Over the past few years, as European societies have competed more intensely for affiliates, they have cut the amount of money they hold back for online royalties. GEMA, the German PRO, is the last of the big three to do so, after PRS for Music (U.K.) and SACEM (France). But on Monday (Sept. 15), it announced plans to reduce its commission on online royalties to 7% by 2027, compared to the 8% charged by PRS and SACEM.
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The exact specifics of the royalties being cut vary, but the lower rate applies to revenue from the giant on-demand music streaming services, including Spotify and Apple Music. And while the new rates are competitive, they also reflect the lower cost of collecting and distributing this revenue, especially as compared with money coming in from radio stations or restaurants. In some cases, much of this online revenue comes through other societies.
All of this is relatively recent. SACEM and PRS both moved to 8% this year — down from 9% and 10%, respectively. In the case of GEMA, the plan is to lower the percentage it holds back from the current 10% to 9% in 2026, then to 7% in 2027. (Some societies also apply lower fees to certain foreign revenue, often according to the originating society.) The competition here is complicated by the role of ICE, a hub that operates as a joint venture of GEMA, PRS and the Swedish society STIM. SACEM, the biggest society in Europe, could be seen as a hub of sorts as well.
The new rates will have a significant impact on GEMA. Right now, this revenue accounts for just under a quarter of the organization’s total revenue, so by 2027, the change will increase the royalties it pays out by 6 million euros ($7.1 million) a year. “The measure of a successful collecting society is the amount of money it pays out to its members,” Thomas Theune, the GEMA executive who oversees online licensing, said in a statement. “Thanks to our digital processes and fully automated IT systems, we’re already able to license and distribute more efficiently than ever. In turn, this means we can pass on even more money to our members.”
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