Ars Technica

A new peer-to-peer music service developed by a “team of enterprising college students” has a novel twist on the music sales business: give users a cut of the sales. Grooveshark is currently in beta and claims to have signed a number of independent labels up for its service. All the sales traffic will go over a P2P network, and users will be “rewarded” for sharing their music.

P2P-based music stores are nothing new. Indeed, a number of P2P networks have tried to go legit after running afoul of the RIAA, none with any notable success. The most recent example is LimeWire, which recently announced plans to begin selling MP3s encoded at 256Kbps. LimeWire has managed to sign on a couple of notable distributors, including Nettwerk Productions, home to Avril Lavigne, Sara McLachlan, and the Barenaked Ladies, among other acts.

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.