Web radio dominates music consumption and sales. Bottom line. It is the present and future of the music and radio businesses. The music industry needs a healthy Internet radio space with far more competition than there is now (again, contrary to popular meme, Pandora dominates marketshare and then there's a smallish gaggle of everybody else).
Compulsory licensing -- with equitable rates across services -- regardless of how they deliver music (streaming, on-demand, etc.) needs to become the standard. Without it companies such as Spotify are held hostage by a music industry that acts in opposition to the musician's best interest. Thousands of small labels and independent acts do not, cannot and will not receive air play (or royalty compensation) under a direct licensing scheme.
Once this gets settled -- and it will -- Pandora becomes a buy. And, guess what, like most other hyper-growth companies with massive opportunity ripe for aggressive investment, it will trade at a lofty valuation. That will not and should not change.