We heard it from Techcrunch who heard it from the Chilean tech blog FayerWayer: music startup Grooveshark has reached an agreement with the EMI Group. A strange turn as EMI sued the company behind the service, Escape Media Group, almost three months for infringement on its copyright. The web-based music application offers music on-demand, for free. Users get access to individual tracks from a database which is powered by a 7-million strong track catalog.

The funny part, Grooveshark allows both artists and record labels to ‘promote’ themselves through the application with ads and pay-per-listen campaigns. That’s a good one, because lots of music offered by the company is actually not being paid for at all. This is clearly not a solution either. On a sidenote rant, I do wonder how it is possible that such companies still are able to run a business and what label would be that daft to invest a single cent in this service which thrives on stolen content. Add to this that I seriously wonder what label would ever purchase a pay-per-listen campaign on a service that is totally destroying their business model. You pay to promote what you can get for free on there. Now, what kind of a business model is that? It smells like pure blackmail if you ask me.

But back to Grooveshark. The service also offers a paid VIP version offering ‘exclusive’ features and a special interface for users who pay $3 per month with a full year subscription costing $30 a year. Note that the licensing agreement between Grooveshark and EMI is only valid in the United States.

Techcrunch added a sidenote saying that if Grooveshark now manages to sign up the other majors too, it stands a chance to become the ‘Spotify in the U.S.’ before Spotify actually crosses the pond.