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The End of Grooveshark? But Not the End of Streaming Music Services

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By Mark Wilson, Esq. on October 06, 2014 10:05 AM

Grooveshark is an online music service that allows users to upload their own music and stream it. But it also allows users to add to their streaming library any song that someone else has already uploaded.

As you might expect, the music companies weren't too keen on this, and though Grooveshark obtained licenses for some of the music in its collection, it didn't obtain licenses for all of the music.

Enter this lawsuit against Grooveshark's owner, Escape Media Group Inc., where the music companies moved for summary judgment on direct and secondary infringement.

That's Some Strong Evidence

The motion for summary judgment in the U.S. District Court for the Southern District of New York doesn't deal with all of the songs available on Grooveshark, only the ones uploaded by Grooveshark's own employees. This isn't a case where Grooveshark's actions were innocent and mischaracterized or there's a possibility of an innocent explanation: Grooveshark intended to infringe, and they documented it.

Take, for example, this juicy nugget: "Escape's Chairman explained that defendants 'bet the company on the fact that [it] is easier to ask forgiveness than it is to ask permission' to use plaintiffs' content." Grooveshark's chairman also ordered all employees, in two separate companywide emails, to "share as much music as possible from outside the office, and leave your computers on whenever you can" in order to build a large database of music. "This is mandatory," he wrote in the second email. When Grooveshark received DMCA takedown requests, they diligently removed the songs -- then re-uploaded them later.

Far from an "information wants to be free" idealism, Grooveshark's explicit business model was to amass a library of music, serve ads to users, then placate music companies by selling them user information at a price greater than the cost of licensing fees. "This would create a scenario whereby Escape would never have to pay for the content it used to build its business."

What's Important Is What's Not Here

TechDirt's analysis of the order focuses on what's not here; namely, any mention of DMCA's safe harbor provision, which allows a communications provider to escape infringement liability if, inter alia, the infringing was carried out by a user of the site and the website was automated (meaning the provider wasn't curating the transmissions or managing the uploads). YouTube uses this provision to avoid being liable when its users upload copyrighted content.

The fact that Grooveshark, unlike others in its situation, chose not to invoke the safe harbor provision is a public policy relief, TechDirt observed:

If Grooveshark had prevailed, and the DMCA safe harbors held that the company was not directly liable for infringement done by its users, it would become Exhibit A from the legacy recording industry for why the DMCA safe harbors would need to be gutted by the upcoming attempt at copyright reform. So, in some ways, it appears that the ruling this week might actually be innovators and the DMCA safe harbors dodging a bullet.

Grooveshark's actions vis-à-vis its employees were so clearly intentional that it could never have seriously claimed the DMCA safe harbor provision. The music industry already hates the provision: It tried to weaken it both in the Ninth Circuit (fail) and legislatively through the Stop Online Piracy Act (also fail). Copyright and trademark infringement are the only intellectual property offenses that carry the potential for federal prison time and criminal fines; both the MPAA and RIAA have worked tirelessly to increase the criminal penalties as they've worked to reduce the available defenses.

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