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... and probably the best solution. How to Create Your Own Internet Radio Station Live365 is an easy way to start a station. It's also possible to make a profit with a Live365 Pro station. I think you must own a legitimate copy of the music that you upload but that is the main restriction. Everything else, like royalty fees, is handled by them.

Caveat: Do not try to "roll your own" internet music server. Copyright owners take such copyright infractions seriously and it could result in more legal hassles than you can handle.
 
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