Grooveshark.com is a new company that pays users for sharing music. It was designed to motivate people not to pirate music for free. Click here to listen to the radio report by Miami Herald reporter Joshua Johnson. And if you can't listen, here's a brief summary of his report:
A group of University of Florida students and graduates has created an online music service that compensates members for sharing their files.
Grooveshark.com charges $0.99 or less per download, depending on a song’s popularity. The secure peer-to-peer system allows members to download from each other, with most of the revenue paid as royalties to the song’s license holder. Members can also sell their own compositions through Grooveshark. The company splits the rest with the user who supplied the song. Currently the payment comes as credit to buy more songs, although Grooveshark is working on ways to cash out the fees to users.
Grooveshark is run by a team of more than forty UF students and graduates, mostly in their early twenties. Co-founder and struggling musician Sam Tarantino got the idea while passing a used CD shop near the Gainesville campus. They’re competing not with iTunes, according to company spokesman James Davis, but with the mentality of downloading music without paying.
“The reality is, (people) don’t have to buy music,” says Davis. “You can go online right now and find any song you want for free. What we’re trying to do is give people a reason to buy music.”
UF’s Office of Technology Licensing helped Grooveshark get started when its founders were still in college. Officials helped with patent applications, business connections and researching the idea. The University didn’t invest in the company, but Grooveshark gave UF a 5% stake in return for continued support.
“I don’t think UF should take too much credit here,” said UF Office of Technology Licensing director David Day. “These guys at Grooveshark are just a cohesive, very smart, very hard-working, very determined group of people.”
Day says that each year UF assists about a dozen start-up companies, 75 business licenses and 300 inventions. Successful products are part of the University’s bottom line; it recently made about $37 million on product royalties ranging from glaucoma drugs to Gatorade. UF made $70 million by selling stock from another company they helped start up, Regeneration Technologies. That money paid for two new science buildings.
Grooveshark’s invitation-only beta version racked up nearly ten thousand registered members in its first two weeks, through word of mouth and mentions on popular blogs. It’s still working out royalty deals with the major record labels. Grooveshark also says it hasn’t heard from the Recording Industry Association of America, which fights illegal downloaders on behalf of music labels. RIAA had no comment on Grooveshark. --- JOSHUA JOHNSON