Yahoo and AOL to shut their net radios after rise in royalties

Yahoo! and AOL, a division of Time Warner, have separately announced that there is a distinct possibility that they would close their respective online radio services.

An abrupt rise in royalties on songs being listened to means running online radio services may prove to be a losing battle.

US based Internet radios pay 0.08 cents in 2006 and this is expected to rise to 0.19 cents in 2010.

More than a quarter of all US Internet users have visited web radio with Yahoo Launchcast and AOL Radio representing nearly 8 million users between them.

AOL Radio Network distributes on average around 2 billion songs a month (based on a November 2006 report) which means that all things equal, it would be expected to for out more than USD 40 million by 2010.

Yahoo has tried to entice more users to convert to pay-for subscription but "less than 3% of their radio listeners are subscribers. Subscription is a feature for users who would prefer no interruptions, not an interesting business for anyone."

While smaller radio webcasters have been spared the pain of having to fork out more than they get from in revenues, Soundexchange, the organisation which collects royalties on behalf of its members said that, bigger commercial webcasters like AOL and Yahoo are expected to pay.

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