San Francisco  - Internet radio stations on Tuesday reached an agreement with the music industry for royalty payments for streaming music, both sides said.

The agreement came after two years of wrangling and requires large ad-supported radio services, such as Pandora, to either share 25 per cent of revenue with the music industry or pay a per-stream rate of 0.08 cents retroactive to 2006, whichever is greater. Sites that generate less than 1.25 million dollars in revenue must pay 12 to 14 per cent for streaming rights.

The price of the deal will force Web radio station Pandora to limit the amount of free listening available each month, according to founder Tim Westergren.

"The royalty crisis is over," Westergren said in a blog post. "This ensures that Pandora will continue streaming music for many years to come."

Westergren wrote that heavy users of Pandora who listen to more than 40 hours of web radio a week would be asked to make a contribution of 1 dollar to help the web radio site meet its costs. (dpa)