Yahoo Music, once the top music destination on the Web, is handing over the bulk of its Launchcast Internet radio operations to CBS Radio - a move driven by dramatically higher fees for airing music online. Yahoo employees will still oversee the programming for Launchcast’s stations, drawing from CBS Radio’s content.

Yahoo Music head, Michael Spiegelman, singled out more expensive royalty payments - under the most recent Copyright Royalty Board rate structure - as key to the decision. However, he added that Yahoo will continue to program its own music channels, and will focus on developing open platforms that allow Yahoo users to embed music in community and social applications, including its Instant Messaging product.

Under the latest arrangement, Yahoo will depend on CBS Radio to power Launchcast and sell all the ads on the service. In return, Yahoo’s highly trafficked news and sports sections will feature some of CBS’s top-rated radio stations, including WFAN in New York and KNX-AM in Los Angeles.

The deal, which closely resembles another between CBS Radio and AOL Radio in June, will have CBS take over all advertising-sales operations, licensing and technology decisions for the Launchcast service. That includes replacing the Launchcast desktop music player with a co-branded one provided by CBS. The deal will also widen Launchcast’s audience, enabling users to listen to the service through the Firefox and Safari Web browsers for the first time.

With this shift, Yahoo broadens its retrenchment from online music. Earlier this year, the company closed a music downloading service and transferred its music subscription service to RealNetworks Inc.’s Rhapsody.