A quick note from the continuing Yahoo drama: today the company agreed to sell off Launchcast, its streaming music service, to CBS. (Disclosure: CBS is the publisher of News.com.) This continues Yahoo's movement out of the music biz--it sold its subscription service to RealNetworks back in February.
If it keeps going at this rate, CBS will have to add an ear to its logo.
More interesting than Yahoo's exit is the buyer. Launchcast now sits alongside Last.fm and AOL Radio (which is best-loved on the iPhone) in CBS's online radio arsenal. According to this report in All Things Digital, Launchcast will become more like AOL Radio, focusing primarily on pre-programmed playlists and Webcasts of terrestrial radio stations, while Last.fm will remain the company's flagship property for user-generated playlists.
It's interesting that CBS still sees a lot of opportunity in preprogrammed (top-down) online radio. By way of comparison, look at News Corp's recent launch of MySpace Music, which is focused on the idea that users will hunt down their favorite artists and songs and then assemble playlists (bottom up). CBS's approach makes sense--you might as well appeal to all segments of the listening audience, and some Internet users simply don't have the time to bother with custom playlists, or even with recommendation-driven services like Last.fm and Pandora.
One of the first things Microsoft did when launching the new Zune was kill the 2-year-old MSN Music download service.
The business reasons were plain: MSN Music was a PlaysForSure service, but the Zune wasn't PlaysForSure-compatible, and it came with its own music download service, integrated into the Zune software.
Sure, there's still something with the brand name MSN Music, but it's basically a shell--a few music videos, some promotional tie-ins with Zune (through a program called Ignition), and a radio station powered by Pandora.
If Microsoft's smart, it'll keep LaunchCast around.
(Credit: Yahoo)So what might that mean for Yahoo Music, if Microsoft's proposed acquisition of Yahoo clears? Probably not much, at first.
Microsoft's Kevin Johnson, who leads the group responsible for online services and Windows, mentioned in a conference call that the company would get the quickest benefits from combining their advertising platforms, particularly paid search: "scale economics can kick in fairly rapidly when you just look at the simple step of just combining the search-related ad inventory on a single ad platform."
Translation: as soon as the acquisition closes, Yahoo Search would be folded into Microsoft's Live Search, and Panama would be folded into AdCenter.
Eventually, though, Microsoft would go through all the other Yahoo divisions, looking for overlap or strategic misfits. Here's where Yahoo Music could feel the heat. Selling PlaysForSure-protected files does nothing for the Zune, and even if Yahoo goes with DRM-free MP3 files, it would seem to be redundant with the Zune Marketplace.
Now, if Microsoft were smart, it would recognize the popularity of the combined Yahoo Music and LaunchCast (see Aribtron's online-radio ratings). But often, decisions in acquisitions are driven by politics and emotion rather than actual business logic.
Editors' note: Yahoo on Monday announced that it is discontinuing its Yahoo Music Unlimited subscription service, transferring its customers to RealNetworks' Rhapsody service.
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