Yahoo Inc. (Nasdaq:YHOO – news) and digital media company Gracenote launched an online lyrics service on Tuesday, the first industry-backed effort in a market dominated by unauthorized, rogue Web sites.
Yet at Yahoo and elsewhere, lyrics remain a notable omission from digital music files either purchased or acquired through subscription models. Not only do consumers not receive song lyrics with their download, they can’t search for songs by lyrics within Yahoo Music Unlimited or any other digital music service including iTunes.
The cost of including the lyrics to these files — primarily the result of the licensing fee — would either force digital retailers to increase the cost of their service or accept less of an already-thin margin.
But Yahoo and Gracenote say these issues will be resolved over time once publishers begin realizing the added revenue that lyrics bring them. Gracenote CEO Craig Palmer estimates that lyric license fees could result in as much as $100 million in annual revenue within 10 years.