Internet radio site Pandora is to stop streaming music to UK users from 15 January after failing to reach agreement with record companies.

Founder Tim Westergren said in a letter to subscribers that all services outside the US will have to be shut down following a breakdown in negotiations.

Westergren, a former professional musician, blamed the unyielding stand of the record companies for his decision.

"Phonographic Performance Ltd (which represents the record labels) and the MCPS-PRS Alliance (which represents music publishers) have demanded per-track performance rates which are too high to allow ad-supported radio," he said.

"Hugely disappointing and depressing to us as it is, we have to block the last territory outside the US.

"The consequences of failing to support companies like Pandora that attempt to build a sustainable radio business for the future will be the continued explosion of piracy, the continued constriction of opportunities for working musicians, and a worsening drought of new music for fans."

Pandora, which is based on the Music Genome Project, plays bands that the user specifies but also suggests similar music that may appeal.

The service has been hit by royalty demands but is expanding into the mobile music sphere to increase revenues.