If current rates charged by labels cannot be supported by ad sales, maybe the music service has the wrong business model. It’s worth thinking about. The prevailing thought is that a site like last.fm has the right business model. That should be questioned. Always.
For many consumers, Internet radio will be a substitution — not just a complement — for music purchases. When I look at the numbers, I think it is unlikely that there will be enough volume to compensate for lost purchases. That’s exactly why labels aren’t rushing to lower their rates. Right now, it’s better for them to let the struggling music service figure out a way to generate more revenue.