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You're talking about DMCA safe harbor provisions, which would only apply if Grooveshark promptly took down content when requested by copyright owners. Further, Grooveshark isn't even claiming the service is for "user generated music". (YouTube is different on both those points.)

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http://grooveshark.com/dmca

The only music I’ve seen taken down was from the Beatles.

and Pink Floyd

can't find Smashing Pumpkins on there either

Oh yeah, couldn’t find Gish on there the other day. Good point.

Glad to see that I'm not the only one. I was very confused, I was in a weird mood and was looking for both Pink Floyd and Smashing Pumpkins, but couldn't find either of them. Now I know...

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