You can do this already. Write a music player client that can stuff your music into an encrypted blob and push it out on Amazon S3 or something. $22.50/month for storage.
The problem is that that monthly price is a bit high for most people.
Well, as a startup, I mean. There shouldn't be any legal hurdles, anyway - it's really just a backup system specialized for music.
And I'll be honest, I have no clue what Grooveshark's business model is. I like it, but I don't see how the RIAA doesn't come down on them like a ton of bricks, and I really doubt the ads they show can cover what they ought to be paying in royalties.
Grooveshark has deals with a few of the major record labels. They get paid everytime grooveshark plays a song. They have been sued a couple times in the past and now have deals with most of these labels.
Grooveshark makes money through their VIP, advertising, and promotions put on by the artists themselves.
Technically they are not sharing music since you cannot download it, which is why I would guess they get around a lot of things that way.
Sounds like a good idea for an OS project, if it doesn't exist yet. But how cheap is storage in the cloud? 25$/months is definitely too much, if that's what S3 costs for 100GB?
S3 and comparable services typically cost around $.15/GB/MO. You can sometimes go down to $.10 with a reduced redundancy service, or for very high volumes (approaching petabytes).
10GB is not enough for an average music collection. Also I think dropbox does not add to your available space on your hard disk. It just mirrors parts of it.
Sure it is, most people don't listen to that much music and there's a ton of 8gig iPods out there and still selling strong. 10gigs might not be enough for you, but it's certainly enough for most anyone's active listening list.
It would probably make sense to do this as a service though. I'm guessing people probably listen to similar tunes, so it would be significantly cheaper if you could pool 10 people's music and only store 1 copy of every song.
The problem is that that monthly price is a bit high for most people.