March 13, 2013 at 3:25 pm

Grooveshark Finds Out What Happens When Music Is Free (For One Band)

Grooveshark, where anyone can upload music for other people to listen to (up to a point), is sort of like Napster-meets-Spotify. The company offers millions of free tracks without compensating copyright holders, with the legal defense that it cannot stop people from uploading whatever they want — and that it’s too hard to filter out tracks whose rightsholders prefer they not be available there. (Why then, we wonder, is it so good at filtering out The Beatles?)

When we met Grooveshark CEO Sam Tarantino last year, he was strumming a guitar in his office. Then he expounded at length on why he thinks recorded music should be free. One big reason: Bands make their money from touring anyway, so it doesn’t make sense to pay rightsholders similar rates to what Spotify pays.

Agree or disagree, this is the principle that drives Grooveshark. This week, the company revealed data from a little experiment it conducted in free music. In order to prove the value of its platform to promote bands so that they can make money in other ways, Grooveshark teamed up with a band called Quiet Company in July 2011 to see what would happen if Grooveshark “promote[d] the band in any way they saw fit,” in return for the band giving away its music.

The results are in, and Grooveshark shared them with (and my pal Mike Masnick) in the form of the below infographic.

The main takeaways:

  • Quiet Company’s revenue from live shows doubled during the experiment.
  • The band won over ten awards and earned “private investors” — fans who are willing to bankroll it on some level in return for a piece of the action.
  • Grooveshark’s promotions bled over to other sites. Its popularity exploded: over 367K percent on Grooveshark, 4.5K percent on Facebook, 2.1K percent on Facebook, and 95 percent on Twitter, with plenty of new international fans finding out about them too.

Before you get too excited about this and decide that recorded music should be free because of a single experiment, it’s worth keeping in mind that Grooveshark skinned its entire site with 10 different promotions for Quiet Company — something it couldn’t do for, say, every band on Grooveshark, or even a hundredth of them. Still we’re intrigued:

grooveshark quiet company

  • Phil Johnson

    My comment is “well, duh”. Exactly like you said in the last paragraph. It’s the modern extension of “If I just got signed to a big label with a budget, I could be huge!”

    It’s still a carpet bombing promotion strategy that isn’t available to 99% of artists. Which then makes just as useful as a major label deal.

    Of course, if the option is out there to pay for (and you can bet GrooveShark will be doing these for profit very soon), then it’s open to more artists, but still dependent on the budget. Noise Trade is a good example of this. They’re promotions are already booked out for many months.

  • Rob

    So let me get this straight. For CEO Sam Tarantino and Grooveshark recorded music should be free, but he should be able to line his pockets providing that “free” music to the public. The fact is his company could not exist without all the “free” content that he is monetizing. I guess if recorded music has no value, he should be able to make a living without it.

  • Phone Source

    The big incognito is that nobody knows how Grooveshark makes money. I saw no ads on the website. Most people have to sell something to make money. We make money by selling the hottest consumer electronics.

  • Christo

    I imagine they make money off artists wanting to promote their music which the infographic above suggests is profitable for the artist. I guess people are using grooveshark for the free content and grooveshark sells that audience to artists. I like the saying if a serves is free; you’re the product.

  • Rafa

    I like groove shark, but it should pay for music just like Pandora. BS to put stuff out there for free when so many people would gladly pay a few bucks a month for the service. I hope it is shut down, ha