Frankly I never cease to be amazed at what a great deal that is compared to how Spotify / Pandora / etc are getting screwed big time on licensing fees.
Traditional radio was / sometimes still is an extremely profitable business. Once you exceed basic costs, it's all gravy minus sales commissions and some production costs on commercials etc. Radio is basically one giant sales business.
It seems as though for radio, from day one, it was heavily a promotional medium for selling physical records, with the added bonus of a sales cut for the music industry. With the move to digital music, I think they stopped looking at it as a means of promotion so much and wanted to own the whole channel (as much as possible). Short sightedness, spurred on by a mixture of fear (eg Napster) and greed (opportunity to rewrite the distribution rules).