Grooveshark’s Lesson: Better to Ask Permission Than Forgiveness

by Lee Gesmer on October 1, 2014

Grooveshark's Lesson: Better to Ask Permission Than Forgiveness

One thing that any online “music locker” company that relies on third-party content and hopes to benefit from the DMCA safe harbor should know is that employees should not upload copyrighted content to the service. Nothing will blow up a DMCA defense faster.

It seems that Grooveshark (legally “Escape Media”), didn’t get this message. As Joshua Greenberg, one of Grooveshark’s co-founders wrote to employees in 2007:

Download as many MP3′s as possible, and add them to the folders you’re sharing on Grooveshark. Some of us are setting up special ‘seed points’ to house tens or even hundreds of thousands of files, but we can’t do this alone… There is no reason why ANYONE in the company should not be able to do this, and I expect everyone to have this done by Monday… IF I DON’T HAVE AN EMAIL FROM YOU IN MY INBOX BY MONDAY, YOU’RE ON MY OFFICIAL SHIT LIST.

Strong stuff, and not the kind of thing you want to have pop up in discovery.

Grooveshark has been the target of multiple industry lawsuits. Two, in particular, are an action in SDNY in which the court, on September 29, 2014, entered summary judgment against Grooveshark, and a New York state action alleging infringement of pre-1972 sounds recordings, which at present are not covered by federal copyright law.

However, it is difficult to see how the September 29th decision doesn’t mark the end of the line for Grooveshark. The decision holds Grooveshark and its two founders (Greenberg and Samuel Tarantino) liable for direct and secondary copyright infringement. A few additional quotes from the 57 page opinion tell the story:

  •  When it began “Grooveshark did not have a large user base to leverage as a source for content.” Therefore, it told its employees “to create Grooveshark user accounts and to store hundreds of thousands of digital music files on their computers in order to upload or ‘seed’ copies of these files to other Grooveshark users.”
  • “Escape’s senior officers searched for infringing songs that had [been] removed in response to DMCA takedown notices and re-uploaded infringing copies of those songs to Grooveshark to ensure that the music catalog remained complete.”
  • Grooveshark “was aware that its business model depended on the use of infringing content,” but decided to “bet the company on the fact that it is easier to ask forgiveness than it is to ask permission.”
  • After moving from a peer-to-peer to a centralized storage model, Grooveshark “designed its … software so that it would automatically copy every unique music file from each of its users’ computers and upload them to the storage library.  … Grooveshark referred to this as a ‘cache everything’ policy.” Grooveshark “instructed its employees to obtain copies of digital music files from any possible source and to upload them to the central music library.”

The court found that the Grooveshark employees uploaded more than 150,000 files, and that Grooveshark’s library of songs hit the company’s goal of  2 million files.

Needless to say, Grooveshark’s activities were blatantly illegal. While the DMCA provides safe harbors for web sites that host copyrighted work uploaded by third parties, it has no relevance to works uploaded by company employees, as was the case here. One can only wonder what Grooveshark’s owners and employees were thinking to participate in what bordered on group insanity.

Whether Grooveshark sought legal advice before embarking on this voyage of folly we may never know.

In any event, it is over now.  Grooveshark.com will soon be dark, and the two founders will be stripped of their assets or forced into bankruptcy. Grooveshark’s investors (yes, it appears that “angels” may have invested over $6 million in the company) will (to borrow from Samuel Clemens) not only receive no return on their money, they’ll receive no return of their money.

For some additional thoughtful comments on this case in the broader context of how the courts have come to view music sharing sites, see Jeff John Roberts’ post on GigaOm, here.

UMG Recording v. Escape Media Group, Inc. (S.D.N.Y Sept. 24, 2014)

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