Apple's iTunes Radio Cuts Deal With BMI

In its latest move in licensing music, Apple's iTunes Radio has cut a performance licensing deal with BMI, according to sources.

Those sources say that BMI is going to be the beneficiary of the rising tide begun by the major music publishers who withheld digital rights from the PROs (performing rights organizations), in order to cut market-rate deals. Consequently, sources say that BMI will receive 10% of advertising revenue from the iTunes Radio service. Apple was unavailable to comment and BMI earlier had declined comment.

While the Universal Music Group, Kobalt Music Group and BMG Chrysalis have notified the two PROs that they are withholding their digital rights so that they can cut their own direct deals, all three of them will likely be covered by the BMI deal for the remainder of the deal, since none of them can reclaim the ability to cut digital deals until Jan. 1, 2014, sources say.

In the meantime, because of different licensing periods, the above three publishers and Warner/Chappell Music have filed what is termed a revocable notices with ASCAP that beginning July 1 it is their intention to withdraw digital rights, but none of them have made a final decision, according to the ASCAP Website.

The Universal Music Publishing Group has already confirmed its intention to cut direct digital deals and sources say it is close to signing a deal with the Apple iTunes Radio service. Likewise, sources say the BMG Chrysalis will withdraw its digital rights from the two PROs when the waiting periods expire. However, its not clear if Warner/Chappel will pull all of its digital rights, even though it has filed a revocable notice with ASCAP and apparently has negotiated a direct deal with Apple for its streaming service. Sources say that since publishers allow the PROs to license their music on a non-exclusive basis, Warner might choose which digital accounts it wants to do direct deals with and might leave others to be covered by the PROs. A Warner/Chappell spokesman declined comment.

As for Kobalt, "while Kobalt has notified ASCAP and BMI of its revocable election to withdraw licensing rights with respect to certain categories of digital service providers, we prefer not to comment further until the arrangements are finalized," a Kobalt spokesperson said in a statement.