A new draft bill from U.S. Representative Jerrold Nadler (D-NY; pictured) aims to raise AM/FM streaming royalty rates, in effect implementing an over-the-air performance royalty. It would also potentially raise royalty rates for satellite and cable radio to the same levels as those for Internet radio.
Nadler's bill, dubbed the Interim FIRST Act and currently in "discussion draft" form, would "put cable and satellite radio services on the same royalty-setting standard as Internet radio," reports The Hill. That would mean switching cable and sallelite from the 801(b) standard, to the "willing buyer/willing seller" model currently used to determine web radio royalty rates.
Additionally, the Interim FIRST Act would "make traditional radio stations pay a higher fee for live-streaming their broadcast online." Nadler intends for this extra free to "make up for broadcasters not paying a fee when they play artists' songs over the air," writes The Hill.
That extra fee would wind up being what the Copyright Royalty Board decides "most clearly represents the royalty that would have been negotiated in the marketplace between a willing buyer and a willing seller for the public performance of sound recordings by means of over-the-air non-subscription broadcast transmissions by affiliated terrestrial broadcast radio stations," reads Nadler's draft bill (Section 3).
Technically, it's not royalty on over-the-air radio. But it amounts to paying a royalty for over-the-air (plus the streaming royalty) if a station also chooses to stream.
An over-the-air performance royalty appears to be the overall goal here. Comments from the musicFIRST Coalition seem to explain the Interim FIRST Act's name: "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." Said Nadler in a statement: "The lack of a performance royalty for terrestrial radio airplay is a significant inequity and grossly unfair. We can’t start a race to the bottom when it comes to royalty rates and compensation for artists."
As for changing the standard for satellite and radio platforms from 801(b) to "willing buyer/willing seller," how much of a difference will that really make? While we'd have to wait for a determination from the Copyright Royalty Board to definitively answer that question, consider this: satellite radio operator SiriusXM pays around 8% of its revenues for the right to use copyright sound recordings in its broadcasts, based on a determination using the 801(b) standard. Pandora, on the other hand, says nearly 70% of its total revenue (based on its Q1 FY 2013) will go to royalty payments (and that's based on on a deal Pandora struck that actually decreased its obligation from the CRB decision -- a decision based on "willing buyer/willing seller").
In July, we reported on (here) separate in-progress legislation from Rep. Jason Chaffetz (R-UT). That bill also aimed to bring more equality to radio royalty rates, but did so by potentially lowering web radio rates by determing streaming rates using the 801(b) standard.
Nadler says Chaffetz's bill -- which has Pandora's support -- could potentially "hurt performing artists." Not surprisingly, the musicFIRST Coalition has voiced support for the draft bill while the NAB opposes it.