From Wired Magazine:

It’s a sad day for internet radio enthusiasts. Bloomberg reports that AOL and Yahoo may shut down their web radio services as a result of a 38 percent increase in royalty fees.

“We’re not going to stay in the business if cost is more than we make long term,” Ian Rogers, general manager at Yahoo’s music unit, told Bloomberg.

The news comes roughly eight months after the U.S. Copyright Royalty Board hiked royalty rates for webcasts effective (retroactively) from 2006 through 2010. For 2007, webcasters must pay $.0011 to stream one song to one listener; and that rate will jump to $.0014 in 2008; and to $.0018 in 2009. The fee structure was expected to drive hundreds of net radio stations out of business with the exception of deep-pocketed businesses such as Yahoo and AOL.

It’s not a totally done deal, though: Webcasters are scheduled to begin their appeal of the rate structure starting in February, and the whole process could carry on through much of 2008.

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