Yahoo And AOL May Shut Down Web Radio Services

Considering Shutdown

YAHOO! INC. and TIME WARNER INC.'s AOL unit may shut down their Web radio services after being hit with a 38% increase in royalties to air music, reports BLOOMBERG. "We're not going to stay in the business if cost is more than we make long-term," YAHOO! MUSIC UNIT GM IAN ROGERS said in an interview.

YAHOO and AOL stopped directing users to their radio sites after SOUNDEXCHANGE, the WASHINGTON-based group representing artists and record labels, began collecting the higher fees in JULY. YAHOO is promoting a music service offering videos and songs for sale rather than its LAUNCHCAST, the largest Web radio site, ROGERS said.

As a result, the number of people using LAUNCHCAST fell 11% to 5.1 million in OCTOBER, according to COMSCORE. AOL RADIO users declined 10% to 2.7 million from 3 million. Radio sites attracted 51.2 million U.S. visitors last month, more than a quarter of all U.S. Web users.

SOUNDEXCHANGE, which represents record companies including SONY BMG, WARNER MUSIC GROUP CORP. and VIVENDI SA'S UNIVERSAL MUSIC GROUP, sought the royalty increase amid a drop in industry revenue. U.S. sales of compact discs fell 20% from 2004 to 2006, according to data from the RECORDING INDUSTRY ASSOCIATION OF AMERICA.

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