CBS to run Yahoo's Internet radio

New royalty structure claims former top music site

DENVER -- Chalk up another Internet radio casualty courtesy of the new royalty fee structure. Yahoo Music, once the top music destination on the Web, is handing over the bulk of its Launchcast Internet radio operations to CBS Radio.

Under a deal closely resembling that between CBS Radio and Launchast rival AOL Radio, CBS Radio is taking over all advertising-sales operations, licensing and technology decisions for the Launchcast service. That includes replacing the Launchcast desktop music player with a co-branded one provided by CBS.

CBS also will add all of its Internet radio stations to those available through Launchcast, including webcasts of CBS' terrestrial radio stations as well as its Internet-only feeds.

But that's not to say Launchcast will remain the same. Most particularly, the customized radio stations to which Launchcast users are accustomed are getting phased out, with an eye toward migrating those users to CBS' service. Also getting the ax is the Launchcast Plus subscription radio product, which charged about $2 a month for commercial-free radio in high-def audio. Instead, the high-def feature will be added to the basic-usage tier, at the expense of including ads in all streams.

On the plus side, the CBS player will allow Firefox browser and Mac users to access Launchcast, something they previously could not do. Collectively, those users represent about 22% of the Internet radio listening market.

Yahoo Music head Michael Spiegelman singled out more expensive royalty payments because of SoundExchange, under the most recent Copyright Royalty Board rate structure, as key to the decision.

"A lot of the economics around Internet radio have changed quite drastically in the last year," he said. "We want to be able to continue to offer Internet radio to our users, but it's pretty clear we had to make some big changes to the product to do so. We could either scale back features, scale back functionally and limit listening, or go with a partner with the scale of monetization to continue to operate in a sustainable fashion."

Yahoo, he added, will continue to program its own music channels, and will focus on developing open platforms that allow Yahoo users to embed music in community and social applications, including its Instant Messaging product.