An uncertain future now looms over internet radio stations, as their representative group, the Digital Media Association, failed to reach an agreement with the music industry over royalty rates before the February 15th deadline.

The stations were trying to negotiate with SoundExchange, an RIAA spin-off that collects and distributes royalty payments from both traditional and internet-based radio stations. The parties have been trying to reach an agreement since a 2007 government ruling gave SoundExchange the right to raise royalty rates by up to 300%.

While plenty of big traditional radio stations have reached agreements with SoundExchange that let them also operate internet streams, the internet-only groups represented by the DMA haven't been able to come up with terms they can live with. In the interim, SoundExchange allowed them to continue streaming music at the the old rates, but the deadline to come to an end of the negotiations has now been reached with no resolution.

We're not quite sure what's next for the sites, including fan-favorite Pandora, that couldn't work our a royalty plan. Pandora has warned listeners before that it may have to shut down if better rates couldn't be negotiated. Now that the time for that to happen has passed, we're waiting for statements from the affected companies as to what they have planned next. We've got out fingers crossed that they figure something out.

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