Grooveshark Is Now Deadshark: How an Illegal Streaming Service Hid Behind the DMCA for Nearly 10 Years

Stephen Carlisle May 7, 2015

On May 1, 2015, Grooveshark became “deadshark.” ¹ The online music streaming service, which had at its’ peak 35 million users, ² shut down and turned all of its intellectual property assets over to the major record companies that had sued it for copyright infringement. ³

Grooveshark was started in 2006, by Samuel Tarantino and Joshua Greenberg, two University of Florida students. ⁴ Grooveshark is a wholly owned subsidiary of Escape Media, LLC, a Delaware corporation. Since its inception, Grooveshark has operated in defiance of the copyright laws for nearly 10 years; that is until the courts found Tarantino and Greenberg to be personally liable for Grooveshark’s infringements. ⁵ It was only upon the eve of the start of the damages phase, after a “U.S. judge ruled… that Grooveshark’s copyright violations on nearly 5,000 songs were “willful” and made “in bad faith,” ⁶ and that the Court was going to instruct the jury that the maximum award was “$150,000, not $30,000,” ⁷ that the various defendants threw in the towel. As well they should. Their potential liability on 4,907 songs ruled to be at issue, ⁸ would have been over $736 million dollars.

So how did Grooveshark stay open for almost ten years? Well, according to the two summary judgements issued against them by two different courts, ⁹ they obfuscated, destroyed evidence and hid behind the DMCA.

Here’s what Grooveshark claims they did:

“Gainesville, Florida-based Grooveshark describes itself as “one of the largest on-demand music services on the Internet” with more than 30 million users sharing over 15 million files. The company says it has a policy to honor copyright holders’ “takedown” requests that comply with the Digital Millennium Copyright Act.” ¹⁰

Here’s what they actually did.

The whole business model of Grooveshark was to “beg for forgiveness, not for permission.”

“Rather than wait to obtain licenses before launching Grooveshark, Escape decided to launch its service utilizing infringing content in order to grow faster and attempt to strike more favorable licensing deals with plaintiffs. (citation omitted) 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. (citation omitted) Escape discussed the possibility that its strategy of illegally growing its user base before settling with plaintiffs might permit it to collect information about Grooveshark users’ listening habits, which it could then sell to plaintiffs for more than Escape would have to pay in licensing fees. (citation omitted) This would create a scenario whereby Escape would never have to pay for the content it used to build its business.” ¹¹

In other words, Grooveshark was yet another internet business that wants to use content without paying for it.

According to the Copyright Act, the owner of the copyright in a sound recording controls the right to perform the recording when it occurs in a digital transmission. ¹² If the performing entity making the digital audio transmissions is “interactive service,” it is not eligible for statutory licensing, ¹³ and therefore must get licenses directly from the record companies, like Spotify does. So as an “on demand” streaming service they required licenses from the record companies from the very moment they started streaming. Did Grooveshark do this? Nope.

As for the DMCA, Grooveshark was entitled to “safe harbor” from liability only if Grooveshark:

• does not have actual knowledge that the material or an activity using the material on the system or network is infringing;
• in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or
• upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material ¹⁴

Did Grooveshark do this? Nope.

Instead, it’s officers and employees themselves uploaded content to the site to the tune of over 150,000 separate files. ¹⁵

In an email, Tarantino wrote:

“If you have a home seeding point keep it on at all times. This is very important as we need to be seeding as many songs as possible. IF YOU ARE PART OF THIS COMPANY INSTALL/UPDATE GROOVESHARK ASAP. This is mandatory. If you don’t have the time to install the software you are working for, then I don’t know what you’re doing here.” ¹⁶

Not to be outdone, Greenberg stated in an email:

“Please share as much music as possible from outside the office, and leave your computers on whenever you can. This initial content is what will help to get our network started-it’s very important that we all help out! If you have available hard drive space on your computer, I strongly encourage you to fill it with any music you can find. Download as many MP3’s as possible, and add them to the folders you’re sharing on Grooveshark… 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. ” ¹⁷

So, Grooveshark was never in compliance with the DMCA. They had actual knowledge from the inception of the business, that there were over one hundred thousand infringing files that were illegally uploaded to their website.

Just a year after Grooveshark started, there were negotiations with UMG, Sony and Warner Bros. about obtaining licenses. ¹⁸ Did Grooveshark reveal that they had self-seeded the files on service? Nope. ¹⁹ It was only through discovery in a lawsuit filed by UMG in New York that the self-seeding was revealed. ²⁰ So, Grooveshark’s next step was to do what has now become a familiar practice by internet Defendants. They started destroying evidence. ²¹

“Greenberg received over thirty-nine DMCA notification letters from Escape for uploading 687 files to Grooveshark. (citation omitted) This means that Greenberg uploaded at least 687 sound recordings onto Grooveshark and that the UsersFiles should reflect these uploads. Greenberg confirmed during his 30(b)(6) position testimony that Escape maintained records in the UsersFiles of the dates, times, and identification numbers of all the files that he uploaded… However, when Escape produced a copy of the UsersFiles table to plaintiffs, it did not contain any records associated with Greenberg’s user account. (citation omitted) Plaintiffs requested that Escape produce any archived copies of Greenberg’s uploading records and explain why his data was missing. (citation omitted) Defendants confirmed that no archived copies of Greenberg’s records exist.” ²²

