Grooveshark denies service to Germany due to “unreasonably high” licensing costs

Streaming music site Grooveshark has decided to restrict access to Germany due to high licensing costs, the site announced today.

Grooveshark lets its users legally upload music that can be enjoyed by the entire community. And much like YouTube, if a user uploads a file that he or she doesn’t own and it gets a DMCA complaint, Grooveshark takes the file down. It’s estimated that Germany makes up less than 10 percent of the site’s total 30 million active users.

Grooveshark has been in legal hot water with the major music labels because it doesn’t have broad licensing agreements to play the majority of its music, unlike Spotify, MOG, Rdio and Rhapsody. In Germany, however, the issue might be tied directly to cost versus legality, according to TorrentFreak’s translation of the company’s official site notification:

“Due to unreasonably high operating costs, the notice reads, Grooveshark is now inaccessible from Germany… We will miss you! You can write to us. We hope to come back one day. If you want to reduce the operating costs for both providers and Grooveshark, you can send a polite message to GEMA.”

GEMA is a German music rights collection agency that has 64,000 members and represents over 2 million artists. The “unreasonably high” music licensing fees could be related to a GEMA rate change for music-on-demand services.

We’re reaching out to Grooveshark for more information about the situation and will update this post with any new statements.

Gainesville, Fla.-based Grooveshark has over 30 million active monthly users who stream more than 15 billion songs per year, according to the company. In November, the company rolled out a new design of its online music player that includes a social layer. More recently, the company debuted a new HTML5 music player aimed at getting around restrictions against a Grooveshark application for Apple’s iOS platform.