I highly suspect that is the case. On-demand (picking specific songs) has significantly higher royalties than radio. turntable.fm's model of picking a bunch of songs to be played but playing them with a batch of other user's requests was an interesting way around that.

In this case, however, I don't see the reason for skipping the currently playing song. I'm assuming that they've already had to pay for the current play so they might as well let it play out before skipping to the cheaper rotation.