From my understanding (could be wrong) the label's aren't getting paid for their music through Grooveshark, so if they're not getting paid they'd likely prefer to force users to jump through the hoops of pirating music then from using a service such as Grooveshark. (actually they'd prefer you use a free service like Spotify which pays for the music rights).
> they'd likely prefer to force users to jump through the hoops of pirating music
A side effect of which probably would be more users becoming “torrent-educated”.
Also, there's a huge difference between listening to music only on Grooveshark, and having the tracks (CD) bought and lying around on your drive. In the first case you don't own the music.
If you're downloading it, however, the difference almost vanishes, and you have much less reason to pay. You have the files already—so are able to listen without the connection, put it on your player, etc. Like you've bought the music, but without the money.
But it would be much more viable to elaborate deals and get paid through Grooveshark.
What I'm saying is that they would benefit a lot more from having Grooveshark as an ally (even if not entirely on their terms) then defeating it and getting back to square zero in the anti-piracy effort.
What is the end game though, hope that the service is successful enough that they will start handing over a cut to the labels? The streaming model is looking fairly broken if the only way for it to work is to operate in a legal grey area.