The increasingly complex rules of Britain's music royalty system have become so difficult to navigate that it could stifle innovation and make new start-ups a rare phenomena, posits Martin Stiksel, one of the co-founders of Last.fm.

The British system for online music royalties has payments being negotiated and paid to those holding the rights of the music streamed, including record labels, music publishers and the artists themselves; in contrast, websites like YouTube have negotiated flat fees to cover the royalties for music with a UK copyright.

Last year, music service Pandora deemed the rates demanded by record labels and music publishers far too high to allow ad-supported radio to continue to operate. With the waters so treacherous and confusing, Pandora stopped offering its service to British users.

Britain's communications minister, Lord Carter, reportedly ignored calls to simplify the system and has in fact announced plans to create another agency to oversee the enforcement of copyright - a move that many believe will further complicate matters.

Despite the confusion, Last.fm has seen significant growth. The site now has more than 25 million monthly users, and plans for the site call for further explorations to find new users.

For example, in addition to the site's mobile phone apps, it is working on building software into other apps for home use.