Rep. Mel Watt has introduced legislation that would create a performance right for sound recordings at broadcast radio and create a new revenue stream for record labels and artists.

The Free Market Royalty Act, introduced Monday morning, would create a "one-stop" license for all non-interactive broadcasters -- both broadcast and digital -- and enable parties to individually negotiate direct deals. It effectively takes the infrastructure created around the digital performance right -- namely SoundExchange -- and extends it to a broader performance right.

The bill has a few important components:

  • Broadcasters and non-interactive webcasters would be authorized to collectively negotiate with SoundExchange for a performance royalty with agreed-upon terms.
  • Individual negotiations could take place as well.
  • SoundExchange would collect and distribute royalties arising from both broadcast radio and non-interactive webcasters. Those royalties would be split according to current law regarding digital performances: 50% to owner of sound recording, 45% to performance artist(s) and 5% to non-featured musicians and vocalists through AFM and SAG-AFTRA.
  • If public radio stations cannot negotiate with sound recording owners, they can petition the Copyright Royalty Board without an interruption of service to their listeners.

In addition, the bill would instruct the Register of Copyrights to study the state of the law recognizing the protecting the "making available" and "communicating to the public" rights for copyright holders.

The record industry and groups representing artists have pushed for years for the establishment of a performance right for broadcast radio. A deal was almost reached with broadcasters three years ago after the Performance Rights Act of 2009 was introduced and passed both the House and Senate Judiciary committees. While there is no performance right for sound recordings at broadcast radio, songwriters and composers do have such a right.

"All platforms for which music is the central ingredient should pay for the music that drives their business" and RIAA spokesperson said in a statement to Billboard. "It is time to redress these wrongs to ensure rights holders and those who create music are compensated fairly."

Although there have been a handful of privately negotiated deals between broadcasters and rights owners -- such as the Clear Channel-Warner Music Group strategic partnership -- these deals don't actually create a performance right. Groups representing labels and artists have continued to push for the establishment of a performance right that would underpin private negotiations.

"Simply put, there is no such thing as a market for the performance of music on terrestrial radio when there is no performance right," musicFIRST Coalition's Executive Director Ted Kalo said in a statement.

Broadcasters prefer market-based solutions and believe privately negotiated deals are helping resolve the issue. "NAB respectfully opposes the legislation, and appreciates the support of 183 members of Congress who stand with America's hometown radio stations against the offshore record labels," the organization said in a statement. The NAB also believes Watt's legislation would "impose new costs on broadcasters" that would jeopardize the future of free, over-the-air radio.

Last year's Internet Radio Fairness Act attempted to change how the Copyright Royalty Board sets statutory rates. The standard for webcasters like Pandora is a "willing buyer, willing seller" that tries to approximate a transaction on the open market. Kalo believes that Watt's bill "would facilitate free market negotiations, which would indisputably arrive at such a price for music."