My friends at Grooveshark have just done a BETA release. The product is good, but I won’t go into it that here. Instead I will copy you on some of the coverage from around the blogosphere, and discuss a few things that you may not been aware of.

Coverage

Grooveshark

Ars Technica

There are a couple of significant differences between LimeWire and Grooveshark’s business models, however. First, LimeWire will start out as a direct-download site, with the P2P component coming later. Also, Grooveshark’s virtual tip jar feature appears to be unique among the P2P music stores.

Grooveshark is banking on users being attracted to the idea of getting a cut of the action when someone downloads a track from their PC. At 99¢ per non-DRMed MP3, the user’s cut isn’t going to be much more than a few cents after the artist, label, and Grooveshark take their share, but it may be enough to convince some music fans to sign up for the service and share some of their bandwidth.

Crunch Gear

Here’s an interesting idea. Offer DRM-free downloads at 99 cents per track and pay regular users to upload the files in their music collection. Sell those tracks and split the profits with the record label, the user who uploaded the tracks, and keep a little for yourself.

Boing Boing

We are really working to build grass roots support for this idea. we have gotten the interest of a ton of independent labels as well as some larger ones (Magnatunes/Naxos/Sheridan Square), and even though we’re not out of California we have still managed to raise awareness with Angel Investors. We’ve released our BETA and the press release for it is going out later today, we want as many people to see the product as we possible can and your help would go a long way.

My Thoughts

Grooveshark is trying to break into an industry that is a more than a little difficult to crack. I’ve been following their development from the beginning and it really seems like they have a shot to make some waves (excuse the pun). The biggest things they will have to overcome are misconceptions about what they are doing.

Here are a few,

They are only dealing with independent labels. This is not true, they have made contacts with everything from the smallest indie to the majors. They are working to be able to legally provide anything that you would be able to find on a peer to peer network. Right now if you were to use the site, you would be surprised at what is available.

International. Grooveshark will available world wide, they are making sure that the service can be used not only by those in the U.S. but also by content creators across the globe.

Where are your lawyers? That’s why I am so excited about what they are doing (and why I work with them closely). Well before this idea was a glimmer in the management’s eye, most of the legal ground work was taken care of. Beyond that, they are working to improve their legal position everyday. I won’t go into details but I will say that users, labels and content providers are well insulated.

Everyone gets paid. Other than universal streaming of any song that you can think of, the biggest draw would have to be the concept of crediting the users for sharing. These credits come into play well after the labels have been compensated. The team is trying to build a new economy that finally gives file sharers a reason to make their work available.

Web 2.0 Roundup

So are there any problems? Sure. The biggest, of course, is that anyone who tries to make a peer to peer network needs scale in order to survive. On top of that, like any BETA product, there are still bugs to be worked out of the system and everything could be faster. Also, did I mention that they are dealing with the music industry? Historically, the music industry has been incredibly slow to respond to any major changes in how they do business.

These problems aside, the Grooveshark team is right in line to fill the gap between consumers, creators and copyright holders. Only time will tell if they can make it that final yard.

[Disclosure: I am currently employed by the folks at Grooveshark. Be sure to subscribe to the RSS feed before leaving]