At all2gethernow [access protected, 2016-03-10], I am going to discuss the topic as a part of the #camp [access protected, 2016-03-10]. Furthermore I’m participating in the discussion on “Collection Societies and Rights Management”. Hopefully, many of you will join us to discuss. Those who can’t be there in person, please join our community [link broken, 2016-03-10]. There, you will be able to submit suggestions and comment on anything.

So, please take this series of articles as some kind of basics to what I’m going to discuss with all of you at all2gethernow. No matter whether it’s online or offline. Posts are published day by day.

Part 1&3 you’ll find here:
“The GEMA Presumption as an Entry Barrier (Pt. 1/3)”
“The GEMA Presumption as an Entry Barrier (Pt. 3/3)”

What exactly is an “entry barrier”?

The licence market is protected by the GEMA presumption. Of course, this means that the income of composers, authors and providers (labels) of GEMA licences is protected. Where’s the threat? They are “threatened” by new providers, say authors of works under Creative Commons licence. Those are constrained in selling their licenses.

Free licensed songs would represent a product substantially expanded by valuable properties. It is no substitute product but nevertheless a competitive one. A substitute product is kind of a completely different one that satisfies at least the same customer needs as the original product does, yet it is considered definitely better – example: CD (almost) replaces vinyl. In case of licensing, Creative Commons can be seen as a so called augmented product. It has most properties of the original product (GEMA licences), plus customisable licences, transparency in rates and a lower price.

To block free licences from entering the market, GEMA maintains the GEMA presumption. Unfortunately, that means: GEMA artists turn against artists writing free licensed tunes. Is music business really that much affected by a economy driven industry? Have artists become competitors?

The GEMA presumption’s consequences.

Free licensed content that is employed and therefore sold is clearly a minority compared to content that’s licensed with collection societies. That doesn’t mean at all that there are no masses available – there are quite a lot of potential writers out there. But even if there are masses they are not visible since they are constrained from entering the market.

Conclusion: GEMA presumption apparently is confirmed – but to a large extent it works like a perpetual motion machine and supports itself.

Question is – does the factual situation of GEMA’s monopoly still withstand, and so the GEMA presumption?

Actually, there is much reason to doubt that. The more important question is: How high the number of free licensed songs has to be as being considered sufficiently high according to German jurisdiction? It should be sufficiently high to allow for reasonable doubts in a high likeliness of almost inevitably finding titles from the GEMA repertoire in any number of songs performed.

Sufficient to be, or not to be: that is the question.

A percentage of 10% should be large enough to doubt the GEMA presumption. Actually, the percentage necessary should be substantially lower – from an impartial point of view.

Let’s have a look at an example from a different domain: Any software for automated text recognition or machine translation that has an error rate of 5% or higher won’t make it. It’s unacceptable and fatal. To put it the other way around – a software has to be at least 98% free of errors to allow for claiming “highest probability of working free of errors”. According to this benchmark, it’s a percentage of a mere 2% compared to 98% of GEMA repertoire that is needed.

Being ambitious, say we stick to aiming at 10%. In 2006, the GEMA repertoire contained more than 5m works. Presumably, today it contains about 7m (roughly estimated). Accordingly, 7m would translate to a 90% share of the market. To keep things simple, I’m going to assume there are only two participants in the market: GEMA vs. free licences. A third participant still would have to be defined. Maybe there are participants like non-licensed works (by spare-time musicians for example) or those that are licensed with collection societies not partnering with GEMA (Vietnam).

Paragraph of payoff.

A simple rule of three shows that the total market comprises approximately 8m works. Accordingly, almost 800.000 free licensed songs will have to be verifiably available to doubt the GEMA presumption. Remember – this is far more than just “sufficient”. If a number this large would be confirmed, GEMA should be deeply concerned about how to defend its presumption.

Let’s see: Jamendo? 200.000 tracks., CCMixter, netlabels, non-GEMA-CDs – not to forget about independent musicians (pro, semi-pro) as well as all spare-time musicians. Add another point: Creative Commons licences may be customised to different countries’ jurisdictions. Yet, and precisely put, therefore, the number of worldwide available titles has to be considered. Because at the same time they all are available in Germany too.

Theoretically, it should not be questionable the mass of tracks is sufficiently large enough. At least, if there’s any doubt in reaching a percentage of 10%, one must imagine 5% is the number that’s the much more realistic mark necessary to achieve.

[End of pt. 2/3]

This text has been published under a Creative Commons BY-NC-SA 3.0 Unported licence. If you would like to make use of the text or parts of it in a way that goes beyond the scope please get in touch with me.