Yahoo’s Launchcast Turns To CBS

Yahoo’s Internet radio service will plug into CBS’ webcasting network come February.

Blame it on higher royalty fees for Internet radio. By plugging Launchcast into CBS Radio’s Web services, Yahoo becomes the second operator of a standalone Internet radio service to avoid higher royalty fees by signing with CBS. AOL Radio inked a similar deal last summer.

The plan calls for CBS to do all the heavy lifting, from powering Launchcast to selling advertising. Although Yahoo will oversee the programming, CBS radio will provide the content.

But life is often a trade-off, and the Yahoo / CBS Radio deal is no exception. Under Yahoo, Launchcast player only worked on Microsoft’s Internet Explorer. Once the new deal is under way, Launchcast will also work with Firefox and Safari Web browsers.

Why would CBS think it can succeed when Yahoo failed? It all goes back to money.

For Yahoo, having CBS handling Launchcast means a further reduction in spending. The Web portal has been trying to cut about $400 million from its annual expenses and can now eliminate royalty fees and Launchcast operating expenses from its things-to-drop list.

CBS, on the other hand, thinks it can make more than a few dollars on Launchcast by targeting advertising to listeners in specific zip codes.

Of course, the rising cost of royalties is also a factor.

Although a 2007 decision raised royalties for Internet radio to what some believe will cost operators up to 70 percent of their income, more recently passed legislation enables Internet radio operators to negotiate for lower royalties. However, Yahoo chose not to go that path, in part because the Web portal feared the negotiations could result in even higher costs for a service that wasn’t all that profitable in the first place.

“Because of the unfavorable rates, we didn’t think it made sense to invest in the product,” Yahoo Music chief Michael Spiegelman said.

Launchcast began life as part of, which Yahoo acquired in a deal that was worth about $5.7 billion in 1999, dot-com bubble dollars. One of’s owners who actually made money on the deal was Mark Cuban, who used his profits to buy the Dallas Mavericks NBA team.

Launchcast going from a standalone service to an outlet powered by CBS Radio is hardly good news for other similar services that fear higher music royalties might put them out of business. One such operator, Tim Westergren, who founded Internet radio service Pandora and now serves as that company’s chief strategy officer, commented that the Yahoo Launchcast / CBS deal could be a harbinger of things to come.

“It’s a real shame because Yahoo was such a pioneer in this field,” Westergren said. “It should serve as a cautionary tale of what can happen when copyright holders want too much money.”


They’ve Seen The Future

As the year winds down, the number crunchers start winding up.

Blame it on those end-of-year reports. During the rest of December as well as the first few weeks of January, humanity will be bombarded by various facts, figures, numbers and statistics. For those who love numbers, it is the best time of year – but a nightmare for the numerically impaired.

The new JupiterResearch report about the U.S. music market is one such release. Chock full of numbers, Jupiter’s “U.S. Music Forecast, 2008 to 2013” says digital music sales make up 18 percent of the U.S. market and will reach 41 percent in five years, Reuters reported.

But record company execs shouldn’t break out the bubbly just yet. Like other reports in past years, Jupiter isn’t predicting online download sales will replace declining CD sales anytime soon. Instead, the research company predicts the U.S. music market will drop from $10.2 billion to $9.8 billion by 2013.

One of the more interesting aspects of the report is that many consumers who purchase downloadable tunes also purchase physical CDs.

Specifically, 64 percent who subscribe to online subscription services and 57 percent who download music also purchased CDs in the past year.

And yes, online piracy is still a major problem, as any record label exec can tell you. The Jupiter report isn’t predicting any quick fix for the problem, but it does say that paying for music downloads is increasing in popularity.

Details of the report also indicated that consumers prefer unprotected MP3s to DRM-laden proprietary formats. What’s more, Jupiter says consumers now spend about 60 percent of their total music budgets on digital formats.

But despite all the optimistic numbers for online music, there was one area Jupiter wasn’t too keen on – music on cell phones.

The research company predicted that listening to music on mobile phones would have a limited impact, if any, on music consumerism in the U.S. and would amount to less than $300 million in sales by 2013.


Selling It On iTunes

Although Apple does not release actual sales figures for its online music store, it did announce which artists sold the most.
The best-selling CD on iTunes was Coldplay’s Viva la Vida. Leona Lewis’ “Bleeding Love” was the online store’s top single.

But how does that translate into dollars and cents?

A Coldplay rep did say the band’s latest album sold more than 500,000 copies digitally, and that iTunes was the major conduit for those sales.

Other top-selling albums on iTunes include Jack Johnson’s Sleep Through The Static, which clocked in at No. 2. The soundtrack to the movie “Juno,” Lil’ Wayne’s Tha Carter III and Sara Bareilles’ Little Voice rounded off the iTunes Top 5 albums.

When it came to singles, Lewis’ “Bleeding Love” sold 3.2 million in downloads, according to J Records. Meanwhile, iTunes says the title track of Coldplay’s album was the No. 2 single on the service, followed by Flo Rida’s “Low,” Katy Perry’s “I Kissed A Girl” and Rihanna’s “Disturbia.”