Internet radio services that don’t let users play tracks on demand don’t need to strike content licensing deals with record labels, according to the verdict in the ongoing dispute between Yahoo’s Launchcast and the music industry.

The U.S. Second Circuit Court of Appeals today upheld the original verdict, reached in 2007, that found Launchcast need only pay the standard Webcaster royalty rates to SoundExchange. That eliminates the need to get permission directly from record labels to air their content. Because songs on these services are played in random order rather than on-demand, the court ruled they are not “interactive services” such as Imeem and MySpace Music are.

Sony Music Entertainment, then Sony BMG, sued Launchcast in 2001, saying the ability to build custom stations around music preferences and the ability to skip songs constituted interactivity, and that required additional licensing deals with the labels.

The ruling affects other similar services, such as Slacker, Last.fm and Pandora.

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