Q&A With Grooveshark, Where ‘Everybody Gets Paid’ For Sharing Music

The only online digital music store that actually rewards you for sharing your music with others answers all of the burning questions many of us have had.

I’ve been covering Grooveshark for quite some time now here at Zeropaid and many of you have written to me about how it sounds good on paper, but you just haven’t quite grasped how it works, how you get compensated for sharing music, and how on earth it’s legal. Well, now I’m able to answer all these questions and more thanks to a recent interview with Joshua Bonnain, head of Strategic Relations over at Grooveshark, who has made even this skeptical “reporter” a newly converted fan.

I must say that previously I’ve had my doubts about Grooveshark and admittedly never really shared more than a handful of songs at any one given time. It was never fully explained how one is actually paid when other users download a track from your shared music library, or whether or not the service could even be legal considering today’s anti-file-sharing climate in which the RIAA wields an iron fist upon any and all whom dare to to think outside the box when it comes to digital music distribution.

But, now I’m pleased to say that I think that Grooveshark, whose slogan is “Everybody Gets Paid,” may actually be every darn bit as cool and revolutionary and one would think and hope the concept actually is. How? Well, Josh made clear that “Grooveshark splits its profit with the users 50/50 after the royalties, fees, and other expenses for a given download have been paid out.” He also emphasizes that as far as legality, that all the”…proper arrangements have been made to ensure that we are a legal service.” This means you don’t have to worry about Grooveshark getting taken down and you losing all your hard earned credit like was the case for many of you with AllofMP3.com.

Another interesting point is that for all you audiophiles out there Grooveshark offers music in .OGG and.FLAC encoded formats, something you’ll never see on iTunes or any other digital music download store(except maybe OINK ). Chew on that for a second – a LEGAL digital music download store that offers .OGG and .FLAC? Try finding that kind of legal setup anywhere else.

Josh also makes a good point in that Grooveshark could also serve as a defacto music streaming service. For those of you like myself with several hundred GB’s of tunes that can’t very well be toted around entirely on a portable media player, Grooveshark will allow you to stream your music on the go. Unlike say Pandora or Last.fm, music for a party or social event could truly be on-demand. Plus, in the meantime you’re allowing your music collection to earn credit towards buying cool stuff or to purchase even more music. Think of it as interest-bearing account for your music collection.

Moreover, Grooveshark may just finally be the digital music revolution we’ve all been looking for after all.

THE GROOVESHARK INTERVIEW

All the tracks are of course DRM-free, but it also states that your system “maximize the bit-rate,” what is this maximized bitrate that tracks are encoded in?

Grooveshark offers varying bitrates and file types in order to suit a wide range of individual tastes: everything from high-quality mp3’s upwards of 512 kb/s—in addition to your typical 128, 192, and 256 kb/s downloads—to open-format OGG and lossless FLAC files. This is extremely important for our audiophile membership, as there aren’t many other places where you can [legally] obtain lossless audio and high quality mp3’s.

Pricing?

Right now, all tracks are 99 cents. We plan on mixing this up a bit in the near future, though.

How precisely are users reimbursed for sharing their digital music collections with other users? How is it calculated and how and what can users redeem their credits for?

Grooveshark splits its profit with the users 50/50 after the royalties, fees, and other expenses for a given download have been paid out. If a user downloads a $.99 track, we may, for example, have to pay $.60 in licensing fees and $.03 in transaction fees, leaving $.36 to be split evenly between Grooveshark and the user who is “recompensated” for the download. Things such as purchase history, community contributions, and number of songs uploaded are all considered in determining which peer with a given file should be recompensated for a download. The amount given back to the user for any given download depends on the individual variables that go into it, such as cost of the song, transaction fees in place, and the individual arrangement we have with that particular record label.

Since the 50% split is simply purchasing credit at this time, members may only put the credit towards other songs. We’ll soon be adding merchandise and other options in near future (shirts, stickers, concert tickets, etc.), though it’s important to keep in mind that the decision is really up to the major labels as far as what types of merchandise are available outside of obligatory Grooveshark shwag.

How are you able to facilitate the distribution of music from record labels who have not formally agreed to allow their content to be shared or sold, especially DRM-free?

This is a big secret in regards to the model and our competitive advantage. The nature of the Grooveshark business model ensures that everyone is properly paid for their copyright claims. This includes anyone, whether major or indie label. We’re in talks with all of the major labels, and the proper arrangements have been made to ensure that we are a legal service.

Current number of active users?

We currently have nearly 4,500 members in our system. We’re growing at a rate of around 75 to 100 members a day on average, as well.

Vision for the future of Grooveshark? Plans for improvement/enhancement?

We have a lot of big plans for tons of new features in the future, but in the short term we’re working on a better way to organize content (splitting up “songs” into separate “songs” and “files” to cut down on redundant data), a new JavaScript-based song information browser, a new corrections system that allows more control over data input, etc. Past that, we’re going to be doing a lot of work with expanding the capabilities of playlists within Grooveshark, as well as adding some cool new community features.

Is there anything else you’d like to say or mention?

We would like to say that it’s very important to build our community as much as possible in order to ensure that Grooveshark works as it’s intended to. The more people in the service, the better it gets as a whole. This is especially pertinent to every day operations, as our members are continuously correcting song tags, rating songs and befriending other members.