TechCrunch reports that Sonific, an online music radio service similar to Pandora and last.fm, is shutting down operations on May 1st, saying that they were unable to secure licensing from the record labels in a way that made their business possible. According to a post by Gerd Leonhard, Co-Founder & CEO of Sonific:

"There are countless startups providing access to any and all music streams without any license whatsoever. However, when we approached the major record label decision makers in order to obtain licenses for some of the music in their catalogs we have routinely faced demands for very large cash advances and fixed per-stream minimum payments, pressure to give them 'free' company equity, and requirements of utterly bizarre usage restrictions. It seems that the industry's major stakeholders still prefer this turf to remain unlicensed rather than to allow real-life, workable and market-based solutions to emerge by working with new companies such as Sonific. This is not the way forward.

"We therefore had to realize that a company that wants to provide interactive streaming music services must either a) risk the constant complaints of their users, due to the lack of hit content b) proceed to use any and all music (this is routinely done by allowing users to upload their own MP3s) without the required licenses, and therefore be at the total mercy of the record labels at some point in time, and c) build a huge audience very quickly, based on having the content available - permission or not -, and then very quickly sell themselves to a large company that will take care of placating the labels while the money is plenty and the pockets are deep... Unfortunately we don't like any of these choices."