Actually, a lot of radio stations did, citing the advertising issues, though the question of the possible music charges was the more likely culprit. Clear Channel turned all of their stations' streams at that time; so did ABC (those stations hadn't been sold to Disney yet) and Citadel. Outside of the noncommercial stations, the only groups I know of that didn't turn off their streams during that time period (though they stopped playing over-the-air ads during station breaks) were Susquehanna, a small group that was later purchased by Cumulus, and Cox.
I don't know that it was a lot of stations, but it was definitely a noticeable number. Most of the ones owned by the big operators, including Clear Channel and Citadel, were back online, or at least gave local markets the option of going back online, by the end of the year. The AFTRA spot issue was fairly easy to solve if you didn't run network programming or syndication. Most operators, including my employer, were already experimenting with ad insertion anyway. You just set the encoder to not encode the "cart numbers" of the spots that couldn't be streamed. If you still used cart machines, all you had to do was disconnect a machine or two from the stream and mark the AFTRA spots on the log. Then, you only played the AFTRA spots on the disconnected machines.
Something else to keep in mind is that bandwidth was expensive 25 years ago, especially if you weren't in a large city or major metropolitan area. When one of our streaming providers went out of business, we moved our streaming to Warp Radio. The previous provider covered our bandwith; Warp didn't. Once we saw the cost of the bandwidth was $1,000/month per station (7 total), we went from streaming all seven stations to only streaming the two most popular. That company was our only potential bandwidth provider. We looked in vain for a competitor but couldn't find anybody else in our area. Later, we struck a deal with SurferNetwork that paid most, if not all, of the bandwidth costs and got all of our stations back online. I believe we had to pay the SoundExchange royalties, but, at the time, those were a pittance compared to almost $100,000/year in bandwidth. When I was working what turned out to be my last radio job a little more than five years later, that company resumed streaming after it was able to trade out its bandwidth. That was definitely something we couldn't have done in the year 2000!
The streams did come back, slowly at first, but later with increased speed, especially after mobile cell phones became popular.
Something else to keep in mind is that some of the "old guard" of radio, if you will, left the industry. Mel Karmazin was among the most vocal and well-known, but he was far from the only one who considered internet audio competition rather than a complimentary service that could be sold on top of the over-the-air product. Some will probably still argue he was right and can make a convincing case for that, but he wasn't right in the manner he thought he was.
Cumulus also had a group-wide prohibition on streaming in 2001. A few Cumulus properties streamed in the years before, but it decided streaming wasn't worth the hassle by the time. The company I talked about in the first and second paragraphs sold to Cumulus in 2004, and I believe we had the only music (if not the only, period) stations in the entire company that were streaming. We kept expecting to be told to take the streams down, but corporate never said a word. Not sure when it made the change, but, by the end of 2008, Cumulus had its own streaming portal. I was long gone from the company by that time. I barely lasted 100 days after the Cumulus takeover.
