Evidently the controversy over royalty rates for online radio — which I thought had been somewhat resolved — is still ongoing, and it’s not looking good.

Pandora is one of the nation’s most popular Web radio services, with about 1 million listeners daily. Its Music Genome Project allows customers to create stations tailored to their own tastes. It is one of the 10 most popular applications for Apple’s iPhone and attracts 40,000 new customers a day.

Yet the burgeoning company may be on the verge of collapse, according to its founder, and so may be others like it.

“We’re approaching a pull-the-plug kind of decision,” said Tim Westergren, who founded Pandora. “This is like a last stand for webcasting.”

SoundExchange, the organization that represents performers and record companies, said it supports the higher royalties for Internet radio because musicians deserve a bigger cut of Internet radio profits.

“Our artists and copyright owners deserve to be fairly compensated for the blood and sweat that forms the core product of these businesses,” said Mike Huppe, general counsel for SoundExchange.

Given that the current royalty structure makes a viable business model impossible for online broadcasting, someone should ask Mr. Huppe: just how happy would his clients be if their piece of the online radio business turns out to be a hefty percentage of zero?

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