Reports: CRB Killed The Internet Radio Star Pandora

"We're approaching a pull-the-plug kind of decision," Pandora founder Tim Westergren told The Washington Post . "This is like a last stand for Web casting."

The static involves Web radio stations, such as Pandora; the royalty collection organization Sound Exchange, which represents music artists, record companies and The Industry Association of America (RIAA); and The Copyright Review Board (CRB), an offshoot of The Library of Congress.

Last year, Sound Exchange won a decision from the CRB to increase Internet radio's royalties between 300 and 1,200 percent, according to the organization SaveNetRadio. Previously, Web radio services used to pay an annual fee plus a percentage of the profits.

The decision translates into the following fee structure, according to The Radio and Internet Newsletter: 2006: $0.0008 to stream one song to one listener; 2007: $.0011; 2008: $.0014; 2009: $.0018; 2010: $.0019.

The CRB subsequently denied motions from groups including National Public Radio to rehear the case.

In a filing, The CRB said, "The parties arguments in their respective motions amount to nothing more than a rehash of the arguments that the judges considered in the initial determination."

Westergren told The Washington Post that when he heard the decision, he thought, "We're dead...multiplied by the millions of songs and thousands of listeners Pandora serves, that means the company will have to pay about $17 million this year," Westergren said.

SaveNetRadio pointed out that broadcast radio is exempt from the ruling and pays no performance royalties to record companies or recording artists. Satellite radio, pays between 3 percent and 7 percent of revenue in sound recording performance royalties.

Rep. Howard L. Berman (D-Calif.) is attempting to broker a last-minute deal between Web radio stations and SoundExchange to reduce the fees, The Washington Post said.

"We're losing money as it is," Westergren told the paper. "The moment we think this problem in Washington is not going to get solved, we have to pull the plug because all we're doing is wasting money."