In the furthest reaches of India’s rural heartland, the cellphone is bringing something that television, radio and even newspapers couldn’t deliver: Instant access to music, information, entertainment, news and even worship.

Despite its rapid modernization, many of India’s 750,000 villages remain isolated except for the cellphone reception that now blankets almost the entire country after a decade of rapid expansion by operators. So in villages that don’t receive any FM radio stations, people have begun calling a number that has a recording of Bollywood tunes and listening to it on their headsets.

This primitive cellular “radio” service was used by close to 20 million Indians last year, phone company executives estimate.

“I call it the poor man’s iTunes,” says Mahesh Prasad, president of Reliance Communications Ltd., one of India’s largest cellular companies. “A villager waiting for a bus has nothing to do. When he wants to kill some time, this is the only entertainment media available.”

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Technology companies are launching big advertising campaigns as they wager on a pickup in business spending and jockey to have their products stand apart in an environment where new customers are hard to find and competition is intensifying.

Companies such as Google Inc. (GOOG) have recently embarked on major ad pushes. This month, Google rolled out globally an ad campaign to flag its Gmail service and Google Docs word processing and spreadsheets. It’s an unusual move for the Internet giant, which has done little traditional advertising.

On Thursday, Juniper Networks Inc. (JNPR), a maker of networking gear, is starting its first-ever global campaign to raise awareness of its brand. Its bigger rival Cisco Systems Inc. (CSCO) last week launched new radio, print and online campaigns promoting a line of products for small businesses and a new system for corporate computer rooms.

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Radio programmers are now able to collect so much data about listener habits that some have begun fine-tuning their shows down to the second–to the dismay of on-air personalities like Ryan Seacrest.

The “American Idol” TV show host has a popular morning radio show based in Los Angeles that frequently takes the top spot in its target audience of listeners age 18-34. But that isn’t good enough. He has been complaining about being told to cut short the chatter and play more Lady Gaga and other hit artists, all because of the rollout of an audience-measurement system used for selling advertising.

Arbitron Inc.’s (ARB) Portable People Meter two years ago began replacing radio’s antiquated diary-based audience-measurement system, in which people kept written records of what they listened to.

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The next generation of radio listeners might not remember the olden days of scrolling through stations by turning a knob on a car or home stereo. Instead, the radio they listen to could very well be on their mobile phones.

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It is a fascinating and challenging time to work in the music business. The record industry is swept up in a sea of change and we have embraced it. It’s a new day for the business and a new day for fans–25 years ago, it was just radio and records, but today’s music marketplace is dramatically different, with hundreds of different fully licensed digital music services and models.

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There’s an old debate in the Valley about whether Google (GOOG) is really a media company or a technology company. In a sense, it is a silly debate, which is mostly a matter of semantics. A better question is this: Now that Google has become one of the world’s largest media companies, at least as measured by advertising dollars, what does it do next?

After all, the company has tried but generally failed to extend its approach to selling advertising into offline media sectors like television and radio. Nonetheless, as Thomas Weisel Partners analyst Christa Quarles notes this afternoon in the latest edition of her Internet Quarterly report, Google is already the largest media company in the world as measured by ad dollars, with about three percent of the total market. She suggests comparing that to Wal-Mart (WMT), with about four percent of the global retail market.

Quarles notes that the company intends to extend its advertising reach into the mobile, display and video sectors “by improving relevancy and efficiency.” But the more lucrative opportunity might lie elsewhere, with corporate IT budgets.

Quarles notes that Google has barely put a dent into global IT spending, with only about a 0.1 percent share of what was a nearly $400 billion market in 2008; she sees this as “a large and untapped market for Google.”

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The government’s stimulus plan won’t work as planned if we don’t get consumers spending again. But in the nearly $800 billion package, there is one thing missing that would surely help accomplish this: advertising. To get people spending again, and the economy moving, the government needs to provide help for businesses in America to advertise their products and services.

Let me disclose that I do have a horse in this race: I’m an investor in advertising-supported businesses. I’ve spent a large percentage of my working career in businesses that sell advertising–including broadcast and cable TV, radio, magazines, Internet, newspapers and direct marketing. I’ve also led businesses that have used these media to advertise products and services.

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Back in 1993, the Knight-Ridder newspaper chain began investigating piracy of Dave Barry’s popular column, which was published by the Miami Herald and syndicated widely. In the course of tracking down the sources of unlicensed distribution, they found many things, including the copying of his column to alt.fan.dave_barry on usenet; a 2000-person strong mailing list also reading pirated versions; and a teenager in the Midwest who was doing some of the copying himself, because he loved Barry’s work so much he wanted everybody to be able to read it.

One of the people I was hanging around with online back then was Gordy Thompson, who managed internet services at the New York Times. I remember Thompson saying something to the effect of “When a 14-year-old kid can blow up your business in his spare time, not because he hates you but because he loves you, then you got a problem.” I think about that conversation a lot these days.

The problem newspapers face isn’t that they didn’t see the Internet coming. They not only saw it miles off, they figured out early on that they needed a plan to deal with it, and during the early 90s they came up with not just one plan but several. One was to partner with companies like America Online, a fast-growing subscription service that was less chaotic than the open Internet. Another plan was to educate the public about the behaviors required of them by copyright law. New payment models such as micropayments were proposed. Alternatively, they could pursue the profit margins enjoyed by radio and TV, if they became purely ad-supported. Still another plan was to convince tech firms to make their hardware and software less capable of sharing, or to partner with the businesses running data networks to achieve the same goal. Then there was the nuclear option: Sue copyright infringers directly, making an example of them.

