Being in the digital music business still isn't easy, though the large media labels are starting to become more open to cooperation. Startup Grooveshark, which boasts a catalog over 6 million songs available for free streaming, however, has been sued by EMI for copyright infringement. The site operates based on a peer-to-peer technology and offers a simple interface for searching and listening to music.
Grooveshark claims to be in talks with EMI and other copyright holders and says that it has secured deals “with hundreds of record labels, major US performance rights organizations, and thousands of independent artists.” However it has failed to secure any deal with major labels and finds itself taken to court over its service.
“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 filing a lawsuit as a negotiating tool. We find 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,” the company stated, according to the allthingsd blog.
Grooveshark operates on an ad-supported business model but so far has failed to become profitable though it generates some revenue. While it's obvious that it wants to have deals in place with major labels as well as indie acts offering a 50/50 split on the profits, it hasn't been very successful so far and it's unclear for how long the service will survive in its current form.