Rep. Howard Berman, the chairs the House Judiciary Subcommittee on Intellectual Property, the Courts, and the Internet, said last week he plans to introduce legislation that will grant artists and copyright holders a performance right in broadcast radio. He plans to grant special accommodations to small and religious stations so they will not be burdened by the new payments.

"I recognize that granting artists and sound recording copyright owners the right to be compensated for music played on the radio presents a change. But current law presents an inequity that is neither fair nor right. Artists deserve compensation for the use of their music and this gap in the law must be addressed. ...

“I am confident that we can do this in a way that is sensitive to the legitimate concerns and economic realities of broadcasters. My intention is to ensure that small and religious stations – and, indeed, all stations – will not be unduly burdened and that any new payment requirement will not be excessive. In fact, under the legislation that we are crafting, a large majority of all radio stations will receive special accommodations. This is the right thing to do."

While Internet radio stations pay the owners of the sound recording as well as the composers, terrestrial radio stations pay only the royalties related to the performance of the underlying composition. (Performing rights organizations like ASCAP, BMI and SESAC represent songwriters and collect royalties on behalf of their members.) This new sound recording royalty would be paid by terrestrial radio stations in addition to the royalties they currently pay. This would correct the "inequity" (to use Berman's term) that exists between the regulations placed on the two types of radio stations.

The reaction of the radio industry is predictably negative. ICBC Broadcast Holdings President/COO Charles Warfield predicted it "would be a shift of seismic proportions."

Other reading:

• A September 2007 interview with Rep. Berman at the San Fernando Valley Business Journal. "Anybody who is transmitting radio digitally has to pay but over-the-air terrestrial is the one platform that is exempt. They have what I think of as an unfair competitive advantage."
• A good recap of recent House Judiciary Committee hearings at Broadcast Law Blog. "Congressman Berman indicated that the royalty that he was seeking to impose would cover only broadcasters - and not be extended to commercial establishments like bars, restaurants and retail stores, which also currently pay a performance royalty to the composers of music."