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Streaming music service Grooveshark goes dark (+video)

The Grooveshark website paid no royalties to artists or record companies and has been in legal trouble since 2009.

Grooveshark has been around longer than Spotify, Rdio, Beats Music, or Google Play. At its peak, it had more than 35 million users and a virtually infinite library of music. Yet Grooveshark, which allowed users to upload music to the site for others to stream, didn't seek licenses from the recordings' copyright holders. Instead, they argued that they should not be held liable if site users upload copyrighted works, which they did in great quantities.

This approach didn’t sit well with the three major American record companies, which began litigating against Grooveshark in 2009. On Thursday, Grooveshark agreed to shut down its web and mobile sites and to hand over all its patents and copyrights in order to settle the lawsuits against it. A note posted on Grooveshark’s home page read in part, “We failed to secure licenses from rights holders for the vast amount of music on the service. That was wrong. We apologize. Without reservation.”

Last year, a federal judge found that Grooveshark was at fault by allowing music to be streamed on its service without compensating artists or record labels. In addition, the judge found that Grooveshark employees had uploaded thousands of copyrighted songs to the service, so the company couldn’t claim protection against the actions of its users. Earlier this month, the judge ruled that Escape Media Group, the company that owned Grooveshark, could be liable for more than $700 million in statutory copyright damages because the copyright infringement was willful.

Instead, Grooveshark’s founders, Sam Tarantino and Josh Greenberg, worked out a settlement in which they shut down the Grooveshark service entirely, deleted all copyrighted songs, and handed over all their intellectual property to the record companies. Mr. Tarantino and Mr. Greenberg acknowledged that their service had infringed copyright, and Escape Media Group agreed to “significant financial penalties” if the settlement terms were not followed, according to The New York Times.

The settlement also means that Broadcasts, Grooveshark’s attempt at a legal streaming service, is no more. Broadcasts was an app for iOS and Android that gave users access to curated playlists for 99 cents per month. Broadcasts used standard royalty rates to reimburse artists and record labels for songs streamed, so Grooveshark didn’t need to negotiate directly with Universal, Sony, and Warner to secure rights.

At the time Grooveshark was founded, no similar streaming service existed. Spotify didn’t come to the US until 2011, and other services such as Pandora selected songs for users, rather than allowing them to choose what to listen to from an online library.

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