Wired Listening Post writer Eliot Van Buskirk, who has been playing close attention to the CRB decision since last Friday, writes today: "Larger services that offer thousands of channels, such as the free Pandora, are also facing a huge spike in royalty costs. Kurt Hanson, publisher of RAIN and CEO of AccuRadio, went so far as to speculate that Pandora, which  is based in the United States, could ‘disappear’ as a result of the new rates. Overseas competitors like Last.fm, which is based in London and removed from the board’s restrictions, could easily claim Pandora’s market share."

"If Pandora has to pay the annual $500 minimum for each channel, Hanson said, its sound-recording royalty bill for 2006 alone would be capped at about $2 billion (based on the service’s 300 million registered users, each of whom gets to create up to 100 unique channels)."

Pandora CEO Joe Kennedy chimed in, calling the rates "disastrous", and adding: "I’m not aware of any Internet radio service that believes they can sustain a business at the rates set by this decision. The only reason the services are not shutting down today is the belief that rationality will ultimately prevail here, either through appeal or Congressional intervention."

Kennedy goes on to warn of the competitive void that the demise of Internet radio would leave, and the gross disparity between formats that the decision creates. "If these rates are left standing, satellite and broadcast may be all that are left," Kennedy said. "Broadcasters pay no sound recording royalties at all and, at the new rates, Internet radio would have to pay 4-5 times the rate that the satellite companies pay."

In an e-mail to the GigaOm website, Pandora co-founder Tim Westergren added, "Left unchanged, it’s over for us and every other internet radio service, period."

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