Yeah, I wrote this paper for another class, so what? I don’t see anyone else using proper Turabian (or whaterver) formatting on their blogs! What now?

EMI v. Grooveshark

Initially launched in 2006 as a peer-to-peer music sharing network (somewhat similar to Napster), Grooveshark left it’s peer-to-peer ways and morphed into a music “stream on demand” site[1]. Built far away from the major record labels, Grooveshark was funded “primarily by friends and family.[2]” Unlike Napster (who claimed to not be responsible of its users content) or Myspace (a network where bands can legally only upload their own music), Grooveshark was breaking all the rules without finding any loopholes. Go to Grooveshark.com, type in a song title, and listen to whatever you want. The website idea, simple design, and ascetics are similar to an online jukebox that has every band and never costs a dime.

For consumers, this concept sounds great. Why buy an album when you can listen to it for free? Plus, streaming music doesn’t carry the same virus risks that downloading does. Finally, when streaming from Grooveshark there is no transfer of files; so no risk of lawsuit. Seemingly closer to tuning into the radio than stealing a CD, Grooveshark is a music consumer’s dream. For some copyright holders, Grooveshark seemed more like a nightmare.

In judging if the use of copyrighted material is “fair use,” a question a lawyer might ask is -- “Does [the infringement] affect the potential market for or value of the copyrighted work?[3]” Grooveshark’s motto is “Play any song in the world, for free![4]” This gives strong implication that Grooveshark not only has potential to hurt the market for music, but that Grooveshark is seemingly designed for such a purpose.

Because of the free and versatile nature of Grooveshark: it resembles neither a new way to buy music (as iTunes does) nor a new way to listen to radio (like streaming radio stations do). Grooveshark represents a new way to get any song at any time without paying any money. Perhaps this is what frightened major record companies like EMI, the holder of so many valuable copyrights.

On May 8^th of 2009, EMI sued Grooveshark for copyright infringements[5]. According to many sources (including Wall Street Journal’s All Things Digital), Grooveshark was actually working with EMI to reach a legal agreement when EMI decided to go to court instead[6]. Nothing has been announced as to what Grooveshark had on the table, but considering their limited income from a few advertisers featured on their website, it was probably nowhere near the ten or twenty dollars EMI expects to make per album. In examining the case EMI v. Grooveshark, it seems that the law is undoubtedly on the side of EMI. Not only was Grooveshark proudly disregarding copyright laws, it announced no legal defense to the public save attempted “negations” with EMI. Apparently, Grooveshark thought it could figure out the copyright licenses after it put up the copyrighted material.

In addition to constitutional law being on the side of EMI, there are also several cases that can serve as precedent to EMI v. Grooveshark. Most famous is Recording Industry Association of America (RIAA) v. Napster in 2000. When at the federal appeals court, the law sided with RIAA (the copyright protectors) instead of Napster (the copyright violating website)[7]. In what many consider the sequel to RIAA v. Napster (MGM v. Grokster) the courst also sided with the copyright holders (MGM) and forced Grokster to pay damages of $50 million[8]. The Grokster case particularly concludes that not only is it illegal to offer a service that allows its users to violate copyright law, that service itself (Grokster or Grooveshark) can be held responsible for damages.

Though the law seemed to be clearly on the side of EMI, it seems that the public was largely on the side of Grooveshark. When Rolling Stone magazine covered the EMI v. Grooveshark story online, consumers from all over the world logged on to blog about their frustration with EMI. Comment after comment on the Grooveshark case grouped EMI with “the major labels,” calling them, “fools,” “greedy,” and “two faced.[9]” A blogger identifying himself as “EMI Sucks” argues, “I can’t believe EMI would stab them in the back like this. Grooveshark was on THEIR side by asking them permission for their music, and EMI turns around and accuses them of copyright violation?[10]” Although it seems these bloggers are confused about the fundamentals of copyright laws, they are also clearly music consumers. Who else would take the time to comment on a Rolling Stones post?

Even though it appears EMI had a foolproof case against Grooveshark, they decided to negotiate instead of pursue the lawsuit. According to an October 2009 article in Wired Magazine, EMI struck a licensing deal with Grooveshark and dropped the lawsuit[11]. Luckily for Grooveshark, because the case was a civil dispute instead of a criminal prosecution, Grooveshark came out relatively unscathed.

Today, Grooveshark stays true to its motto and continues to offer any song from its huge catalog for free. Supported by companies targeting music lovers, Groovesharks users pay for the music with their viewing of advertisements instead of cash. Blending a business model called “freemium”, Grooveshark also offers a premium account (even though basic use is free). The premium service costs $3 a month, removes the advertisements a customer would normally see, and allows the user additional features like saving playlists[12].

EMI v. Grooveshark is an especially interesting case because it marks the music industry’s digression from enforcing copyright laws. Even though the law was on EMI’s side, the music consumer was not. Working with Grooveshark instead shutting it down is part of a new strategy to embrace free music for fear of alienating customers.

---

[1] Peter Kafka, “Another Music Start Up Sued” All Things Digital by The Wall Street Journal. (June 17, 2009) http://mediamemo.allthingsd.com/20090617/another-music-startup-sued-emi-takes-grooveshark-to-court/ (accessed April 9, 2010).

[2] Peter Kafka (accessed April 9, 2010)

[3] Raymond P.Schmitz Jr. J.D., “Copyright: Infringement, Fair Use, and Licensing ” (lecure, Columbia College, Chicago, IL)

[4] http://listen.grooveshark.com/ (accessed on April 9, 2010)`

[5] Peter Kafka, “Another Music Start Up Sued” All Things Digital by The Wall Street Journal. (June 17, 2009) http://mediamemo.allthingsd.com/20090617/another-music-startup-sued-emi-takes-grooveshark-to-court/ (accessed April 9, 2010).

[6] Peter Kafka (accessed April 9, 2010)

[7] CNN, “Justice sides with recording industry on key issue in Napster court fight” (September 8, 2000) http://archives.cnn.com/2000/LAW/09/08/napster.justice/ (accessed April 10, 2010)

[8] John Borland, “Last waltz for Grokster” CNet News (November 7, 2005) http://news.cnet.com/Last-waltz-for-Grokster/2100-1027_3-5937832.html (accessed April 10, 2010)

[9] Daniel Kreps, “EMI Sues Music Streaming Site Grooveshark” Rolling Stone (June 18, 2009) http://www.rollingstone.com/rockdaily/index.php/2009/06/18/emi-sues-music-streaming-site-grooveshark/ (accessed April 10, 2010)

[10] Daniel Kreps, (accessed April 10, 2010)

[11] Eliot Van Buskirk, “EMI Drops Suit Against Grooveshark Music Service, Licenses It Instead” Wired (October 13, 2009) http://www.wired.com/epicenter/2009/10/emi-drops-suit-against-grooveshark-music-service-licenses-it-instead/ (accessed April 9, 2010)

[12] http://listen.grooveshark.com/ (accessed on April 9, 2010)

- Ian Gollahon