BMI, Radio Stations Granted Interim License Deal

Performing rights group Broadcast Music Inc. (BMI) said this week that a U.S. District Court in New York has approved an interim
license agreement for radio stations streaming content on the Internet.

In short, radio stations will pay BMI 1.605 percent of the station’s streaming Internet revenue, which is the going rate for
stations paying BMI for over-the-air broadcasting. The court-approved interim deal is good for stations represented by the
Radio Music License Committee (RMLC), which will continue to hash out final license fees and terms for airing music online with BMI.

The base fee for all stations streaming BMI music is $259 per year and increasing by CPI annually. The agreement also provides for
retroactive coverage for stations that may have been streaming online since 1997. The interim fees may be subject to a plus or a
downward adjustment based upon the court’s final decision in the rate proceeding.

“BMI believes that streaming will increasingly become an important way for stations to extend their brand and image and connect with
their listeners,” said BMI’s John Shaker, senior vice president of licensing, in a public statement. “Radio stations that stream
their signal over the Internet also affords BMI writers, publishers and composers greater exposure of their music and hopefully an
additional source of income in years to come.”

Throughout the legal wrangling, the RMLC has argued that stations do not need a separate BMI license for streaming and therefore
should not have to pay ancillary fees; BMI has contended that a separate license is needed and that stations should pay 1.8 percent
of gross revenues (less certain deductions) from their sites.

The agreement will be offered to a majority of U.S. radio stations that are re-broadcasting their signals on the Internet. There are
roughly 1,800 radio stations simulcasting their signals on the Net.

The BMI and RMLC’s case isn’t the only one that has percolated and raised ire where the convergence of radio broadcasting and the
Internet is concerned. In April, broadcasting giant Clear Channel Internet Group bowed under pressure from advertisers and pressed a
pause button on its audio Web sites. The advertisers had a contract with the American Federation of Television and Radio Artists
(AFTRA), the union that represents actors who voice radio commercials, which pays the actors 300 percent of their normal fee if
radio stations play their ads on the Internet as well as on the radio.

When reminded of this detail, the advertisers asked CCIG, which runs 750 Web sites, to cease airing the ads until a solution could
be worked out. See, CCIG did not want to have pay any additional fees, and ultimately concurred.

The situation was resolved in June when CCIG struck a revenue-sharing deal with Hiwire, one of several firms that provides streaming
ad insertion technology to terrestrial stations. Hiwire detects upcoming commercials in a terrestrial broadcast, then takes them out
as the stream is rebroadcast on the Web. The outfit inserts an AFTRA-compliant ad — one for which advertisers have paid Web
repurposing fees — in its place.

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