MUSIC INDUSTRY BLOG

Grooveshark, the Florida-based streaming music startup that grappled with EMI earlier in the year, has reportedly inked a deal with the major label.

A Webware 100 Winner, Grooveshark allows its users to stream music for free from an aggregate selection of 15 million tracks.  No download or registration required.  The service is supported by online advertising or through a $3/month premium plan which eliminates the ads.

Developed by a group of music enthusiasts from the University of Florida, Grooveshark boasts one million registered users to date.

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Peter Kafka of All Things Digital, part of The Wall Street Journal Digital Network, confirms that one of my favourite music sites and Webware 100 Winner, Grooveshark, is being sued by EMI.  Here is Grooveshark’s statement sourced from Peter’s post:

“For the past year, Grooveshark has been in talks with EMI Records and other copyright holders to negotiate licensing agreements for the use of their content. We are pleased to announce that over the past few months Grooveshark successfully concluded mutually bene?cial agreements with many artists, labels, and publishers that we hope to be a template for other such agreements with additional copyright holders.

Recently, EMI Records chose to abandon the template we’ve built with the help of other major copyright holders and opted for their traditional intimidation tactic of ?ling a lawsuit as a negotiating tool. We ?nd the use of this negotiating strategy counterproductive, as Grooveshark has been willing to conclude an agreement with EMI Records that is economically sustainable for both EMI Records and a start-up company the size of Grooveshark.

Grooveshark is run by a group of young and passionate musicians. We love music, we make music, and we believe that the use of all music should be paid for. We adopted this core philosophy at our inception and to date have concluded agreements with hundreds of record labels, major US performance rights organizations, and thousands of independent artists who support Grooveshark’s business model. (See: Grooveshark Artists)

As musicians, we support the rights of copyright holders and strive to sign sustainable agreements with all content owners, ensuring that all artists get paid– or we agree to remove content from our system in accordance with our DMCA Takedown Policy. We hope that EMI Records eventually follows the lead of the many forward-thinking labels we are already working with, who would rather get their artists exposure and a fair share of our revenue than block content access and force customers to illegal networks.

We understand that the economy of the digital music business is in a state of ?ux, and we hope to help ease this transition by providing the required new tools and services that lead to the next generation of the music industry. We respect the ownership rights of the major labels and publishers, and our core mission has always been to compete with piracy by offering a service that is genuinely better than what illegal networks offer, while also ensuring fair payment to copyright holders. Our next important step on our road to success is to conclude a mutually bene?cial agreement with EMI Records that is sustainable for both EMI and Grooveshark.”

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Music discovery and playlist service, Grooveshark, was selected as one of ten winners in CNET’s 2009 Webware 100 in the “Audio & Music” category, sharing the spotlight with the formidable usual suspects including iTunes, AmazonMP3, and Pandora.  This is indeed a privilege for the Floridian upstart which triumphed over CD Baby, iLike, Sellaband, Jango, and other well publicized and funded music dotcoms.  Nearly 630,000 votes were cast this year.

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P2P streaming music service, Grooveshark, has launched an artist promotion initiative – much like the track placement scheme Jango conceived of – as a means for artists and music promoters to purchase plays on its platform, a direct advertising approach that makes sense.  The Gainesville, Florida, company of approximately 40 young entrepreneurs has created a music service that rivals that of Last.fm and Pandora, the two major players in legal music discovery and ‘free’ music streaming.

Grooveshark claims to have deployed a legal music discovery and consumption model, providing its users with a financial incentive to share music, compensating artist/labels for their respective share of ‘broadcasts’, and maximizing illegal file sharing by financing its original sources.  Whether this service is actually legal or not is questionable and it appears that the company has created an expensive model to sustain on ad revenues alone.  However, they’re coming through on some very interesting marketing features for small budget music marketing campaigns.  At its core, Grooveshark Artists offers pay-for-play audio realestate matched to its existing track recommendations and provides analytics tools for track placement optimization. 

In addition, it has partnered up with some of the most talked about music tech startups for music retail, licensing, funding, and more, including Bandcamp, Sellaband and TheNextBigSound, all under the Grooveshark banner which already includes a number of subsidiary services including Tinysong, a track link generating tool for viral distribution, and  Twisten.fm, a Twitter crawler that finds music-related tweets and links them to playable tracks.  All of this put together amounts to a powerful enterprise of do-it-yourself marketing and a 360 indie approach akin to ReverbNation.