[paul9290]

Sure, but the masses are not listening to the unknown bands. They are listening to the best talent in the world which the labels find, cultivate, market and create icons out of - ones that the MASSES follow, love and adore.

Further the majority (Grooveshark's users/visitors) are there to listen to the label's music not the unknowns. Now if the unknowns are really good then they'll get a record deal because they want to be heard by as many as possible (become famous).

Just like us entrepreneurs wisely seek out investment to grow our businesses artist do the same with the labels. Some artists could say "I hate the labels they will never sign me!" Though once that artist gets a following and a taste for money/fame they'll change their mind! They'd be foolish not to!

[randomdata]

The same could be said for YouTube. It was primarily the Lazy Sunday video from SNL, along with some other major production videos, that made YouTube popular. It was only after the service saw success that the user-generated videos became interesting to the masses. They came for the major label productions, but stayed for the home movies.

But that is, of course, the fear of Grooveshark. The masses come to hear Lady Gaga's latest single, but they just might stumble upon an independent that they enjoy while they are there. That discovery leads to wanting to find more, and eventually the major labels, like in video today, become even less relevant. Grooveshark has already started promoting bands I have never heard of, and I'll usually give them a chance when I am there.

[bri3d]

There's a timing game being played here that YouTube already won, and which I think GrooveShark are about to lose.

Both YouTube and GrooveShark bet that they'd be able to (quasi-illegally) host major production content without the owners' consent until some derivative (in YouTube's case, raw audience combined with ad revenue and in GrooveShark's case apparently metrics) gave them enough value and/or capital to strike deals with legitimate content owners.

YouTube won; they were able to push enough traffic to entice labels into partnering with them for a revenue-generating service (VEVO), and were subsequently able to begin enforcing the DMCA aggressively via automated tooling combined with an easy takedown process for labels.

I think GrooveShark are about to lose. So far, labels seem less interested in making deals with them than in destroying them, and I highly doubt they have enough legitimate content to survive. They didn't make it past the "host infringing content for long enough to generate value" inflection point quickly enough.

It's also worth noting that it's possible to host a much wider variety of independent / user-generated content which is actually interesting on a "video site" than a "music site." "Video" encompasses an incredible range of content (including music!), while "music" is a single content type with a much narrower range of producers. Many more people have cute kids, athletic talent, cool cars, funny pets, and so on than have musical talent.

[Kylekramer]

It is a nice ideal, but I highly doubt that is the fear of Grooveshark. If that was the fear, they would have sued Myspace out of existence back in its heyday (which they probably could have, tons of pirated content was there). But they embraced it. A quick perusal of http://grooveshark.com/#/explore/popular shows that Universal Music Group artists are by far the most played, and UMG doesn't see a cent of that. I think that is the fear, a well justified one even it is trying to hold onto a dying business. Occam's Razor and all.