By Jennifer Martinez - 08/22/12 08:30 PM EDT
“The current system for establishing royalty rates is astonishingly unfair," Westergren said in a statement. "Fairness demands that all music related rate settings utilize the same 801(b) standard."
Nadler's draft bill proposes to put cable and satellite radio services on the same royalty-setting standard as Internet radio. The bill is largely backed by the music industry because it would help music artists get better compensated when their songs are played on digital radio services and live-streamed online by broadcast radio stations.
The 801(b) standard is used to determine the royalties paid by the recording industry to music publishers and songwriters. Westergren said the recording industry refuses to use that same standard "when it comes to what Internet radio pays them."
“Congressman Nadler’s discussion draft would only perpetuate this hypocrisy and worsen an already flawed legislative mistake that is discriminating against new technology and hampering innovation," Westergren said. "Congress should embrace the Chaffetz approach.”
The two bills have sparked a battle between the music industry and digital radio services over music royalties, an issue that has long plagued Washington. The music industry is skeptical of Chaffetz's measure because they argue that it would take money from artists by letting Internet radio services pay lower royalty fees.
In a statement, Nadler said he agrees with Pandora on the need for rate
parity but that Chaffetz's approach will not solve the problem.
"The solution is not to get to parity at the expense of artists as Rep. Chaffetz’s bill proposes," Nadler said. "We can and should both level the playing field for Internet radio and ensure that artists are fairly compensated, which is what my bill would do.”
Recording artists do not receive royalty payments when broadcast radio stations play their songs over the air. Nadler's draft bill is designed to help artists fill that gap by charging traditional radio stations a higher fee when they live-stream their broadcasts online. It would also make cable and satellite radio stations pay higher royalty fees by putting them on the same royalty-setting standard as Internet radio.