GVL in dialogue

In the producer section, the distributions are usually kept within the statutory deadline requirements. We managed to implement statutory system renewals in less than three years while continuing our distribution activities at the same time.

With respect to performer distributions, we are aware that delays have been occurring in the last years and that you had to wait for your remuneration. Unfortunately, the technical modifications of our systems relevant for distribution were more complex and more long-winded than previously anticipated. Nevertheless, we realised significant steps forward in the past months with regards to speed and quality of our distributions.
Specifically, there are still some individual segments for the years from 2010 with particularly complex data situations and low overall volume have remained undistributed (so-called “open budgets” such as jingles, commercials, advertising). After checking back with our committees, we had to put them aside in favour of bigger distribution budgets. From September 2020, rights holders can check all open contributions in the productions involved in these categories via www.gvl.de as their distribution is planned for the first semester 2021.
In the next few days, we are starting with the final distribution of 2013 and 2014.
Other than that, we are going to adhere to the distribution dates provided in the German Collecting Societies’ Act (VGG) with a minor delay: The 2019 initial distribution will take place in November 2020 instead of September. This delay is necessary to take newly reported contributions into consideration.  The final distributions for 2015/2016 are planned for next year, 2017/2018 for 2022. After that, GVL is going to pay out subject to the regular distribution cycle as provided by the VGG. Upon request of our committees and rights holders, we have only aggregated two final distributions in order to avoid additional income peaks within a year.

The German Patent and Trademark Office (DPMA) has been informed about the delays in the distributions and also takes part in our  committee sessions where such questions are discussed. This affects the regular and final distributions as well as the open budgets.

We receive a huge volume of data every day, financial data, contribution data, usage data, information regarding rights ownership etc. For 2019 alone, more than 12 million sound recording usage reports of the broadcasters are ingested for distribution purposes.

All of the data which reaches us in rather varying quality levels must be prepared, structured and systematically processed. In the course of distribution calculation, all information is finally accumulated into the distribution.

For our activities, we depend on third parties to provide the data, more specifically broadcast usage data of the channels and repertoire/contribution details of the rights holders. With regard to the millions of data sets we must process every year, quality flaws occur at rather substantial levels. Our staff have to remedy them, usually in small-scale work. This led to delays or other challenges with respect to the distributions in the past.

We allocate a major part of our resources to data processing in order to find sustainable, economic and flexible solutions.
 

GVL has a coordinated IT strategy as well as an architecture and IT concept. Said strategy was presented to our committees and approved by them.

To be more specific, we work on the basis of the so-called domain-driven design (DDD). This is a methodology, a thinking and working attitude which is at the foreground of software development when it comes to experts’ requirements and objectives. For an independent and continued quality assurance, the work of our IT departments is accompanied and monitored by external experts. 

Processing queries or claims regarding incorrectly prepared accounting or settlements that have not been made can involve a lot of time and effort due to the data complexity. Apart from an initial checking process by the relevant support teams, they usually need the assistance from the IT data management team, the distribution rules team or the accountancy department in most cases, in many cases from all three.

Against this background, processing such claims can take longer. Furthermore, the reasons identified as an outcome can differ greatly and be the result of very complex processes so that an explanation cannot just be made ad hoc and is not necessarily easy to understand for those not directly involved in the process either. Corrections can only be launched and processed in one of the subsequent distribution runs. In many cases and due to the many involved factors within a distribution, the impact of a correction will thus only be tangibly visible at a later date.

We recently paid out remuneration of EUR 3.6m to about 11,500 rights holders for usage remuneration received from abroad and will continue to do so on a regular basis. Information on the representation agreements GVL has for performers and producers of sound recordings is available on our website.

The scope of remuneration from abroad does not only depend on the facilities of GVL but also the legal situation and the existing operational and technical infrastructure at the sister societies and their distribution plans. Accordingly, differences also affect the remuneration GVL receives.

Despite significant and also successful standardisation efforts, operational standards deviate. As such, payments are sometimes not made on an individualised basis or allocated to specific distribution years. This requires a manual processing of payment receipts which in turn often entails time delays for our rights holders.
 

