Here comes a report with rumors of a fall of about 10%, so far, for AOL and Yahoo!’s online radio services as they stop various internal promotions to drive more users to them. What a ’surprise’, huh?

I’ve said this all along, a crazy webcasting royalty rate begets:

• Legitimate companies getting out of this space
• A huge brain drain as young startups look to make a buck in other fields
• Illegal services thriving like online casinos and not paying a dime to labels or the artists
• Illegal AND foreign services grabbing the Internet radio marketshare - which is nearly permanent and irreversible as is the Search industry market.

The way to end this? Adopt sane royalties please. Someone at SoundExchange, for the love of G-d, just think 5-10 years into the future for a change in terms of making profit from new services instead of the continued loss on sales of music, especially CDs. The money is going somewhere else.

If you are interested in this space, see my Internet radio royalty economics analysis which I have recently posted here.