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 ad 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 via Launchcast, including both the 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 Launchcast users are accustomed are getting phased out, with an eye towards migrating those users to CBS' Last.fm service. Also getting the axe 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 Internet radio listening market.

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

"A lot of the economics around Internet radio have changed quite drastically in the last year," he says. "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 adds, will continue to program its own music channels, and will focus on developing open platforms that allow Yahoo users to embed music in different community and social applications, such as its Instant Messaging product.

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