German music publishers are taken aback after a Berlin court ruled on Monday that top collection society GEMA can no longer distribute a share of authors’ royalties to its music publishers. The court ruled that publishers are required to return all such payments made since 2010, and, as the payments distributed by GEMA to publishers normally account for 80 percent or more of revenues, the judgement could have considerable economic repercussions for them. What’s more, they face demands for reimbursements for the last seven years.

Speaking to Billboard, Prof. Dr. Rolf Budde, the president of the German Music Publishers Association DMV today said: "German music publishers are shocked by the judgement and highly alarmed and fear for their own survival."

The decision is the result of a claim brought by two musicians, Bruno Kramm and Stefan Ackermann, who are GEMA members. The plaintiffs argued that they were entitled to claim both the author and publishing shares as the rights of utilization had been contributed to GEMA solely by the copyright holders. The court ruled that the copyright holders had first assigned their rights to GEMA under contractual arrangements, meaning that the publishers could not derive any rights under the artists' copyrights. The court based its ruling on the fact that the existing publishing contracts do not include any clear provisions on the publisher's share.

Budde told Billboard, "Because this case involves an agreement between the copyright holders and the music publishers, the judges should have interpreted the contracts in accordance with the general rules and identified the parties' true intentions."

"We consider this decision to be wrong," explained GEMA CEO Dr. Harald Heker. "Regrettably, the court only focused on the party contributing the rights. However, depending on the wording of the publishing contract, this may also place the copyright holder at a disadvantage. What is more crucial, however, is the fact that there has been an agreement between the authors and the publishers for decades that both parties should benefit economically from income arising from the grant of rights."

Added Heker, "If the copyright holder wishes to recompense the publisher for its publishing activities, this share is legitimate."

Prof. Monika Grütters, the German federal government's officer for culture and media, declared in a statement: "It is now a question of averting harm from cultural diversity and creativity in Germany. The successful and mutually accepted partnership between authors and publishers in joint collection societies is one of the proven constants of cultural policy in Germany. I hope that we can quickly come to an agreement at the EU level."

Publishers immediately called for a legislative solution to address the problem. "The established system and partnership that has been in the interests of copyright holders, music publishers and GEMA alike for decades must be preserved," said Budde. "GEMA does not generally distribute any contribution to the music publishers but only when the copyright holder and the publisher provide for this in the publishing contract."

UPDATE 11/18: An earlier version of this article contained an incorrect figure related to payments distributed by GEMA to publishers. GEMA payments account for 80 percent of revenue, not 20 percent.