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Joe Kennedy, CEO of Pandora Media, the host of the Internet radio site Pandora.com, believes that Congress and the public will act to protect webcasters from possible extinction after a recent ruling of the Copyright Royalty Board that hikes royalty rates webcasters pay to play online music by 300-1200 percent as of May 15th.

He and others are hanging onto this hope as it is likely to be the only chance for survival for many webcasts and Internet radio sites.

The CRB's ruling to uphold its March 2 decision also requires webcasters to pay an annual fee of $500 in addition to the new rates.

"Internet radio as we know it today will not exist if these rates are sustained," Kennedy said in an interview with American Venture on Wednesday.

"I am hopeful that Congress will act, for several reasons. Internet radio is listened to every month now by over 50 million Americans, and those people are letting their congressman know how important this issue is," he said.

An appeal of the decision to the U.S. Court of Appeals for the Federal Circuit in Washington will be filed by all parties including National Public Radio, whose music programming will be affected by the decision.

"As in the past, a reasonably-determined flat fee would be fair and just, for us and for the recording industry," the organization wrote in a memo in response to the CRB's March decision.

The rate hikes, effective May 15th and retroactive for 2006 and the beginning of this year will immediately bankrupt smaller web casters and pose an imminent threat to sites like Pandora, which is on the road to profitability, Kennedy said.

Pandora has received four rounds of funding and has not disclosed the total amount raised. But $21.1 million had been raised and disclosed after a third round in 2005.

"It's Congress itself that set up this statutory license for Internet radio, it set it up in the late 90's because it wanted Internet radio to develop and thrive and be a place for more music to be heard in more new interesting ways," Kennedy said. "Congress sets the rules for this royalty arbitration process and when that process fails it is clearly Congress's role to step in and remedy that."

Pandora has joined with a myriad of webcasters large and small to form the SaveNetRadio Coalition which has drafted a petition requesting action from Congressional representatives.

Pandora founder and musician Tim Westergren formed Pandora in March 2000 and landed $1.3 million when most vcs were locking up their vaults as the Internet bubble exploded. The company boasts over 6 million subscribers thanks to a dedicated following to its unique Music Genome Project.

The project is driven by 50 employees, the majority of whom are working musicians, who listen to songs and categorize them by using over 400 different attributes. Listeners can type in a song such as "Halloween Parade" by Lou Reed or "Righteously" by Lucinda Williams and the project creates a customized music channel loaded with songs that have similar traits. The service is free with an option to subscribe.

The company has always paid royalties and believes in supporting musicians, Kennedy said. "The issue is you can't charge so much money per song that no one can afford to pay the song," he said.

The result of the shuttering of many legitimate radio stations will only serve to lessen profits and exposure for musicians who otherwise struggle to find an audience, he said.

"The primary role for artists [in receiving airplay] is not the revenue per say, it is the promotional impact, to connect with their audience and build a fan base.

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