The European Commission is scheduled to present the bill today. Reuters reports that EU regulations blame poor financial management of collecting societies' revenues - among other problems - for weakened copyright within the EU.
This, in turn, has helped "make Europe prime ground for websites offering pirated music," says the news organisation.
The draft law would give collecting societies 12 months after the financial year in which a track was played to pay rights holders. That's about half the time currently allowed in many countries.
Regulators are also demanding more clarity on the fees musicians must pay societies collecting on their behalf from radio stations or streaming models.
The law also lays out guidelines so that collection societies separate royalty revenues from investments and become subject to supervision by composers and other musicians who hold the intellectual property rights.
As far as tackling music piracy is concerned, the draft aims to make it easier for streaming services and websites to get licenses covering multiple countries.
Artists who can't get a collecting society to license their work in multiple countries will be able to grant their own licenses in a model similar to one used in the US.
However, there have been complaints from artists that the proposed law doesn't go far enough. Arguments say that while distribution of online rights would be catered for, the legislation would do little to unlock royalties from gigging, clubs and private copying.
The draft also gives societies permission to keep royalties if the rightful artists haven't been found after five years.
Kelvin Smits from artists' lobby Younison says that this risks more than 5.7 billion Euros in royalties being collected but not being paid to rights-holders.
"This draft law institutionalises the vested interests of the power-brokers around the table of collecting societies," Smits said, with the 5.7 billion figure coming from a Younison investigation into Europe's main collection societies in 2010.
The lobby group says that the societies have an incentive in delaying payment to artists because they benefit from revenue from royalties and its subsequent interest.
Meanwhile, Younison has praised the model currently used by Britain's own PRS for Music, which can earn a commission of up to 20% on new licenses.
The European Grouping of Societies of Authors and Composers (GESAC), which represents 34 societies, however, placed the spotlight on piracy saying, "The fact is that competition from illegal services offering the same product for free is too great an obstacle for many operators, particularly small stakeholders, to embark on risky cross-border or pan-European ventures."
The proposed law must be taken up by the European Parliament and approved by member states to become law.