A Munich court rejected Gema's demand that YouTube pay 0.375 euro cents ($0.004) per view of certain videos. In its claim, Gema had picked out a sample of 1,000 videos which it said would cost YouTube around EUR 1.6 million.
YouTube counts more than 1 billion users worldwide and says 300 hours of video are uploaded to its site every minute.
Since launching in 2005, YouTube has faced multiple lawsuits from artists and music labels who say it makes money at their expense, even as it has emerged as one of the most popular for fans to discover new music by their favourite artists.
The Google-owned video service has introduced schemes that allow artists to earn money from advertising sold alongside their videos but many in the music business argue this does not go far enough.
U.S. music licensing group Global Music Rights, representing some of the world's biggest artists from Pharrell Williams to Taylor Swift has demanded that YouTube remove up to 20,000 songs and threatened to sue the company for up to $1 billion (roughly Rs. 6,367 crores).
YouTube and Germany's Gema are fighting several legal battles, with a ruling in a Hamburg case expected on Wednesday.
Both parties have said they want to settle, but talks in the past have failed.
The Munich court ruling, which has not yet been published in full, may still be appealed by Gema.
© Thomson Reuters 2015
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