Will Chinese Broadcasters Pay Public Performance Royalties to Record Companies?

This is the second in a series of posts on music copyright in China. My first post was China Music Copyrights.
China is often criticized by the US for its copyright laws but China and the US have more in common than you might have thought when it comes to copyright — they are both among a small number of nations that do not regard sound recording copyright as including a terrestrial broadcast performing right. To put that into perspective, most of the European Union has a terrestrial broadcast performing right. The few other countries that do not recognize this right include North Korea and Myanmar.
What it means in practical terms is that, in the US and China, when a recording of a song is played on radio the record company and the recording artist are not entitled to receive any performance royalties. This came about in the US because terrestrial broadcasters won the debate with other stakeholders. They convinced Congress with the argument that radio airtime provides free promotion to record companies and artists so there is no need to pay them royalties.
In China right now we are seeing a similar debate unfolding between the fledging recording industry and the powerful, state-funded broadcasters. Central to the debate have been changes proposed to China’s Copyright Law. The law has been in its current form since 2010.
In this post I’m taking a look at recording-related provisions of the  Fourth Draft of China’s new Copyright Law as promulgated by the National Copyright Administration of China, known as the “NCAC.” As mentioned in my previous post, this is a working draft that will be subject to further change as it passes through several more stages in a process that is relatively open.
Musical works (with or without lyrics) are included in the definition of “works” in the NCAC Fourth Draft. So are several other types of copyright subject matter including a new category of “audiovisual works” in place of cinematograph works. Sound recordings are not classified as “works” and are dealt with separately. It is unclear why audiovisual works should not also be treated separately, but that’s another story.
The NCAC Fourth Draft does not expressly list the rights comprising the copyright in a sound recording. We may infer that they are the rights conferred on the producer of the sound recording. Under Article 39 these include the rights to authorize others to reproduce, distribute and rent a sound recording. Also included is the right to make the sound recording available to the public, by “wireless” and by cable in “the information network,” in such a way that it may be accessed from a place and at a time of a person’s choosing. I am told by Guo Biao of IFPI China that these expressions refer to Internet use generally, including downloads and webcasting. In any case, the right of “making available” in this way is already enjoyed by the producer of a sound recording under the existing law.
What is most controversial is the proposal, under Article 40 of the NCAC Fourth Draft, that the producer of a sound recording should also enjoy a right of “reasonable remuneration” when the sound recording is “transmitted to the public in wireless or cable form” or “transmitted through technical devices”. Again, I’m told by Mr. Biao that this refers only to three categories of use: first, radio or TV broadcasting (wireless), second, cable transmission, and third, transmission through technical devices in public areas as background music. Article 40 does not involve any Internet use. China’s radio and television broadcasters are concerned that Article 40 of the NCAC Fourth Draft would mean that they would need to start paying royalties. So the NCAC Fourth Draft is being met with resistance.
Who do you think will win the debate?