Choosing a radio station was once a right of passage for the American adolescence. It was what bound you to your friends, disassociated you from your parents and attracted to you whatever partner had the misfortune to have you. Regional in range, determined by frequency, traditional radio was completely national in scope, cities to suburbs, Natick to Nashville. And then, like with the overnight successes the medium helped popularize, everything seemed to decline.

Traditional radio has been in a steady fall for nearly a decade. While it still remains a 21 billion dollar industry, the time spent listening to radio has fallen somewhere to the tune of 8 percent since 2000, according to Arbitron, a firm that measure radio audiences. This steady drop in listenership has forced terrestrial radio stations to program music that can appeal to the broadest of audiences, disenfranchising both music fans and emerging artists, and helping to foster the growth of satellite and Internet radio.

"Internet radio has redrawn the whole radio landscape," said Tim Westergren, a founder of Pandora, a leading Internet radio company. "It provides a more fulfilling radio experience and a mass promotion for artists being shut out of terrestrial radio."

The metrics are in agreement with Westergren, Internet radio captures 33 million listeners per week, according to Arbitron, and nearly 15 % of 18 to 49 year olds tune in to Internet radio on a weekly basis. Internet radio companies, such as Pandora, Last.fm and Slacker offer a personalized radio experience which gives its listeners access to a greater variety of music and enhanced control over the music being delivered to them. The listening experience is now being offered portably, with Slacker's offering a for-sale portable player and Pandora delivering an iPhone application.

Internet radio might be an even greater bonanza for the working artist. "For bands that have no shot at traditional radio", says radio expert Kurt Hanson, "it is one way they can expose their music to fans." Pandora is home to 60,000 artists, 70% of which aren't affiliated with a major label. "While some bands are still holding out for that elusive deal," says Joanna Ifrah, a former artist and repertoire scout for Columbia and Sony records, "Many more emerging bands are working their audience, working their Myspace pages, betting on themselves and getting paid."

Artists are working comfortably and profitably outside of major labels, getting airtime through Internet and satellite radio, building audiences through social networks, and further being able to monetize themselves through sites such as Los Angeles based startup True Anthem. However, major labels are pushing back by influencing Soundexchange to refuse to renegotiate royalty rates agreed upon last year that could potentially bankrupt the Internet radio industry.

While the numbers can be complicated, it comes down to simple metrics; a now profitable Internet radio site will pay royalty rates that exceed total revenue if the current rates negotiated by Soundexchange are upheld. A company like Pandora, which is paying $750,000 per month to Soundexchange under the current rates, would go out of business under the new rates which increase per year retroactively going back to 2006. (Satellites and cable radio settled for 7.5 percent of revenue with Soundexchange). The idea that Internet radio has to pay any royalty rates, while fair to the artists, legally speaking, is laughable.

Traditional radio doesn't pay a dime in royalty rates because it is considered promotional. Has there been a greater promotional tool for an artist since the invention of the barker than the Internet? Even with the 50% cut that the artist receive from Soundexchange, for the working musician, according to Hanson, Internet radio is for more valuable developing a fan base than the "single digit cut they get from royalties." If these rates are enforced and companies like Pandora go out of business, bands that don't fit in the broad world of terrestrial radio will have a far more difficult time building a fan base and will lose the revenue stream that is Internet radio.

While the negotiations between Internet radio and Soundexchange look grim, companies like Pandora aren't ready to lower the antennae on Internet radio just yet.

"We are going to plow ahead until we reach a reasonable settlement," said Westergren.