"Music royalties everywhere in the world are a major stumbling block - in America broadcast radio aren't used to paying royalties and they've been asked to pay online . In UK we are in a rather more enlightened framework, but it really comes down to the fact that there isn't actually a blanket deal yet for Internet radio," says Virgin's James Cridland.

Recent legislation to licence webcasters in America caused outrage over its imposition of charges irrespective of who the broadcaster was, and backdating them to 1998. "The record labels could very reasonably request that webcasters cease and desist or threaten legal action. That had a huge impact in the US when they introduced the CARP bill - about half of the Internet stations at the time just shut down because they were scared of being retrospectively billed," says Gavin Starks of IWA Europe.

The more recent Small Webcasters Settlement Act seems to offer a more level playing field in USA. "What I think it does is it buys a little time until perhaps some other developments happen in the industry which would lead to an environment where a viable licensing agreement would be more of a reality," says RAIN editor Paul Maloney.

Steve Johnston of the Association if Independent Music (AIM) adds: "There's a political dimension to what happened in the US as well, in fact a lot of the major broadcasters were quite okay with the fact the rates were on the high side because it meant there would be less competition."

In the UK the PRS/MCPS collect on behalf of artists, while the PPL collects for performance rights.

"The licence charge for PRS is based on net broadcasting revenue, and there are various bandings depending on the kinds of revenue that the broadcaster would bring in. There is a minimum yearly charge which means that for webcasters that aren't bringing in a revenue they'd pay £1080/year. There is a charge also to MCPS of £250 a quarter," says Adrian Crookes of PRS/MCPS.

Dominic McGonigal of PPL explains their position toward webcasters: "They'll need a licence because its use of copyright, but at the moment the PPL doesn't have the webcasting rights, only the simulcasting rights, so an Internet station in the UK would need to go direct to the record companies."

However, the independent labels in the UK have made it possible to webcast their records by dealing with AIM. Steve Johnston says: "AIM can give a UK Internet station for an annual fee of about £1000 the right to play unlimited streams of our music."

DJ Demon D of Selecta highlights the confusion felt by some webcasters: "Copyright was an issue we were worried about. One reason we chose Live365 is that they broadcast from America and they have a deal with the American bodies that covers us. The difficulty in UK, if your webstream originates from the UK, is that there isn't really any type of law or licensing."

The PPL's McGonigal is hopeful this will soon change: "We are in discussion with all 3000 record companies and overseas societies to put in place global arrangements for webcasting. We hope to come to some agreement within the next few months and then we'll be able to issue wecasting licences."

"In a lot of ways America leads as far as they pass a law like the DMCA and then other countries follow suit. I hope its not like that," offers Paul Maloney of RAIN. However the PPL's plans suggest that it is: "All of our existing tariffs are based on usage and value of rights being exercised, so I'd imagine we'd put in similar tariffs in webcasting - it makes sense to apply similar arrangements in the UK as exist in other similar territories," says McGonigal.

Some webcasters are not too bothered anyhow, as Interface's Eezee-E shows: "In general our policy is: we are pirates, we play what and how we want, and playing music when you are meant to pay royalties also works in the other direction. We think from every tune we play the artist benefits from the airplay." He also maintains that they are producing their own 'new' content by mixing records together.

Bristol Broadband Collective's Tony Gosling agrees: "We need to ask the artists. Sod the PPL or whoever, if the artists are up for it."

"If the composers decide that they want to place their music for free on a website then that is their choice to do so, the important thing is that they should have that choice," is the line from Adrian Crookes from PRS.

However, record label boss Andy Jarrod of 3-Beat is less happy: "It's a loss of publishing rights and a loss of royalty rights," - although he acknowledges that the promotion is good.

The future of these issues remains rather unclear. "I don't think we'll ever get to the point when we have to pay royalties on every tune we play and keep a list, because there are too many net radios out there," opines Charles from LLD.

Eezee-E is not hopeful though: "We approached the copyright people two years ago in London and they basically didn't have a clue how to control all this, or what we should pay."

As the BBC's Torin Douglas sums it up succinctly: "It is very murky. There is obviously a happy medium, but we've not found it yet."