I don't believe that Pandora allows third-parties to buy time for their own shows on the service like say, a local cable channel could/would, like the ones that have religious and infomercial programming...however, the Aquarius station above, and others like it, just stream their music directly on their website with server space they pay for, like the following website
OldSkool 101 | Class is Now in Session
Sounds like they work out a payment schedule for streaming songs like Pandora, though I bet they are not totally up and up with payments, and that most are under the radar. I doubt record companies have time to monitor them, so you could say they function much like on-the-air pirate stations did in the UK back in the day......they evidentally do their own advertising......I'm sure some are making money. Pandora pulls in about a billion a year in revenue, though almost all of that is paid out in streaming rights, server space, and marketing/advertising...