Yahoo scored a victory in a New York federal appeals court after it ruled that the search giant's Internet radio service could play songs without paying licensing fees to copyright holders. The US Second Circuit Court of Appeals concluded that webcasting cannot be classified as an "interactive service," which would require the fees. Instead, a webcasting service is only obligated to pay a statutory licensing fee set by the Copyright Royalty Board.

The case, which resulted in a direct loss for the recording industry, revolved around Yahoo's LAUNCHcast. The service allows users to create "stations" which play songs based on an individual's taste in genre or favorite artist.

Because users are only able to define a genre, the court determined that LAUNCHcast offers a level of control on par with traditional radio. A conventional radio experience allows listeners to tune into a preferred station and music style, but they have no ability to skip or choose songs.