Pandora Radio, the cool personalized radio station that recommends songs based on its Music Genome Project, has started serving audio ads. The high royalty costs associated with streaming licensed songs seem to have finally caught up to the service, which until now has primarily used image-based advertising. The ads seems to be fairly sparse, but have received enough attention that the company’s official Twitter feed just annouced “So you know, we did not take on audio ads lightly. We try to be extremely respectful of your listening experience, & promise to be prudent.”

We’ve confirmed that the ads are appearing on Pandora’s main web-based service, and are trying to find out if the ads will begin appearing on Pandora’s incredibly popular iPhone application, which was the most-downloaded application on the App Store for 2008. The iPhone app launched over the summer without any advertising, and began implementing new image overlay ads in September.

Update: Pandora CTO Tom Conrad says that the iPhone version of the application is not currently running audio ads, but that they will likely appear at some point in the future (though there are no immediate plans to include them).

This isn’t the first time Pandora has experimented with embedding audio advertising into its streams – in early 2007 the company experimented with some ads that were met with an overwhelmingly negative reaction.

Users that are really can’t stand the ads (seriously, they’re not that bad) are invited to sign up for Pandora’s $36/year premium membership.

Thanks to Richard Bowles for the tip.