Grooveshark hooks demo data

Service currently claims 34 million unique monthly

As the battle for dominance in the streaming music field heats up, with leading services all increasing offerings, forging partnerships and expanding catalogs, the name Grooveshark seems to have largely been missing from the conversation.

But the Gainesville, Florida-based company has not been on the wane. Active in the streaming space since 2007, and offering free access to streaming music before Spotify did, Grooveshark currently claims 34 million unique monthly users worldwide. But for Paul Geller, Grooveshark’s VP of business development, that data on user numbers isn’t nearly as exciting as the types of data those users can provide.

Collecting reams of consumer data and listening history (four petabytes per month), and then aggregating that data for musicians and brands, Grooveshark hopes to become a leader applying consumption data to music marketing, while also serving as a middleman connecting bands to the brands interested in sponsoring them.

“You don’t want to be in a situation where artists have to endorse something just to get paid,” Geller said, but added that such sponsorships are quickly becoming the norm, and can be done in increasingly unobtrusive ways. And it’s hard to argue with that logic when even the most irascible of indie artists are signing on to a Mountain Dew-owned record label or turning to brands like Converse to pay for studio time.

Grooveshark aims to be the one to make the introduction between the band and the brand, along with providing the hard numbers explaining why a certain band makes sense to an advertiser.

As an example, Geller points to a recent campaign the company arranged for MSN during last spring’s SXSW festival in Austin. The company approached Grooveshark for a campaign, and rather than simply recruiting bands to endorse the company, they identified appropriate artists who were then recruited to recommend other acts to see at the festival, with MSN only appearing as a sponsor.

“Indie artists don’t have the ear of Mercedes or AmEx,” Geller noted, adding that these sort of targeted cross-promotional ventures are “what great managers have been doing for the last five to ten years. But not every band has a Troy Carter or a Bruce Flohr working for them. We can do that for everyone else.”

Backing up his claims, Geller points to the click-through rates that ad campaigns have experienced through the site (one campaign involving electro artist Deadmau5 claimed a CTR of 24%), the result of extremely targeted data gathering, involving 10-12 different data attributes, ranging from the simple gender, age and location of an advertising target, to their household income, social media virality and even what Geller calls “more ephemeral questions,” such as whether a user would describe themselves as a Blackberry or an iPhone.

“Individually, it would be offensive to suggest that you can peg someone with that sort of question,” he said. But taken together with a number of other data points, particularly those related to a user’s influence within social media and willingness to use it, Geller says the company can make very accurate assumptions over what sorts of brands a user might have an affinity for.

Perhaps the most intriguing application of this data involves what Geller calls “repertoire modeling,” in which the company can analyze consumption data from an established artist’s entire career, and then look for similar patterns among newer acts. The potential applications are significant — if a young band’s support seems to line up similarly to previous successful bands, it could be a valuable A&R tool(providing chartable metrics suggesting when a band is about to break big), or concert promoters (identifying the markets in which the band’s listenership is particularly committed).

It’s perhaps ironic, then, that label participation has been the company’s biggest stumbling block so far. With its music provided and uploaded by users, Grooveshark operates under the Digital Millenium Copyright Act, and at the moment, only has a licensing agreement with one of the four major label groups — EMI. Universal Music Group filed a copyright infringement suit against Grooveshark in 2010, and most recently prog rockers King Crimson have complained about the service’s lag in taking down unauthorized streams of its music.

“We got a lot of flack for starting the way we did,” Geller notes, referring to the company’s location, far from Silicon Valley, and lack of the type of venture capital support that other streaming services have enjoyed. “We would love to settle with UMG, and we’re ready to have those discussions… We’re trying to build a company the old-fashioned way.”

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