Tim Westergren, the founder of the Internet radio company Pandora, warned that he might have to shut down the service soon because the company's operations are crippled by unreasonable royalties. A federal panel doubled the royalty payments for a copyright song played on Internet radio in 2007, drastically cutting profits of all such businesses, which have since struggled to maintain profitability.

U.S. Rep. Howard Berman, D-Calif., is leading an effort to negotiate lower royalties with SoundExchange, the company representing record companies and their artists, in order to prevent the collapse of the ailing Internet radio business.

For Pandora, royalty fees this year will amount to 70 percent of its projected revenue of $25 million, Westergren said.

Pandora is an automated music recommendation and Internet radio service which was created by the Music Genome Project, founded in January 2000. The Music Genome Project uses over 400 attributes to describe songs and a complex mathematical algorithm to organize them. The innovative system requires a musician to create a song's genome in a process that takes 20 to 30 minutes per song. Some tracks require more than one musician to ensure reliability.

With Pandora, users can tag tracks with Thumbs up, No response, Thumbs down, and Zzzz. This enables users to tune the service which will respond by providing them tracks they like. However, rewind or repeat is not possible, and only six skips per hour are allowed, including those resulting from a thumbs down response. Also, play of a single artist is limited.