Last week, it was discovered that Josh Greenberg, one of the co-founders of the music streaming site Grooveshark, was found dead in his home in Gainesville, FL. Greenberg was only 28 years old, and had just settled an infringement lawsuit stemming from his controversial Grooveshark service. The police immediately stated they didn’t suspect any foul play, but many wonder whether the failure of his venture had caused Greenberg to become depressed.
Grooveshark, one of the early pioneers in music streaming, quickly became the enemy of music labels and record companies that were cracking down on music piracy. After a bitter lawsuit that lasted years, Grooveshark was finally shut down on April 30, 2015.
At the height of its popularity, Grooveshark had 40 million monthly users and a team of 145 employees based out of Florida and New York City. Many devoted Grooveshark fans shared public outrage at the collapse of the service, turning to its competitors like Spotify and R-DIO.
Music piracy has been a hot issue since the 1990s, when companies like Napster and Limewire first launched and offered an illegal downloading service for online music. Since then, the music business, both for labels and consumers, has changed steadily. Online music sales today account for a large percentage in album sales, with the sale of digital music having surpassed CDs for the fourth time this year. Online music giant Spotify recently announced it now has 15 million paying users, and 60 million subscribers overall.
With the collapse of Grooveshark and the death of its co-founder, we thought it might be useful to take a closer look at the lawsuit that put an end to the Grooveshark empire. Why did Grooveshark get sued for copyright infringement? What’s next for online music streaming services, and the music business as a whole?
Grooveshark’s copyright infringement suit
Founded in 2006, Grooveshark provided streaming access to a library of millions of songs. In the days before Spotify, which came to the United States in 2011 with a free and fully licensed streaming service, Grooveshark’s library and smooth operating system helped it grow to an impressive size, reaching almost 40 million users in a span of six years.
The site was first sued for infringement in 2009; the case the company settled this week dates to 2011. Grooveshark, which operates under the company Escape Media, settled with Universal Music Group, Sony Music and Warner Music Group, agreeing to cease operations in order to avoid a potential $736 million lawsuit triggered by Grooveshark’s copyright infringement.
Grooveshark had long argued that it operated under the terms of the Digital Millennium Copyright Act, a federal law that protects websites that host copyrighted content uploaded by others.
The Digital Millennium Copyright Act (DMCA) is a United States copyright law that implements two 1996 treaties of the World Intellectual Property Organization (WIPO). It criminalizes production and dissemination of technology, devices, or services intended to circumvent measures that control access to copyrighted works. In addition, the DMCA heightens the penalties for copyright infringement on the Internet, but does provide a safe harbor for internet service providers within the Online Copyright Limitation Liability Act (OCILLA). The Act exempts internet service providers from copyright infringement liability in an effort to strike the balance between the competing interests of copyright owners and digital users. Under OCILLA, if an internet service provider is served a take down notice, they are obliged to comply, but will not be subject to copyright infringement liability if they meet certain exceptions.
Understanding OCILLA under the DMCA
According to OCILLA, an internet service provider is defined as “an entity offering the transmission, routing, or providing of connections for digital online communications, between or among points specified by a user, of material of the user’s choosing, without modification to the content of the material as sent or received. Under this section, the term “service provider” means a provider of online services or network access.
In order to be protected by OCILLA, a provider must adopt and implement a policy for addressing and terminating accounts of users who are found to be “repeat infringers.” The provider must also not accommodate or interfere with “standard technical measures” –
defined as measures that copyright owners use to identify or protect copyrighted works, that have been developed pursuant to a broad consensus of copyright owners and service providers in an open, fair and voluntary multi-industry process.
In theory, Grooveshark should have been protected by OCILLA’s safe harbor, though the site would have to comply with take-down notices which could have had a detrimental impact on their business. However, there are certain elements of OCILLA that be met if one if to claim its protection, and Grooveshark didn’t exactly comply with those requirements.
Providers seeking protection from OCILLA must:
1) not receive a financial benefit directly attributable to the infringing activity,
2) not be aware of the presence of infringing material or know any facts or circumstances that would make infringing material apparent,
3) upon receiving notice from copyright owners or their agents, act expeditiously to remove the purported infringing material.
Why wasn’t Grooveshark protected by OCILLA?
Grooveshark users upload content they own, and then anyone else on the site can stream it. So long as the owner of the song has obtained the song legally, i.e. purchased instead of illegally downloaded the song, Grooveshark should be in the clear – especially if they have carved out a system for identifying and removing repeat infringers, which Groovehsark claimed to do.
Grooveshark defended their service for years under OCILLA, and did so successfully. But the suit filed by Universal Music Group, Sony Music and Warner Music Group in 2011 revealed some damning information regarding Grooveshark’s practices: The suit accused the executives and staff of Grooveshark of illegally uploading copyrighted songs in a systematically offensive manner.
The plaintiffs of the suit were able to gain access to Grooveshark’s databases pertaining to user uploads after a previous lawsuit they had filed against the company the prior year. While going through the information, they found that the CEO and co-founder of Grooveshark, Greenberg’s partner Sam Tarantino, had uploaded 1,791 copyrighted songs. But it didn’t stop there: Tarantino was in fact one of the milder offenders. It was revealed that the company had instituted a policy for uploading copyrighted materials – some of the company’s top executives were found to have uploaded upwards of 3,000 copyrighted songs.
According to testimony asserted during the discovery process, the staff was “assigned a predetermined amount of weekly uploads to the system and get a small extra bonus if we manage to go above that (not easy).”
These findings in court unequivocally established Grooveshark’s guilt: As discussed above, a provider claiming protection under OCILLA cannot do so if its found that they knowingly uploaded copyrighted materials without a license. Grooveshark would have been liable for $736 million had a settlement with the companies not been reached.
Companies that have emerged in the post-Grooveshark streaming music landscape take great care to ensure they only work with licensed songs in order to avoid any copyright infringement liability. In today’s digital world, it’s important to remember that you are liable for the things that you publish on the internet – determining to what extent is a matter of understanding the applicable law.