Online music service Grooveshark has settled its copyright dispute with Merlin and has licensed the catalogs of the indie music agency's member record labels.

The deal compensates Merlin labels for past use of their music as well as future use of their catalogs.

Scoring a Merlin deal makes for a nice addition to a hole-filled catalog. Merlin's roster includes Rough Trade, Warp Records, Yep Roc, Epitaph, Tommy Boy, Beggars Group, [PIAS] Entertainment Group, !K7, Merge, Domino and Koch/E1.

Grooveshark offers both a web-based service and a desktop version. It has mobile apps for iPhone (jailbroken only), Android, Blackberry (jailbroken only, except Storm), Nokia and Palm. Its ad-free level of service (called the VIP Pass) costs $3 a month of $30 a year. The service has come a long way over the years and is now one of the better streaming services. It lacks the simplicity of some of its peers, but its feature-rich interface can be rewarding for those who take the time.

The service's biggest issue is currently the holes in its catalog. The Gainesville, Florida-based company inked a licensing agreement with EMI in December 2009. That deal ended the lawsuit EMI brought against the company earlier that year.

It has directly licensed content from hundreds of independent labels and thousands of artists and artist managers. But it lacks deals with three of the four majors, which lately have shown much more interest in paid services than ad-supported music. Much content from these labels can be found at Grooveshark, but the licenses are not in place and availability can be spotty.

Grooveshark was founded in 2006 by University of Florida students Sam Tarantino and Greenberg. The company raised about $1 million in seed funding by 2007. The company tells Billboard very little in funding has been taken since then and that it has been able to bootstrap the company in a sustainable manner for the last three years.

See the new issue of Billboard for more on Merlin's latest licensing deals.