The web radio show favorite said new royalty rates set by the Copyright Royalty Board will no longer make provisions for small webcasters to opt for a percentage of the rates.
The absence of this licence will make legally streaming copyrighted musical content prohibitively expensive for many small- to mid-sized internet broadcasters, said the body.
"Live365 relies on this licence for many of their broadcast partners and, as such, has hard decisions to make regarding their future in the streaming industry," it said in a statement.
In addition, last month, Live365 said it had also lost the support of its investors. Consequently the body has had to significantly reduce staff and is looking for new funding partners.
Dean Kattari, director of broadcasting for Live365, said the outfit hasdprovided a "home for musical discovery because many of these stations play emerging artists that terrestrial stations are reluctant to take a chance on. It would be a great loss for this to all go away."
In an email to its broadcasters, Live365 wrote:
"We are sad that we are closing our doors at the end of this month. There are always possibilities that we can come back in one form or another, but at this point in time, January 31, 2016 is the last day that Live365’s streaming servers and website will be maintained and supported."