New York - Yahoo (NASD: YHOO) and AOL (NYSE: TW) may shutter their Internet radio services, facing a 38% increase in music royalties at the hands of the Copyright Royalty Board, Bloomberg reports. "We're not going to stay in the business if cost is more than we make long term," Yahoo Music general manager Ian Rogers told Bloomberg. Echoing the same tone, AOL Radio managing director Lisa Namerow told Bloomberg, "If the rates remain as they are, it would be very challenging to sustain a business that is profitable."

Through the Digital Media Association, both Yahoo and AOL are appealing the royalty rates proposed by the music industry's SoundExchange and approved by the Copyright Royalty Board.

However, the U.S. Court of Appeals in Washington may not rule on the matter until 2009.

Since the new rates went into effect, Yahoo and AOL have each stopped promoting their Web radio services, and as a result saw their user numbers drop 11% and 10%, respectively, in October.

Related Links:
http://snipurl.com/1ue0k (Bloomberg)

http://snipurl.com/1ue0n (DMW previous coverage)