31 December 2006 

(73rd Financial Year) 

Income Statement 

for the period from 

1 January to 31 December 2006

Assets 

I. Fixed assets 

II. Current assets 

III. Prepaid expenses 

IV. Receivables held in trust 

27 

GEMA ANNUAL REPORT 2006 Financial Statements 

Balance Sheet at 31 December 2006 (73 rd Financial Year) 

as per 31.12.2006 as per 31.12.2005 

€ € € 

1. Intangible assets 

a) Software 16,056,310.76 

b) Payments on account 4,489,678.34 20,545,989.10 21,439,908.51 

2. Tangible assets 

2.1 Land, land rights and 

buildings 

a) Land 11,763,701.33 

b) Buildings 39,777,343.55 

c) Fixtures in third-party buildings 0.00 

d) Buildings on third-party land 

2.2 Other equipment, operating and office 

equipment 

0.00 

51,541,044.88 

a) Office fittings 846,741.15 

b) Operating equipment 403,537.50 

c) Office equipment 1,555,613.45 

d) Operating devices for IT systems 

2.3 Payments on account and assets 

817,971.15 

3,623,863.25 

under construction 0.00 55,164,908.13 55,950,354.08 

3. Financial assets 

Investments 52,277.71 38,663.80 

75,763,174.94 77,428,926.39 

1. Loans 

Members 180,902.50 180,503.23 

2. Receivables 

a) Members from advance payments 73,320,925.45 

b) Foreign societies 71,027,468.63 

c) Industry 51,646,549.58 

d) Broadcasting companies 20,341,138.13 

e) Music event organisers 41,277,991.91 

f) Other 12,804,368.93 270,418,442.63 294,416,083.75 

3. Securities 171,815,950.00 175,258,750.00 

4. Bank balances 

a) Time deposits 293,739,090.26 

b) Other 12,953,846.38 306,692,936.64 252,799,395.63 

5. Postal giro balances 93,671.74 198,183.34 

6. Cash-in-hand 26,286.24 46,944.56 

749,228,189.75 722,899,860.51 

113,218.65 130,892.21 

2,023,439.75 1,827,892.49 

827,128,023.09 802,287,571.60 

Receivables from guarantees resulting from credit orders for members 0.00 0.00

V. Deferred income 

28 

GEMA ANNUAL REPORT 2006 Financial Statements 

Liabilities as per 31.12.2006 as per 31.12.2005 

I. Equity and reserves 

II. Accruals for distribution 

III. Other accruals 

IV. Liabilities 

VI. Trustee liabilities 

€ € € 

0.00 0.00 

1. from performing, exhibition, broadcasting 

and public communication 

rights and royalty entitlements 

a) Germany 327,935,298.70 

b) Collections 10,658,331.24 

c) Foreign countries 63,891,636.91 402,485,266.85 388,420,019.76 

2. from reproduction rights 

and royalty entitlements 

a) Germany 182,961,208.47 

b) Collections 20,505,394.95 

c) Foreign countries 44,478,101.16 247,944,704.58 242,433,053.36 

3. Other 

a) Europe I 0.00 

b) Other 0.00 0.00 0.00 

650,429,971.43 630,853,073.12 

104,145,421.90 101,742,949.70 

1. Liabilities to banks 0.00 1,000,000.00 

2. Other liabilities 

a) from distributed royalties 

with respect to members 9,154,674.21 

with respect to foreign 

societies 11,728,650.36 

b) from advance payments of 

music event organisers 2,078,563.48 

c) Other 45,994,978.56 68,956,866.61 65,311,550.85 

68,956,866.61 66,311,550.85 

1,572,323.40 1,552,105.44 

2,023,439.75 1,827,892.49 

827,128,023.09 802,287,571.60 

Liabilities from guarantees resulting from credit orders for members 0.00 0.00

Re Assets 

i. Fixed assets 

29 GEMA ANNUAL REPORT 2006 Financial Statements 

Balance Sheet at 31 December 2006 (73 rd Financial Year) 

Costs of purchase and manufacture 

Balance 01.01.2006 Additions Disposals Transfers Balance 31.12.2006 

I. Intangible assets € € € € € 

1. Concessions, industrial and similar 

rights and assets and licences in 

such rights and assets 41,940,367.83 696,476.75 70,762.62 1,785,440.10 44,351,522.06 

