Rep. Nadler Releases Draft Of New Royalty Rate Legislation
August 20, 2012
Rep. Jerrold Nadler (D-NY), the Ranking Member of the House Judiciary Subcommittee on the Constitution, has circulated a discussion draft of the Interim Fairness in Radio Starts Today (FIRST) Act. According to a release from Nadler's office, the legislation would address inequality and unfairness faced by performing artists and Internet radio in regard to rights and royalties.
"Terrestrial radio companies have built into their businesses an exemption from paying a performance right," said Nadler. "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. Artists deserve to be paid a market-based rate for their work, just like everyone else. The Interim FIRST Act would provide artists with fair compensation for the valuable creations they share with all of us."
The proposed Interim FIRST Act would direct the Copyright Royalty Board to take the value of intellectual property into account when deciding the royalty paid by a broadcaster for the Internet simulcast of its live radio music feed. It also would remove the special treatment provision that applies to satellite and cable radio for royalty rates, thereby assuring that all digital radio services pay under the same market-based rate standard. The adjustment of the royalty to be paid by a broadcaster for its live radio simulcast is only intended to be an interim step until such time as terrestrial radio pays a performance royalty for music airplay.
NAB EVP of Communications Dennis Wharton commented on the proposed legislation, saying, "NAB strongly opposes Rep. Nadler's draft bill, which fails to recognize the unparalleled promotional value of local radio airplay and which would kill jobs at America's hometown radio stations. We continue to support private, company-by-company negotiations that are driven by the free market, as was reflected by the recent deal between Clear Channel and BigMachine Label Group. We're pleased that 177 House members and 22 U.S. Senators agree that America's local radio stations should not be subjected to job-killing performance tax legislation that would divert millions of dollars to offshore record labels."
The Free Radio Alliance has also spoken out against the proposed bill, with spokesperson Cathy Rought saying in a statement, "Free, local radio promotes artists, supports hundreds of thousands of local jobs and gives back to communities across the country. The draft legislation proposed by Congressman Nadler is misguided and would cause irreversible harm to free and local radio. This type of government interference runs contrary to the evidence that free market negotiations can and do work. That’s why nearly 200 House and Senate members oppose any imposition of a congressionally-mandated performance tax."
The draft legislation can be seen in PDF format here.