But the revenue percentage deal negotiated between the RIAA and Internet radio stations in 2002 expired, and after unsuccessful negotiations between the two entities, Congress created the Copyright Royalty Board to come up with new royalty fees.

The new rates charge US$.0008 per song per listener for 2006 (the royalty board's ruling is retroactive to 2006); $.0011 in 2007; $.0014 for 2008; $.0018 for 2009; and $.0019 for 2010. For multichannel operators like Pandora.com, a service that helps users find music on the Web, the fee is a flat $500 per radio channel for a particular number of listening hours per month.

Hanson said that under the previous royalty rate, his radio station paid $48,000. Under this decision, AccuRadio's royalty obligation for 2006 would be $600,000, he said.

"So we're bankrupt," he said.

Hanson said Web radio operators are considering their options, which could include an appeal of the board's ruling.