Grooveshark also deleted records pertaining to 320,000 files uploaded to its service, through a combination of automatic and manual deletions. ²³

Grooveshark also destroyed large sections of its source code. “Escape confirmed that it had failed to preserve any non-corrupt version of source code repositories including the “Web” repository. (citation omitted) Escape explained that when its lease on a backup server used to store the relevant code expired several years ago, it chose not to preserve the source code. (citation omitted) However, as Escape knew from soon after the creation of Grooveshark that it could very well face copyright infringement litigation, it was under a duty to preserve all relevant evidence.” ²⁴

While all of this was going on, Grooveshark faced a separate lawsuit from Capitol/ EMI in 2009. Capitol settled the case in September of 2009 in exchange for $825,000 and the promise by Grooveshark not to “allow copying, reproduction, distribution, public performance and/or other exploitation of EMI recordings…except pursuant to a valid and binding agreement allowing such [uses] in accordance with the terms of such EMI content agreement.” ²⁵

This agreement did not last very long before Grooveshark breached it. ²⁶ This led to the First Amendment to the Settlement Agreement on April 11, 2011. ²⁷

The ink was barely dry on the First Amendment before Grooveshark again breached the settlement agreement, leading to a Second Amendment to the Settlement Agreement on November 29, 2011. ²⁸

Once again, the ink was barely dry on the Second Amendment before Grooveshark again breached the settlement agreement. On March 22, 2012, EMI had seen enough to conclude that Grooveshark was never going to abide by the settlement agreements and notified Grooveshark of material breaches of the agreement and terminated the agreements. ²⁹ EMI/Capitol filed suit against Grooveshark in 2012.

It was in this case that Grooveshark was revealed to be using the most ingenious trick to hide behind the DMCA: what the Court called “the Pez dispenser.”

“Grooveshark’s site organizes multiple files containing the same song together, but only the “Primary File” can be streamed by Grooveshark users. (citation omitted) When Escape receives a DMCA takedown notice for files that infringe a copyrighted work, only the Primary File linked to a song is removed, and, if there are Non–Primary Files associated with that same song, the song remains available to Grooveshark users because a new Primary File will be selected automatically from the Non–Primary Files the next time the song is selected for streaming. (citation omitted) As aptly described by EMI’s expert, the system acts as a technological Pez dispenser: Each time a Primary File for a song is removed due to a DMCA takedown notice, a Non–Primary File is slotted in to take its place.”  ³⁰

Remember that Grooveshark is only entitled to DMCA safe harbor if:

• The material is posted by third parties
• Grooveshark does not have actual or constructive knowledge that the material is infringing
• Upon obtaining such knowledge, acts expeditiously to remove, or disable access to, the material

As seen above, Grooveshark knew from the moment it began business that it had thousands of illegal files on its service, because the officers and employees had uploaded the files themselves. In addition, once notified that a song file was infringing, they merely replaced one illegal song file with another illegal file containing the same song. Their obligation under the DMCA would have been to delete all of the files containing the same song because they had matched up several songs with an infringing one, and thus had actual knowledge.

In addition, Grooveshark was required to have a policy to terminate repeat infringers. ³¹ Grooveshark said it had a “one strike” policy that terminated a user’s upload privileges if that user was the subject of a DMCA notice. ³² Did Grooveshark do this? Nope.

“[P]erhaps the strongest indicator of Escape’s failure to terminate the uploading privileges of repeat infringers in appropriate circumstances is the undisputed facts showing that hundreds or thousands of users were not stripped of their uploading privileges after receiving notices of infringement. Notably, 1,609 users received DMCA takedown notices for an upload that occurred after the user had already received a prior DMCA takedown notice. (citation omitted) These 1,609 users submitted 2,339,671 files that are still available in Grooveshark’s active library. (citation omitted) And at least 3,323 users for whom there is documentation of infringement in Escape’s database still have their uploading privileges enabled. (citation omitted) The failure of Escape’s purported one strike policy is all the more alarming when one considers that 21,044 users who have received multiple DMCA takedown notices account for 7,098,634 uploads, or 35% of all uploads to Grooveshark’s active music library.” ³³

The Courts have held that the failure of a website to keep adequate records of users repeat infringements voids their safe harbor protection. ³⁴ However, there does not seem to be any statutory or case law that holds that a copyright owner has the right to inspect those records, absent a lawsuit.

So, of all of the legal misdeeds of Grooveshark:

• Seeding their own website with illegal content
• Failing to terminate repeat infringers
• Replacing illegal content removed pursuant to a DMCA notice with the same illegal content
• Destroying evidence

None of this would have been discovered absent the filing of a lawsuit. This allowed Grooveshark to absolutely make a mockery of the copyright law and operate as a for profit business for almost ten years. It streamed the record company’s recordings at least 36 million times, all without a proper license or payment. ³⁵

Grooveshark is the poster child as for why the time has come for the DMCA notice to become “take down and stay down.” With take down and stay down, it would have been very obvious in a short period of time that Grooveshark was operating illegally, and was operating in open defiance of the law. It should not take years of expensive litigation to stop this illegal activity in its tracks. Not only do websites like Grooveshark cause economic harm to the record companies, but as a “free” service that conveniently pays no royalties on 36 million streams of songs, acts as a barrier to entry to legitimate streaming companies, that do play by the rules, and as previously noted on this blog, struggle to make a profit. ³⁶