I personally think we are stuck in a transitional period between traditional music and digital music. The traditional sense of what Amazon is doing is completely illegal, when you upload a file you are technically making a copy of it which technically you could share with others. In a traditional sense all these services are illegal in some respect.
We need new legislation that has clear guidelines. We need a clear way of letting these companies legally share music. There should be a clear port of call for all music providers such as these to try and make a go with their products.
I think they are spending too much time fighting these companies and telling them they are wrong rather than guiding them in the right direction.
I may be way off mark here but as a developer I would not touch anything to do with music licensing again. I really feel for Grooveshark, I have used the service and it looks like they have put their heart and soul into that product and instead of a great big "Thanks for helping the music industry", they get kicked.
I think the biggest issue for music startups (disclaimer: I used to work for one) is probably that the startups that try to do it legally and correctly are still competing against the ones that border on being illegal, or are straight-up illegal. Users don't care, but startups might get sued.
All of that aside, I agree that Grooveshark has built a great product. But I'd be kidding myself if I didn't also say the first song I searched for was Metallica and I got a massive list of songs I could listen to. I'm sure they wouldn't be happy.
I think its hard to make an unbaised decision on the company and how I feel about this take down decision because I do not know the complete inner workings, only what Grooveshark tell us. They could tell us they are paying fees when they are clearly not, they could say all royalties are being honoured, when again they could not be.
It's all assumption led but I know that whatever is happening is not good for the end user. I was going to pay for their mobile version and I didn't question the legality of it either. To the average user, all this messing around means that when Google or Apple release their own product then every "normal" user will jump ship for it because they know it's there to stay rather than being worried it will be dropped at any point. The end user doesn't generally have any loyalty, they just want to listen to music.