GVL does not manage rights involved in live events i.e. live performances are not subject to GVL licence fees. In such cases, the event organisers pay GEMA as the collective management organisation for creators, not to GVL. Licence fees for GVL do only arise for the public performance of sound recordings in case they are used at festivals. In the public performance sector, a share of 20% of the GEMA tariff is collected. In the case of mixed forms such as festivals where there are live performances and playback of sound recordings a reduced tariff will be applied which takes the lower use of sound recordings into consideration.

Clubs only pay a fragment of the GEMA licence fee for music playback of commercially published sound recordings. These only make up 1-2% of GVL income. Considering the low level of the licence fees GVL receives from the clubs, music monitoring in the clubs must be feasible at reasonable cost. We are therefore in the process of verifying how we can design the capture of usage data against this background. 

The German copyright law distinguishes between so-called exclusive rights which are granted to users by contract and remuneration rights which exist by law, independently of any contractual arrangements. GVL only manages remuneration rights at this time. Interactive streaming of audio and audio-visual content is set up as an exclusive right and therefore does not fall under the rights generally managed by GVL. It is possible that exclusive rights are managed by collective management organisations or music licensing companies. However, to collectively manage these rights, it is necessary that nearly all involved rights owners grant these rights on a large scale. This, in turn, presupposes a general consensus of rights owners and other market participants or a statutory regulation. We were not able to establish a consensus so far, remuneration rights for interactive streaming rights do not exist as of now. Of course, we are open towards an expansion of our rights portfolio if required.

Upon the realisation and maintenance by GVL of the first basic functionalities for the Synchron App, further expansion stages are to follow. We are very sorry that this further development has been delayed because GVL productivity is lower than anticipated due to the COVID-19 effects.  We are battling with bottlenecks among our IT resources, especially due to necessary childcare by staff, and must focus on the portal expansion for our performers. To this end, we had to adjust previous plans. In addition, we must first provide development efforts for our internal GVL project VITA so that the added value of the Synchron App for performers is a high as possible in the long run. We initially underestimated this effort.

We are aware that performers who use the Synchron App are eagerly awaiting the further development of the GVL interface. Together with the developers of the Synchron App, we are going to push the project forward with all our strength. Its implementation is fixed in the schedule for 2021.
 

The Collecting Societies Act (VGG) does not provide for a specific legal form for collective management organisations or music licensing companies, it can therefore be freely chosen. At the moment, the majority of collective management organisations in Germany are organised in the form of a GmbH. Depending on the legal form, the VGG stipulates that collective management organisations or music licensing companies are in the hands of their members. This means that in the case of organisations choosing the legal form of a GmbH, their members must hold the company shares, whereas the legal form of an economic association requires that the collective management organisation is governed by its members.

The business shares of GVL are held by its members, the shareholders BVMI, BFFS, DOV and VUT. Above and beyond that, the Articles of Association of GVL provide co-determination rights of GVL rights holders in accordance with the statutory requirements of the VGG.  Group assemblies take place at least every four years where the rights holders can elect delegates and alternate delegates in their groups. Together with the shareholders (the members), the delegates make up the Assembly of Shareholders and Delegates which takes binding decisions for GVL on a multitude of fundamental issues. These include, among others, the [rights] management and perception conditions, distribution plans or tariffs. Various GVL committees which are in turn made up of elected delegates prepare the decisions.  Apart from the shareholders and delegates governing GVL, it is, just like economic associations, under the supervision of the German Patent and Trademark Office (DPMA). Supervisory duties and powers can be and are thus exercised irrespective of the legal form of a collective management organisation or music licensing company. Moreover, an economic association is also organised under private law, the control by the DPMA is thus identical. The board of directors of the association is not a public officer, managing directors of a GmbH and managing directors of an association have the same control and the same duties.
 

The Finance Committee of the Assembly of Shareholders and Delegates and the supervisory body of GVL receive all information regarding the GVL budget and then release it. In the Finance Committee, financial information (e.g. IT costs, external consultants) are presented in a transparent manner and discussed. Ultimately, the approval is decided upon by the Assembly of Shareholders and Delegates with the elected representatives of the rights holders.