When Pandora/etc argue that it adds popularity to music, they aren't lying- You can see this effect in the national music sales numbers-
Music used to be primarily local- A DJ in a regional market would start playing songs, and they'd catch on in that area. You can track songs such as Louie Louie, which started on the west coast and moved east.
The fact that U.S. radio doesn't have to pay performance fees is an accident of history. There is a bill in Congress that would make terrestrial radio pay performance fees. (Satellite radio has to pay, so it's not really a "we hate the internet" thing.) In Chicago, there's a radio PSA every half hour asking listeners to call their Congressperson to express their concern against it.