Pandora will no longer be available to many users outside of the US

Mounting pressure from record labels has forced the company to stop streaming music to countries where licensing deals have not been agreed.

In the US, web music is licensed under the Digital Millennium Copyright Act, but to stream legally abroad, licences must be agreed with the rights holders.

Pandora founder Tim Westergen said he was "deeply sorry" to non-US users.

In an e-mail to registered listeners outside of the US, he said: "Other than in the UK, we have not yet been able to make significant progress in our efforts to obtain a sufficient number of international licences at terms that would enable to run a viable business."

Pandora has always been labelled a US-only service. However, this was easy for listeners outside of America to circumvent because all that was required to register was a US zip-code.

Now, from Thursday 3 May, Pandora will check a listener's country of origin by looking at their computer's IP address - the unique number which will identify the country in which the PC has connected to the net.

Devastating

Pandora along with many other US webcasters is also facing pressures from a forthcoming increase in royalty fees put forward by the Copyright Royalty Board (CRB).

This was due to come into place on 15 May, but it has now been put back until 15 July.

The new fees, which will apply until 2010, will charge a flat fee per-song, per-user in addition to a $500 fee for every channel owned by a station. Fees will increase every year until 2010.

The American Federation of Television and Radio Artists welcomed the forthcoming changes to the royalty system, stating artists "deserve to be paid fairly for the use of the creativity, talent, and hard work they put into making that product".

But lobby group SaveNetRadio.org has said the hike in royalty could be the death knell for the industry.

It welcomed the two-month "reprieve" and has said it will "continue our fight to free internet radio from these devastating fees".