Hey Mr. Deejay, Show Me Your License

Are digital music services doomed to a life of ugly licensing wars?

The tale of an underdog music startup, brought to tragic demise by greedy record labels, is so familiar it’s practically a cliché. The road to iTunes is littered with the corpses of reimagined Napsters. But a new class of wide-eyed digital music startups hope to change all that. Free or “freemium” services like Pandora, Spotify, Slacker, Turntable.fm, Rdio, Grooveshark, Radical.fm, and CBS-owned Last.fm are competing for ears and a piece of an $800 million pool of audio ad dollars, according to eMarketer’s 2011 spending prediction (other revenue streams—like display ads—are also available to most). But before they can mature into ad-ready businesses, the services need permission to distribute music (something ad-supported terrestrial radio has never worried about). Last week a group of Nashville songwriters sued Grooveshark for streaming unauthorized music after Universal Music Group and EMI had done the same.