It looks like Internet radio is in such dire straits that some ad gurus are thinking of bringing back the most verboten of radio subjects: payola. A guest blogger at Silicon Alley Insider named Doug Perlson made the case that since Internet and Satellite radio doesn't have a royalty exemption (and the accompanying ban on pay-to-play), that they must return to how broadcast radio made money before payola was banned.Perlson, who owns the ad network TargetSpot, argued that listeners are mature enough now to accept the practice: "Radio listeners are a savvy lot...The listeners are well aware that at some point in time, if they are going to get highly personalized, high quality streaming music, they will have to pay for it some way."

Bruce Houghton at Hypebot was quick to bash the idea as "one of the worst ideas [he's] heard in a long time." Houghton argued that payola would go against what some see as the main advantage of internet and satellite radio: it's sense of independence. "People listen to music on the net to escape broadcast radio's 'ick' factor created by endless ads, hype-driven DJ's, overproduced promos," said Houghton. "To bring any hint of that  to internet radio is a huge mistake."

Eliot Van Busick at Wired Listening Post blog notes multiple contradictions in Perlson's argument, commenting, "Essentially, he admits that payola could damage internet radio, but that it wouldn't matter. Try telling that to Pandora."

It seems inevitable that someone would make this argument, but I'm going to have to side with Houghton on this one. To me, the only way this debate will get resolved is if the demand for internet and satellite radio rises beyond the point where it can be quashed by broadcast radio lobbyists. This will probably happen sometime in the future, but when is anyone's guess.