The agreement Wednesday highlights the success of music rights holders in extending their licensing requirements to the Internet. The Recording Industry Association of America (RIAA) and the National Music Publishers Association (NMPA) have won key legal battles against online music services such as Napster and MP3.com, victories that have established licensing agreements for online distribution.
"It's a stopgap measure," said Aram Sinnreich, an analyst at Jupiter Media Metrix. "It's very typical of what we're seeing in the music industry."
Under the agreement, radio stations are required to pay 1.605 percent of their Internet streaming revenue to BMI, the same interim rate that stations must pay for broadcasting songs over the airwaves. Stations will also be required to pay BMI a percentage of the online streaming revenue they have made since 1997.
The license is a temporary measure between BMI and the Radio Music License Committee (RMLC), which represents 1,800 radio stations across the United States. The two groups are in court to decide the final rate.
BMI is asking the United States District Court for the Southern District of New York to require radio stations to pay 1.8 percent of their online revenue to BMI, the same rate for on-air broadcasting.
BMI represents the broadcast rights for 4.5 million musical works, encompassing 350,000 songwriters, composers and publishers
The agreement was not viewed positively by the RMLC, which says it believes online streaming should not be subject to the same terms and conditions as on-air broadcasting.
"It's something we've acquiesced to, so it's not a positive or negative step," said Keith Meehan, RMLC's executive director. He added that radio stations should not be required to pay BMI a portion of their revenue for online broadcasts. "We don't believe we do need that."
The RMLC is also undergoing negotiations with the American Society of Publishers and Composers, the other major performance rights group.