Pandora's new box

The future of music radio lies online, once there's a way to pay artists fairly

My favourite Christmas present last year was a pink leather radio, DAB-enabled, to replace my old (and broken) analogue one. The reason I love it so much has little to do with the extra radio stations it lets me tune in to. Yes, it's fun to listen to the World Service all day, and my growing endearment with 6 Music and Chill FM at least reassures me it's time I turned 30. But I love my new radio, I'm ashamed to say, because it's pink.

When I think about the future of radio, I don't think about DAB. Personalised internet radio is far more exciting. If you've never experienced it before, imagine this: you go to a website, and punch in the names of a few of your favourite musicians. Then, based on an "if you like that you'll love this" technology, it plays you what it thinks you want to hear. You can train it, either by rating the songs it plays you, or by introducing it to your MP3 collection. The result is unadulterated audio pleasure, without a Smashie or Nicey in sight.

Those to whom this sounds too good to be true will not be surprised that personalised internet radio has recently found itself in legal hot water. On 15 January, Pandora, a US-based personalised internet radio station, closed down its service to UK customers, having been unable to negotiate how to pay musicians a proportion of its profits.

In the analogue world, organisations called collecting societies seek royalties on behalf of the artists whose music is played on air, and distribute it accordingly. But the idea of as many radio stations as you have listeners, each playing a different song 24 hours a day, prompted the collecting societies to ask Pandora to pay more money than it could afford, and in the end everybody lost.

Last.fm, the UK's personalised internet radio station, which last year sold for a reported £142m, is confident that it will continue to be able to offer its service in the UK. A spokesperson for the company admitted that royalty negotiation was a "tricky business, in constant flux" and that the process of clearing rights was over-complex, given the potential benefits the Last.fm service can offer musicians. Radio has always been a way to expose listeners to new music they might like to buy, and personalised internet radio does this more efficiently and on a much larger scale.

Pandora's ex-customers in the UK will be wondering why the service they want can't be catered for by the recording industry. And they are not alone - for what are the millions of illicit peer-to-peer file-sharers, but a huge potential market? Internet users are showing the industry how they want their music in the digital age.

Licensing songs for broadcast on analogue radio probably looked incredibly complicated before anybody started doing it. Isn't it time that the industry started responding to internet music fans, rather than fighting them?