I came across this interesting solution – from Bitlet called westream which allows you to point the service at a bit torrent and listen to it as a music stream. 

I’ve not yet tried it – but I lovely the idea, such technology has the potential to allow for people to establish Internet radio solutions with low levels of bandwidth (although it doesn’t solve the huge licensing costs). Admittedly unlike traditional web radio, there would be a lag as torrent peers need to get going.