The music streaming service was sued by EMI, the only label with whom it signed a licensing contract. EMI alleges that Grooveshark has not paid any royalties for the use of EMI's music and is now asking for a payment of at least $150,000. Grooveshark says that this is merely a contractual dispute and that it expects that matter to be "resolved".
Grooveshark, which provides music stream mainly via music uploads from its users (and allegedly through its staff) is already in legal trouble and targeted by Sony, Warner and Universal over claims of willful copyright infringement, while the company says it is protected by fair use regulations as well as the Digital Millennium Copyright Act. Apparently, music publishers are increasingly concerned about free music streaming services as also Spotify announced that it will be limiting free music listening to 10 hours per day and any song can only played five times in a monthly period.
Grooveshark was able to strike a royalty deal with EMI when the settled a copyright infringement case in 2009.