It does seem like Grooveshark made a deal with EMI after getting sued, and a bunch of record labels. They seem to follow Youtube/Vimeo's use of indemnification

It does seem like Grooveshark made a deal with EMI after getting sued, and a bunch of record labels. They seem to follow Youtube/Vimeo's use of indemnification (as in the users agree that the content they are sharing does not breach Terms of Service). Does that mean this is legal? No, Universal and Pink Floyd (in addition to EMI) sued them and Grooveshark could not reach a deal with them. Apple even removed the iPhone app. Nonetheless, Youtube started out the same way. I'm sure they will make more deals and become a legit company.