By Jennifer Martinez - 08/20/12 06:59 PM EDT
The discussion draft also would make traditional radio stations pay a higher fee for live-streaming their broadcast online, which would put more money in the pockets of artists. That's intended to make up for broadcasters not paying a fee when they play artists' songs over the air.
The discussion draft so far has received support from the musicFIRST Coalition, a group made up of recording artists, musicians and music businesses that advocate for performance rights.
"The only real solution is for Congress to create a legal performance right, but raising terrestrial radio’s digital royalties is an important interim step towards that goal. By effectively reimbursing performers for lost income, Rep. Nadler’s draft legislation recognizes the injustice of denying fair pay for airplay," said Ted Kalo, executive director of the musicFIRST Coalition, in a statement. "The discussion draft proposes a 21st century marketplace standard that treats artists and platforms fairly and equally."
The National Association of Broadcasters (NAB), which represents radio and television broadcasters, strongly opposes the draft legislation. Dennis Wharton, a spokesman for NAB, said the draft bill "fails to recognize the unparalleled promotional value of local radio airplay" and "would kill jobs at America's hometown radio stations."
Wharton said NAB supports companies' efforts to work out royalty rates privately, citing Clear Channel's recent agreement to pay sound recording performance royalties to Big Machine Label Group as a successful example of industry-led discussions.
Rep. Jason Chaffetz (R-Utah) is also working on a bill that deals with reforming music royalty rates. Chaffetz's bill, on the other hand, would put Internet radio services such as Pandora on the same royalty-setting standard as other digital radio services.
His draft bill, which is backed by Pandora, aims to lower the royalty fees Internet radio stations pay and make them more level with the rates other digital radio services pay. Chaffetz argues that current royalty rules force Internet stations to pay much higher rates to stream music than cable and satellite services.
Nadler said he agrees with Chaffetz's belief that all music platforms should be able to compete equally, but he says the Utah Republican's draft bill doesn't fully address the problem.
"Where he and I differ is that I do not believe establishing such a level playing field means we have to hurt performing artists in the process. Instead, we can create royalty standard parity for all parties and compensate creators fairly," Nadler said in a statement.
He added that Chaffetz's bill also does not address the lack of a performance right for songs played over broadcast radio.