A divided music industry is embroiled in a high-stakes struggle in Congress over royalties that could end up costing one side or the other billions of dollars.

Artists currently do not receive any payments when their songs are played on FM and AM radio, while copyright law requires webcasters, satellite radio services and cable companies to pay. And the Recording Industry Association of America is fighting for a change, contending it’s a matter of property rights.

The National Association of Broadcasters disagrees, arguing that the airtime is free promotion for musicians that, in turn, increases sales. In total, the NAB says, performance royalties could cost radio stations $7 billion a year.

Two pending bills would impose royalties for performers for radio play. Sens. Patrick Leahy (D-Vt.), Orrin G. Hatch (R-Utah), Lamar Alexander (R-Tenn.), Bob Corker (R-Tenn.) and Dianne Feinstein (D-Calif.) have sponsored the Performance Rights Act to “provide fair compensation to artists for use of their sound recordings.” Rep. Howard Berman (D-Calif.) is sponsoring a companion bill in the House.

Conversely, Reps. Gene Green (D-Texas) and Mike Conaway (R-Texas) introduced a House resolution stating that “Congress should not impose any new performance fee, tax, royalty or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over the air or on any business for such public performance of sound recordings.”

The resolution has the support of 150 House members, including Rep. Greg Walden (R-Ore.), a former radio station owner, and House Ways and Means Committee Chairman Charles B. Rangel (D-N.Y.).

Both sides were in full lobbying mode last week on Capitol Hill. The NAB was in the midst of its State Leadership Conference, an annual event where broadcasters hear from federal policymakers and meet with legislators to discuss issues that affect the broadcast business.

More than 600 NAB members met with members of Congress, opposing the recording industry’s stance.

“They are portraying this as ‘struggling artists need to be treated fairly.’ The reality is that the record companies have been abusing these artists for decades,” said the NAB’s executive vice president, Dennis Wharton.

During its message push, the NAB has had a stroke of good luck. In the midst of this legislative battle, artists are filing suits against record companies for improperly handling royalty payments.

The broadcasters point to a recent lawsuit in the New York State Supreme Court in Manhattan, brought by a number of big-name artists alleging that Universal Music Group has been cheating artists out of royalties for years. Plaintiffs include Patti Page and the estates of Count Basie, Sarah Vaughan, Woody Herman, Les Brown, Benny Goodman and the Mills Brothers. The suit seeks at least $6 million plus attorneys’ fees and punitive damages.

The recording industry partnered with royalty collector SoundExchange and 11 other groups to form the MusicFIRST (Fairness in Radio Starting Today) Coalition to literally make some noise on Capitol Hill.

The coalition sponsored events that brought gospel singer BeBe Winans and the father of go-go music, Chuck Brown, to the Hill, prompting impromptu jam sessions in the hallowed halls of Congress and drawing notable attention to the cause.

The NAB is certainly better-funded. But what one side lacks in funds, it can make up for in star power.

The broadcasters may have Count Basie. But MusicFIRST has Frank Sinatra, who was a longtime advocate for royalty payments, says SoundExchange Executive Director John Simson.

The list of founding musicians behind MusicFIRST includes Alanis Morissette, B.B. King, Christina Aguilera, Dave Matthews Band, Dr. Dre, Fall Out Boy, Jay-Z, Jimmy Buffett, Mary Chapin Carpenter, Placido Domingo, Steve Miller, The Doors and the estates of Judy Garland, Nat King Cole and Tupac Shakur.

In November, Lyle Lovett testified before the Senate Judiciary Committee on behalf of MusicFIRST, speaking to NAB’s argument on artists’ promotional benefits from radio.

“Dan Brown sold a whole lot more copies of his book ‘The DaVinci Code’ after the movie came out, but no one would suggest that the motion picture studio could make his book into a movie without paying him for the privilege, just because he got some promotional benefit,” Lovett testified. “In fact, I can’t think of any other copyrighted work that has a ‘promotional benefit exemption.’ And, as I said, radio pays songwriters when they broadcast their tunes, even though they also get a promotional benefit.”

Last month, the coalition brought Mary Wilson, a former member of The Supremes, to an event that included representatives of the NAB, SoundExchange and the Future of American Media Caucus.

“We know this is a long-term fight, and we know we have a much better-funded opponent,” Simson said.

Both MusicFIRST and the NAB have prominent supporters.

The broadcasters have long been an effective lobby and a formidable opponent. In the first half of 2007 alone, the NAB spent $4.28 million on lobbying. And its PAC gave an additional $243,015 in campaign contributions to federal candidates, including Conaway, who received $1,000, and Green, who received $10,000, according to the Center for Responsive Politics.

The bulk of MusicFIRST’s funding comes from the recording industry, which spent $658,747 on lobbying in the first half of 2007. The association also gave $51,028 to federal candidates, including Corker and Berman, who received $2,000 and $3,000, respectively.