If anyone else streams or buys those songs, then the content owner will get paid.
Meanwhile the ads or the $6 a month fee goes only towards the songs that YOU actually STREAM from the service at streaming rates. Plus you can buy other songs for 99 cents.
If you never listen to your uploaded songs again, someone else will and they will be the ones paying the content owners.
Content owners get paid whenever anyone strams or buys anything on the system regardless of where it came from.
I thoroughly disagree with this. Corporations often wage "ideological" "wars". That's what lobbying is all about -- a corporation has decided Public Policy X will either help or harm their corporate interests, so they pay lobbyists to advocate for or against it.
Media companies like Universal, Disney, et al guard copyright very closely. They want to advocate the belief that intellectual property is identical to physical property and that the only rights anyone has to an idea are the rights that the idea's copyright owner decides they should have (usually granted when the petitioners include a large check with their request for rights).
Copyright is the most vital issue to media companies and they treat it as such. If they find what they believe to be gross infringement, they are not kind to its purveyors -- I think we've had enough history in filesharing to know that.
Grooveshark is just another way to skin the cat. Its extensive (and some would say "egregious") use of DMCA safe harbor provisions I think probably is one of the major inspirations for SOPA and PROTECT-IP. Cases against Kazaa, Grokster, and others did not come attached with new legislation because they didn't really have a plausible case under the DMCA. Grooveshark's service-oriented approach makes them a clear safe harbor, and unless Grooveshark quickly sees legitimization as a marketing channel and gets "white-knighted" a la YouTube and Google, they will remain rogue and the media companies will keep hounding until they get at the jugular. Since Grooveshark is using DMCA as a cover, the media companies just want complete control over "the internet" (i.e., the internet as most people know it, DNS) so they can send the Federal Bureau of Cybercrime Protection a notice and have Grooveshark or other services with a plausible legal defense blacklisted just like that -- no need for pesky "trials" when records companies are losing hypothetical money!
It should be common knowledge by now that old media will keep at this game until it ruins them. They are absolutely committed to it, and they will fight to death -- either theirs or ours -- to get copyright the way they want it, so that they can gain more cash from the so-called "lost sales" perpetrated by anyone listening to major label music or watching major studio movies but not buying at retail or iTunes.
Rather, the industry decided long ago that it would take it as an a priori truth that any kind of piracy costs them money, and act accordingly. That's an ideological stance.
Grooveshark is not really "piracy" since every content owner gets paid regardless of the origin of the content. Whether it cannibalizes other revenue sources is up for debate.
However, copyright is also about control and owners want complete control of their catalogs.. for a good reason.
Grooveshark crowdsources catalogs without permission from copyright owners and then only lets them manage the content via DMCA takedowns. The labels have to relinquish control to the users for this system to work and that is what they are objecting too.
Money and control is what copyright is about. Big media are ideologically against Grooveshark paying their users to seed the system without the owners consent.
To use an analogy: Grooveshark is a grocery store where the customers personally stock the shelves with Coca-cola products but the company doesn't get to decide which products are available. Maybe the customers don't like Coke Zero and refuse to stock it. Coca-cola can't do anything except remove stock they don't want there.
Except the analogy falls down since Grooveshark is digital and the shelf space is infinite. The labels can add their entire catalog themselves, but they don't want to.
If a band is touring the world to promote an album, their presence in a given country has a huge impact on sales in that country.
If music is leaked across the internet way in advance of the tour/pr/marketing drive, then sales of the album drop precipitously. It's not possible to be everywhere on Earth at once, so it's then impossible to effectively market the album.
Crooked movie/entertainment businessmen? Sounds just like those old gangster/movie tycoons in the old Raymond Chandler novels I've been rereading since moving to LA!
*According to the leaked emails.
Both Spotify and Grooveshark pay royalties to labels that they have a license agreement with. But if you don't want your stuff on a streaming service, users will upload it to Grooveshark anyway.
This is also the reason why there is so much cool stuff on Grooveshark that is not on Spotify. Forgotten albums, bootlegs, remixes and mainstream music from certain bands. Grooveshark will also never show you a "this song is not available in your region" message.
Besides, even if Grooveshark wanted to make a deal (I'm sure they do), they couldn't afford Universal. The vast majority of grooveshark users don't pay, but just get ads. For the ones that do pay, their monthly fee still pales in comparison to the value of the hundreds or thousands of songs they've stored in their account. I've got 300 songs in my GrooveShark. Even if were paying the $6 per month, it would take 50 months to cover the costs of those songs at $0.99 each. And during those 50 months, I would have probably added another 300 songs.
The only end game I see here is GrooveShark going out of business. And I say this with great sadness, because I'm a regular user and love the service.
1. http://www.digitalmusicnews.com/stories/090310groovesharkumg