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.

One company, I’ll call it Schmentercom, owns an oldies station with no DJ’s, minimal promotion, with only one goal, to splinter a bit of the audience of the other oldies station in the Seattle market, and weaken its Arbitron.
Also, Country KMPS had been on top of the list for the longest time, until the Wolf 100.7 came along: again I don’t think that new station is ever expected to dominate the market, but to lower the other country station’s #’s just enough that advertisers see a percentage increase in market share in the other held properties, and knock KMPS out of dominant position. It’s a mercenary game.

What I think the corporate suits didn’t realize was that there was such personal brand loyalty to KMPS, esp Ichabod Crane.
Which brings me to mention: the only time I listen to the radio, pretty much, is on the road. I tend to scan, until I pop a CD in (catching up on my “reading” that way: ever read “The Black Swan” by Taleb?)
There are many people using satellite radio but probably more people like me (haven’t looked at the numbers) who figure there’s enough content for free, and if not, I’ve got my CD player (or iPod). Of course, the iPod proves your point: the online ability to create custom content for hours of drive time means LastFM has as much impact on the highway as at the cubicle.