Pandora, the web radio station that creates a customised playlist based around your favourite songs and those that are musically similar, has announced that it will cut off UK listeners on 15 January, the BBC reports.

US licensing laws stipulate that Pandora must negotiate its royalty fees to copyright holders for each nation it streams to. It has been attempting to secure a licensing agreement for Britain since May 2007, but has finally admitted defeat.

Pandora works by comparing the initial favourite artist cited by a listener to other artists that have been analysed by the Music Genome Project for tonality, influences, style, mood, instrumentation and various other musical characteristics. It then begins to play songs that have elements in common with the chosen favourite.

As the listener vetoes certain songs or gives other the thumbs-up - or types in additional favourite bands - the site creates a detailed, personalised web radio station to suit the listener's tastes and introduce them to new music they are likely to enjoy.

But there are significant limitations to prevent the site giving users access to copyright-restricted music beyond 'fair use'. Listeners are limited to six 'skips' per hour, for instance, and are given limited access to a single artist's work.

More importantly, users are asked to register (and provide a US ZIP code) after hearing just a handful of songs. The site also analyses IP addresses to ensure that listeners are US-based.

In an email to UK users, the site's founder, Tim Westergren, claimed that British licensing authorities had demanded unworkably high fees, resulting in the blocking of the service in this service.

"Both the PPL (which represents the record labels) and the MCPS/PRS Alliance (which represents music publishers) have demanded rates that are far too high to allow ad-supported radio to operate and so, hugely disappointing and depressing to us as it is, we have to block the last territory outside of the US," Westergren wrote.

"We have been told to sign these totally unworkable license rates or switch off, non-negotiable, so that is what we are doing. Streaming illegally is just not in our DNA."

The official MCPS/PRS response, as reported by the Guardian, is as follows: "Licences are available for all online and mobile services and the terms applicable to webcasters were set down in the UK last year by an official independent and expert panel know as the Copyright Tribunal. In reaching its determination the panel heard considerable evidence from all sides of the online music business."