I think it's fair to say that nobody at Universal has any idea if Grooveshark is actually raising or lowering their profits. Nobody has conducted any kind of inquiry to see whether the sales lost via Grooveshark are compensated by the value provided to music-owning consumers (upload, play anywhere) and the free publicity gained, and nobody cares to.
Rather, the industry decided long ago that it would take it as an a priori truth that any kind of piracy costs them money, and act accordingly. That's an ideological stance.
This lawsuit is likely not pertaining to cost but rather to control.
Grooveshark is not really "piracy" since every content owner gets paid regardless of the origin of the content. Whether it cannibalizes other revenue sources is up for debate.
However, copyright is also about control and owners want complete control of their catalogs.. for a good reason.
Grooveshark crowdsources catalogs without permission from copyright owners and then only lets them manage the content via DMCA takedowns. The labels have to relinquish control to the users for this system to work and that is what they are objecting too.
Money and control is what copyright is about. Big media are ideologically against Grooveshark paying their users to seed the system without the owners consent.
To use an analogy: Grooveshark is a grocery store where the customers personally stock the shelves with Coca-cola products but the company doesn't get to decide which products are available. Maybe the customers don't like Coke Zero and refuse to stock it. Coca-cola can't do anything except remove stock they don't want there.
Except the analogy falls down since Grooveshark is digital and the shelf space is infinite. The labels can add their entire catalog themselves, but they don't want to.
If a band is touring the world to promote an album, their presence in a given country has a huge impact on sales in that country.
If music is leaked across the internet way in advance of the tour/pr/marketing drive, then sales of the album drop precipitously. It's not possible to be everywhere on Earth at once, so it's then impossible to effectively market the album.
Agree - it's really the cabal of old guys looking to screw over a young upstart competitors.
Crooked movie/entertainment businessmen? Sounds just like those old gangster/movie tycoons in the old Raymond Chandler novels I've been rereading since moving to LA!
Rather, the industry decided long ago that it would take it as an a priori truth that any kind of piracy costs them money, and act accordingly. That's an ideological stance.