One of the coolest apps on the web is in danger of extinction, and it is a story of patience and greed.

Pandora, the music site that allows you to create up to 100 custom personal radio stations, and suggests music based on songs you pick, was in the Washington Post Saturday, claiming that the music royalty rates the company is forced to pay are about to kill their business.

It was in Spring of 2007 when the Copyright Royalty Board ordered a doubling of royalties that internet radio stations would have to pay record labels for the privilege of airing a song. According to the article, those rates would force Pandora to hand over 70% of its gross revenue to SoundExchange, an arm of the RIAA record company association. Some in Congress have attempted to intervene, yet no agreement is close after months of talks. Pandora’s CEO is saying that unless something gives, they’ll have to pull the plug.

Meanwhile the labels are sniping back, saying that the web streamers are not doing enough to generate revenues for their business models. Talk about a “pot/kettle” scenario! It’s these same record companies who refused to change their models for years after the arrival of the internet, and now are scraping to stay relevant.

The lack of patience on the part of the record industry is shocking as well. The expansion of broadband internet has only reached the majority of the country in the last three to four years. It’s been only recently that the large radio companies have done anything to build their online streaming presence. Everybody is doing this at a loss…so I feel that the RIAA has gored their calf about three to five years before it will turn golden.

Of course, all of this back and forth does little to help music artists proliferate their music, and shows no recognition of the still important role that music on the radio plays in selling records. If radio airplay, terrestrial, satellite, or internet, has little bearing on record sales through CD’s or I-tunes, then why do the record companies spend millions on promotion departments and independent promoters?

I say that you’ve got to let the models and the ad market play out; we are still very early in the digital transition for the movement of money from the traditional media to the digital (Google Jeff Zucker from NBC Universal). Sure, go ahead compensate artists for their works, just make sure that there is a delivery system left over after the bill is paid.