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Post-Election: Internet Radio Royalties Debate

While the national, state, and local elections next week will have repercussions for years to come, in the immediate future another key subject for many broadcasters will be under the congressional microscope: performance royalties.  House Judiciary Committee officials have signaled that in November they intend to review the current state of performance royalties for music streamed over the Internet. 

Likely to be featured in this hearing is a bill recently introduced by Rep. Jason Chaffetz (R-UT) titled the Internet Radio Fairness Act (H.R.6480).  This legislation would put all non-interactive digital audio services on an even plane by applying the royalty setting standards of Section 801(b) of the Copyright Act across the board.  By requiring consideration of copyright users’ ability to earn a fair income and of the viability of those platforms, among other points, Section 801(b) standards have in the past led to more favorable treatment of satellite and cable radio streaming than other webcasters have received under the current so-called “willing buyer, willing seller” standard.  Notably, this legislation would also make judges on the Copyright Royalty Board into Presidential appointees confirmed by the Senate, rather than having the Librarian of Congress appoint them after conferring with the Register of Copyrights, and the bill would set the burden of proof on copyright holders that the royalties they are seeking are reasonable.  Music streaming giant Pandora has joined forces with a number of other organizations, including NRB member Salem Communications, in supporting the bill. 

Another bill likely to garner attention is draft legislation that has been circulated by Rep. Jerrold Nadler (D-NY) that would instead make the “willing buyer, willing seller” standard, which is favored by record labels, into the uniform standard for online music streaming.  In addition, Rep Nadler’s legislation would institute a de facto performance tax on broadcasters by inflating the fees for their online streaming.

NRB has spoken forcefully against Rep Nadler’s approach, which would place a new and unwarranted burden on many Christian radio broadcasters.  Calling it a “crushing blow to many Christian radio stations,” Dr. Frank Wright, President and CEO of NRB, declared Rep. Nadler’s bill to be “fundamentally flawed as it rests on the faulty premise that all the value in radio airplay of music flows to broadcasters – an assumption refuted by reason and experience.”  NRB will be carefully monitoring the overall discussion of webcasting royalties as it relates to both commercial and noncommercial broadcasters in November and beyond.

  • Find out more about the Internet Radio Fairness Act (H.R.6480) here and here.
  • See NRB’s response to Rep. Nadler’s draft performance tax bill.

By Aaron Mercer, Vice President Government Relations

Published: November 2, 2012