"Due to unreasonably high operating costs, Grooveshark is discontinuing service in Germany," a statement on the company's German site announced. "If you would like to see operating costs reduced for service providers such as Grooveshark, you can send a polite message to GEMA."
But GEMA has countered, saying in a statement that it was never in contact with U.S.-based Grooveshark and believes the company cancelled service because it refuses to pay royalties at all. The statement went on to name various U.S. lawsuits pending against Grooveshark involving Universal Music, Warner Music and EMI Music.
The organization also noted that Google and Apple have banned Grooveshark's mobile apps from their respective web stores, and then referred users back to Grooveshark's website with complaints.
With some 30 million active monthly users and 15 million songs, Grooveshark calls itself the "world's largest on-demand and music discovery service."
"By creating new revenue sources for the music industry, innovative marketing opportunities for artists, and strategic data products for music and brand managers, Grooveshark cuts into music piracy by helping everyone - from fan to band - make the most of online music," its About page reads.
But those familiar with music rights in Europe say power is fragmented, making it difficult for organizations such as GEMA to satisfy both platforms like Grooveshark and the whole of the European music industry.
"Societies like GEMA find themselves between a rock and a hard place," writes Andrew Orlowski of TheRegister.co.uk.
"The[se European] organisations are a little like trade unions: they’re member-owned, and are negotiating collectively on behalf of their members. If the society negotiates away the music too cheaply, the members are entitled to wander off and find another negotiator – or negotiate their own."
The conflict is only one of several battles over web content sharing that has escalated in recent weeks. Music and film industry reps, who say they are struggling as a result of piracy, are pushing legislation to make service providers liable for the copyright violations of their users.
Service providers argue that current proposed legislation threatens free speech, innovation and the growth of some of the web's highest-potential communities.
Wednesday saw one of the largest online protests in web history take place against U.S. house bill 3261, or the Stop Online Piracy Act (SOPA), and its sister bill PIPA. Wikipedia, Google and other online service providers participated in various actions - including a 24-hour service blackout by Wikipedia - to mobilize users to write their legislators in opposition to the bills.
The U.S. Senate is scheduled to vote on PIPA January 24th.