I think Pandora is looking out for Pandora. That means that if Pandora has to pay performance royalties, everyone else should, too. And if no one has to pay, they'll be even more pleased. I think if someone uses an artist's music to make a profit, they should have to pay the artist.
And although I agree that the system's time has passed, I'm not sure what this "Music Industry" is that you speak of (in title case, no less), but there is a lot of ignorance out there. For the record, there is no unified music industry. There are at least two distinct parts--majors and independents, and possibly a third--independents with major distribution. (AFAIC major-owned "independents" are majors.)
Artists (and their labels) used to be happy with not making any money off of radio (and paying radio stations in some cases, e.g. the payola scandal) because of the promotional value of the medium--lots of radio play, lots of sales. But nowadays, sales returns for many artists have diminished to the point that this potential source of income has once again become attractive.
In Europe, any sort of public performances (radio, streaming, live) are subject to performance royalties paid to songwriters. (It gets a little bizarre when you get a payment from one of the royalty collection societies for your own performance of your songs (which the venue was charged for), but on the whole, the system works.) Independents have been hit the hardest by the changes in the market over the last five years (or so), but are the least likely to be registered with a royalty collection society in order to collect performance (and mechanical) royalties and so the money sits in the collection society's bank account, collecting interest until it is divided up among the members of the society according to the proportion of the market share each member represents. So even if a similar system is adopted in the US, there is no guarantee that independent artists (i.e. the ones *I* care about) will get their money unless the collection system is also fair.