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Like Napoleon marching into an abandoned Moscow, Larry Page and Sergey Brin have led Google’s advance into traditional advertising only to find nothing to loot. Now begins Google’s long imperial retreat, starting with 40 layoffs.

Susan Wojcicki, the millionaire sister-in-law of Brin who also holds a management role in the company, announced the job cuts in a blog post, as she laid out plans for Google (GOOG) to exit the business of brokering radio ads, a business it entered in 2006 when it bought dMarc Broadcasting for $102 million.

Up to 40 Googlers will lose their jobs, a small percentage of the 20,000 remaining employees at the search giant. But the real cut here is to Google’s ambitions.

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Pandora, a private company that has created the most popular Internet-based radio service in the U.S., has a lot of zealous fans. In fact, they are a bit like the fanatics who love Apple Inc. and its well-designed products. For its legions of fans, Pandora stands out not just as an Internet radio station but as a gateway to discovering new music. The company’s core technology is based on the Music Genome Project, which essentially matches users’ favorite musicians or songs with other music of similar genres, based on a compilation of hundreds of musical attributes.

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The younger generation will be our future leaders. We hear that a lot in politics, but it also applies to media companies wondering who will be leading them into a digital future. National Public Radio has two programs–Next Generation Radio and Intern Edition–aimed at training young folks to do quality radio reporting the NPR way. Not surprisingly, those twentysomethings have also pushed NPR further into the digital realm, creating an eye-catching blog and using Public Radio Exchange, an online marketplace for radio reports, to get wider distribution for their work.

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The bell is tolling for Webcasting in the U.S. after the Copyright Review Board refused to alter the new proposed royalty rates, which represent an enormous hike in the money online radio stations must pay. The new rates take effect July 16, and a coalition of Webcasters led by the popular Pandora are pleading that their business will go away with these new payment obligations.

Many times, these outcries are public-relations strategies that exaggerate the impact to garner sympathy and, subsequently, lower rates. In this case, it’s not hyperbole. Net radio companies will go bankrupt if they continue to broadcast under these new rates, so expect many to go silent. But royalty rates don’t impact people’s desire to listen to music. John Gilmore is credited with saying “The Internet interprets censorship as damage and routes around it.” Oversized royalties create a type of censorship, and the resilient Internet and capitalism will route around this as well. Webcasting will be revitalized stronger than before, because this time it will have a viable long-term royalty structure.

On first glance the new Webcasting rates sound reasonable: 0.0011 per song play per listener and $500 per station. However, two factors make the total larger than you’d expect. First, many Webcasters offer individual stations tailored specifically to every individual’s taste. This personalized experience triggers a massive amount of “station” royalties. (I have four personalized Pandora stations.) Secondly, although the 0.0011 sounds small, it adds up quickly when someone clicks play and leaves a station playing for hours in the background. I did some math using the last publicly published numbers for three top Webcasters and arrived at some startling results. (These numbers are surely not precise, but give you a baseline.)

And if those numbers aren’t bad enough, there are built-in rate increases for the next four years.

Compounded, these numbers represent a growth of more than 100% from 2007 rates. It’s impossible to run a profitable online Webcasting business with the new royalty structure. Pandora (which I often use and really like) and all other legitimate U.S. Webcasters will go bankrupt or simply turn off the lights.

Some Webcasters have started a grass-roots lobbying effort and convinced some congressmen to introduce a bill that would make satellite, AM/FM and Webcasting radio all pay the same, much lower rates. Unfortunately, it’s relatively easy to get a bill introduced and, by design, hard to get it through the proper committee, agreed to by both houses of Congress and then signed by the president. Media companies are expert lobbyists, and it just takes one powerful senator to block a bill. And it’s not a quick process, so short-term relief seems highly unlikely.

However, net users’ thirst for music isn’t altered one note by a royalty decision. People will still crave music and the passive listening experience while sitting in front of the computer, where they spend an increasing portion of their life. A new generation of Webcasters will emerge to fill the vacuum created by this royalty-induced musical implosion.

This new generation of Webcasters will limit their stations to music from labels who will agree to a direct license at lower rates. Many were surprised when the Copyright Review Board’s rates did not offer a “percentage of revenue” option–a concept both sides advocated, albeit with greatly different numbers. Webcasters will willingly pay record labels a single-digit percentage of revenue, similar to the 3% they pay to ASCAP/BMI, which represents music publishers. Smaller labels will agree to this or a more modest per-song royalty, recognizing that they are receiving (besides the money) valuable promotion. As more labels agree, the holdout labels will feel competitive pressure to ensure Internet promotion for their artists and be compelled to agree. For sure, this transitional period for Webcasting means many of your favorite songs will not be heard on online radio, because the major labels who sell 80% or so of music will not immediately voluntarily agree to lower rates. (The record labels were the driving force in lobbying Congress for new laws under which Webcasters are now required to pay these royalties.)

The temporary absence of the major-label song library may not be as crippling to Webcasting as you might think. The constraints of odd-numbered stations on the limited AM/FM spectrum have consolidated consumer taste. But the Internet has unlimited capacity, which allows for a much greater diversity of music. An astonishing 55% of the songs played on Pandora are from independent labels. And since users can vote thumbs up or thumbs down on every song, this is likely an accurate representation that consumers desire a greater variety in their audio experience.

You have until July 15 to try Pandora before it dies. It’s a wonderfully simple interface, where you pick a song you’re in the mood for and a custom radio station is auto-constructed and begins playing in just seconds. From there you can use your Web browser to tailor your station to respond to your tastes even better. While the Pandora of today will go away midsummer, we hope the management of Pandora can find a way to continue operations and this time find a way to build their business on more solid financial terms.