Terrestrial Radio Flexes Its Muscle Once Again

CBS Radio announced today that it was buying Yahoo's Launchcast service. Although Launchcast was at one time the leading streaming radio site, it was never a money maker for Yahoo. And given the current situation at the struggling Internet portal, keeping money losers are not in the equation.

CBS Radio, on the other hand, continues to intelligently increase its hold on Internet Radio. The acquisition of Launchcast follows the deal for AOL Radio earlier in the year and Last.fm last year.

Pandora's Chief Strategy Officer, Tim Westergren, is quoted in the LA Times article saying that "It's a real shame, because Yahoo was such a pioneer in this field". He goes on to say that "It should serve as a cautionary tale of what can happen when copyright holders want too much money."

Obviously referring to the proposed Internet royalty rate hikes, Tim does have a point. But the reality is that even before the hike, Launchcast was in the red. CBS Radio and its large local sales teams have a much better chance monetizing the streams. It does not hurt that CBS Radio still has a large (albeit declining) revenue stream from OTA broadcasts.

The cynic might say that CBS Radio will do to Internet radio what Clear Channel did to broadcast radio. But we feel that CBS Radio could really surprise us and go the opposite way:

1) Improve online radio by offering both pre-programmed (CBS, AOL, Launchcast) AND user-generated (Last.fm) stations. Thereby offering something for both the casual and diehard music fan.

2) Multicast Launchcast's music channels not only online but over the air on HD2 Stations. This would solve one of the biggest issues holding back HD Radio: Lack of great music content.