2. Payments on account 3,465,440.10 2,809,678.34 0.00 -1,785,440.10 4,489,678.34 

II. Tangible assets 

45,405,807.93 3,506,155.09 70,762.62 0.00 48,841,200.40 

1. Land, land rights and buildings, 

including buildings on 

third-party land 

2. Other equipment, operating 

66,819,649.23 13,940.60 0.00 368,614.75 67,202,204.58 

and office equipment 13,208,695.52 1,370,936.22 1,177,981.58 0.00 13,401,650.16 

3. Low-value assets 

4. Payments on account and assets 

78,607.09 68,402.35 79,390.71 0.00 67,618.73 

under construction 86,733.53 281,881.22 0.00 -368,614.75 0.00 

III. Financial assets 

80,193,685.37 1,735,160.39 1,257,372.29 0.00 80,671,473.47 

Investments 38,663.80 13,613.91 0.00 0.00 52,277.71 

38,663.80 13,613.91 0.00 0.00 52,277.71 

Total 125,638,157.10 5,254,929.39 1,328,134.91 0.00 129,564,951.58

Cumulative depreciation 


Balance 01.01.2006 Additions Disposals Transfers Balance 31.12.2006 

€ € € € € 

23,965,899.42 4,400,074.50 70,762.62 0.00 28,295,211.30 

0.00 0.00 0.00 0.00 0.00 

23,965,899.42 4,400,074.50 70,762.62 0.00 28,295,211.30 

14,678,940.08 982,219.62 0.00 0.00 15,661,159.70 

9,485,784.12 1,467,866.64 1,175,863.85 0.00 9,777,786.91 

78,607.09 68,046.17 79,034.53 0.00 67,618.73 

0.00 0.00 0.00 0.00 0.00 

24,243,331.29 2,518,132.43 1,254,898.38 0.00 25,506,565.34 

0.00 0.00 0.00 0.00 0.00 

0.00 0.00 0.00 0.00 0.00 

48,209,230.71 6,918,206.93 1,325,661.00 0.00 53,801,776.64 

Book values 

Balance 31.12.2005 Balance 31.12.2006 

€ € 

17,974,468.41 16,056,310.76 

3,465,440.10 4,489,678.34 

21,439,908.51 20,545,989.10 

52,140,709.15 51,541,044.88 

3,722,911.40 3,623,863.25 

0.00 0.00 

86,733.53 0.00 

55,950,354.08 55,164,908.13 

38,663.80 52,277.71 

38,663.80 52,277.71 

77,428,926.39 75,763,174.94

Re Liabilities 

II. Accruals for distribution 


Balance Distribution for Advance Increase Balance Balance 

01.01.2006 2005 and earlier distribution 2006 2006 31.12.2006 31.12.2006 

II. Accruals € € € € € € 

1. from performing, exhibition, broadcasting 

and public communication 

rights and royalty entitlements 

a) Germany 317,755,165.40 299,153,409.33 6,657,839.61 315,991,382.24 327,935,298.70 

b) Collections 9,316,447.94 14,829,036.84 59,160,407.39 75,331,327.53 10,658,331.24 

c) Foreign countries 61,348,406.42 36,719,290.16 0.00 39,262,520.65 63,891,636.91 402,485,266.85 

2. from reproduction rights and 

royalty entitlements 

a) Germany 185,818,383.03 141,189,250.52 41,542,414.40 179,874,490.36 182,961,208.47 

b) Collections 17,703,043.63 15,770,763.28 103,650,307.59 122,223,422.19 20,505,394.95 

c) Foreign countries 38,911,626.70 13,254,878.91 0.00 18,821,353.37 44,478,101.16 247,944,704.58 

3. Other 

a) Europe I 0.00 0.00 1,199,997.28 1,199,997.28 0.00 

b) Other 0.00 0.00 0.00 0.00 0.00 0.00 

630,853,073.12 520,916,629.04 212,210,966.27 752,704,493.62 650,429,971.43 650,429,971.43


Income Statement 

for the period 

from 1 January to 31 December 2006 

2006 2005 

€ € 

1. Income from exploitation rights 

and royalty entitlements 847,348,112.11 823,291,287.14 

incl. from the administration of 

collections € 207,335,709.13 

(previous year: € 178,275,071.56) 

2. Other operating income 12,905,502.14 16,147,344.09 

3. Personnel expenses -66,749,746.70 -65,195,387.91 

of which 

a) Wages and salaries -48,976,854.13 -48,408,900.00 

b) Social security and other pension costs -17,772,892.57 -16,786,487.91 

of which in respect of retirement 

pensions € 7,031,793.76 

(previous year: € 6,755,315.99) 

4. Depreciation on intangible fixed 

assets and tangible assets -6,918,206.93 -7,029,228.57 

5. Other operating expenses -47,572,561.97 -47,704,336.05 

6. Income from securities 5,653,339.60 5,495,054.08 

7. Other interest and similar income 8,470,657.93 7,290,048.01 

8. Interest and similar expenses -19,360.98 -24,102.85 

9. Results of ordinary business activities 753,117,735.20 732,270,677.94 

10. Taxes on income -110,815.30 -80,507.73 

11. Other taxes -302,426.28 -304,807.11 

12. Transfers to the accruals for distribution -752,704,493.62 -731,885,363.10 

13. Net income / Net loss for the year 0.00 0.00

GEMA 

Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte 

GEMA 

Publisher: Dr. Harald Heker, Chief Executive Officer 

Editors: Dr. Hans-Herwig Geyer, Dr. Elfriede Rossori 

Bayreuther Straße 37, 10787 Berlin 

Tel.: 030 / 2 12 45-00, Fax: 030 / 2 12 45-950 

Translation: Marcolla-Robert Übersetzungen, Baldham 

Layout: Schell & Partner, München 

Rosenheimer Straße 11, 81667 Munich 

Tel.: 089 / 4 80 03-421, Fax: 089 / 4 80 03-424 

E-Mail: gema@gema.de 

Internet: www.gema.de

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