Gainesville-based music startup Grooveshark just signed a major label agreement with EMI Music and EMI Music Publishing. While the company is unwilling to disclose the exact terms of the deal, Grooveshark VP of Marketing Josh Bonnain expressed that the agreement is fair and mutually beneficial. The surprise deal comes after EMI filed a June lawsuit against the company. While Grooveshark members gain access to EMI's huge song catalogue including tracks from the Virgin, Blue Note and Astralwerks labels, it'll be interesting to see if the agreement is actually a sustainable one.

Although a number of music startups have established partnerships with smaller indie record labels, larger deals are rare as the cost of music licensing has proved prohibitive. For streaming music site Imeem, the road to signing major labels has been fraught with legal battles. Despite the fact that Warner music originally invested in Imeem, the company sued the startup to settle outstanding debt. In the end, it seems Grooveshark renegotiated licensing agreements while staring down the barrel of a gun. Due to the similar nature of the EMI / Grooveshark relationship, we can't help thinking that this recent deal likely skews in favor of the labels and rights holders.

As ReadWriteWeb covered in August, Grooveshark recently launched a $3 per month ad-free subscription service and continues to build out its artist tools. Nevertheless, the site's key revenue stream is its advertising. With seminal albums like Miles Davis' Birth Of The Cool, Radiohead's OK Computer and Pink Floyd's Dark Side of the Moon, EMI will increase Grooveshark's catalogue selection and popular draw. It will be interesting to see if the company's revenue increase will be worth the licensing fees.

To try Grooveshark visit listen.grooveshark.com.