That was quick. We're only a week into the 100th, and two "flag"-related bills have been introduced already. Last Thursday (Jan. 11), Dianne Feinstein reintroduced the "Platform Equality and Remedies for Rights Holders in Music Act of 2007" or PERFORM Act, S.447, that would reconfigure the current statutory licensing scheme under 17 U.S.C. Sec. 114 for audio webcasting and digital "radio" via satellite/cable radio. The bill text looks to be unchanged from the version of the PERFORM Act introduced in the last Congress (in April 2006, also sponsored by Feinstein, plus Frist, Biden, and Graham on the Senate side, with Howard Berman and Mary Bono sponsoring a House version).
Basically, what the bill does is to impose a laundry list of new restrictions on webcasters and satellite radio who want to qualify for the statutory royalty rate for streaming audio. Generally speaking, that royalty rate is assumed to be substantially lower than what record labels would demand in the "market," although it's difficult to assess what that market would be, since U.S. copyright law doesn't include a general "public performance right" for sound recordings, and has only included a digital performance right since 1996. For an idea of what the statutory rates are, see this SoundExchange page. The rates are currently being renegotiated, but in the last go-round, rates were about $0.000762 per performance, i.e. less than one tenth of a cent per performance. So a webcaster who streamed 1000 songs would owe 76 cents in royalties. (There are a ton of caveats, but that's the gist.) The two satellite radio companies, XM and Sirius, operate under a separately-negotiated deal, and pay 10% of gross revenues. (Incidentally, these royalties are for performance of the sound recording, as opposed to the underlying musical composition -- royalties for performance of which are dealt with by older agencies like ASCAP/BMI -- and are supposed to be split by recording labels and artists.) There are lower rate scales available for non-commercial webcasters.
One can argue about whether these rates are too low or too high, but it's clear that in general, they are far lower than what record labels would demand if a webcast were considered the making of a copy, i.e. a reproduction of the sound recording, rather than a "broadcast" or performance. No webcaster (who is broadcasting music owned by major labels, anyway) could afford to stay in business if, each time they played a song, they basically had to buy a copy of that song for each of their listeners. So, to qualify for these webcast/broadcast rates, a webcaster has to jump through a lot of hoops under current law to make sure the webcast acts more like a traditional radio broadcast than the iTunes store. It has to be non-interactive. Listeners aren't allowed to select particular songs to play right now, and there are limits on how broadcasters can pre-announce songs, or play entire albums, etc.
The PERFORM Act would add several other restrictions. The two most controversial are that webcasters would have to wrap their webcasts in DRM, and not take an affirmative steps to allow recording. In the words of the bill (subsection (c), content protection) a webcaster can only qualify if:
the transmitting entity takes no affirmative steps to authorize, enable, cause or
induce the making of a copy or phonorecord by or for the transmission recipient and uses
technology that is reasonably available, technologically feasible, and economically
reasonable to prevent the making of copies or phonorecords embodying the transmission
in whole or in part, except for reasonable recording as defined in this subsection;’’
So, essentially, webcasters couldn't webcast in MP3. They'd have to use some sort of DRMed format (and in most cases, they'd end up paying royalties for the use of that, too). This is an exceedingly expensive "fix" for what is, in reality, a tiny problem for the recording industry. Sure, some people out there record streaming music so that they can keep, effectively making copies out of streams -- a digital equivalent of taping songs off the radio. But the restrictions on streaming (to make it non-interactive) are already so onerous that a would-be "music pirate" isn't going to waste time getting songs this way. They'd just go to the myriad P2P networks available andf grab the song there (after its been ripped from a CD by someone, somewhere). On the other hand, forcing webcasters to encrypt just makes it a huge pain for those people who want to webcast or listen to streaming audio. If you're a webcaster, you have to implement some sort of locked down DRM, which costs time and money. And if you're a listener, you have to hope the client app is good (and you have to have a bevy of client apps to listen to the myriad DRM flavors out there). Oh, and if you want to listen to your webcast on something other than the lowest-common-denominator Windows PC running XP (like a Mac, or a smartphone, or some sort of home media appliance) then you'd better hope there's a client available (although there probably isn't).
The part about not taking affirmative steps to enable the making of a copy appears squarely targeted at XM Radio, and its Inno device (a sort of iPod-sized Tivo for XM, which lets users record audio to the device and play it again later, although they can't transfer the digital files off the device), over which the record labels are engaged in heated litigation with XM. I'm sure the RIAA really appreciate Senator Feinstein's help. (For what it's worth, the tv/movie/music industry contributed about a quarter mil this election cycle. While this is a lot of money, it's only natural that they'd give big to a senior California senator. (And entertainment was only the 4th highest industry sector in Feinstein contributions.) California rep Howard Berman, the previous House sponsor of the PERFORM Act last year, and incoming IP subcommittee chair, got $173,000 from the entertainment industry for the 2006 cycle, which (relatively speaking, for House member) is a lot more (and his #1 industry sector).