The Switch

November 17, 2006

Andrew Wise
Marketing Director

Grooveshark is a revolutionary service, and we believe that it will change the landscape of digital music. Currently music lovers buy or download their songs from a number of sources, mainly iTunes and Limewire. The rest of the downloads are spread across a huge number of p2p programs and music stores, each of which has been unable to achieve critical mass.

As opposed to tackling iTunes head-on, we are going after the average p2p user. Services like Limewire offer users free downloads, a huge library, sometimes questionable song quality (and sometimes the wrong songs), the possibility of getting SUED by the RIAA, and …viruses.

Our model attempts to address both the pros and cons of the p2p network, and offer a better product.

We will offer demand-based pricing, so less popular songs will cost less. Also, we are going to cap the songs at $.99, so you won’t be paying $5.00 for that My Humps we know you love
To offer a library matching that of p2p networks, we are going to allow users to upload their current libraries, whether they be legally or illegally attained, and they are going to share their music with others
To ensure that each song is of the utmost quality, we will be controlling the distribution of songs and will monitor their wavelengths and file makeups to ensure that only the highest quality, correct songs get sent to our users
We are going to be licensed with the major recording labels, so you can be confident the RIAA will not take your grandson’s grandson’s college fund
Finally, since we will be monitoring the files, we will actively detect and root out any possible viruses keeping your computer clean

So why did I get so long winded with our pitch? Well, this is the reason for the graph… We asked students at the University of Florida (population 51,000), whether they would be willing to switch their music services from whatever they were using (iTunes, Limewire, etc.) to a service that promised to correct everything that was wrong with the p2ps, and they said yes — overwhelmingly YES!

69% of our surveyed applicants (500 surveys) said they would be willing to pay for a variable-based pricing model that offered everything that their current p2ps offer plus more.

This is a well warranted step in our goal to bring digital music into the 21st century.