Yahoo cedes Internet radio operations to CBS

Struggling with rising music royalty costs, on Wednesday, Yahoo offloaded much of the responsibility for its Internet radio service to CBS, only a few months after Time Warner made a similar move with AOL Radio.

Starting early next year, the 150 stations in Yahoo's Internet radio service will be combined with those of CBS, and that CBS will take on all of the sales duties for the service, which is known as Launchcast.

Also under the agreement, Yahoo employees will continue to be in charge of programming for Launchcast. Now, though, they'll be able to pull in content from CBS.

Meanwhile, a new CBS Radio player will be integrated into the Yahoo Music site, and Launchcast will become available for the first time to Firefox, Safari, and Macintosh users. The earlier Launchcast browser worked only on Microsoft's Internet Explorer browser.

In addition, Yahoo's news and sports section will gain access to some of CBS's top-rated stations, including KNX-AM in Los Angeles and WFAN in New York City.

Like AOL Radio and other Internet radio services, Launchcast is dealing with the impact of a March 2007 decision by the US Copyright Royalty Board which increases royalties for music streamed over online radio. Time Warner announced a similar deal for AOL Radio with CBS in June.

Increasingly caught in economic survival mode, Yahoo has been trying to achieve cost efficiencies since last October. In a related maneuver earlier this year, Yahoo shut down its music downloads service and transferred its music subscription service to RealNetworks' Rhapsody.

Now, Yahoo officials are reportedly hoping that CBS's system of targeting ads at listeners in particular ZIP codes will boost Launchcast's revenues. Moreover, CBS's programming consists of a mix of music, talk, and sports, so that the expenses of music royalties will become somewhat diluted from Yahoo's standpoint.