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Another storm is brewing for Grooveshark, the self-proclaimed “world's largest on-demand music streaming and discovery service.” With a library of more than 15 million songs, most of which are unlicensed, Grooveshark relies heavily on the “safe harbor” provision of the Digital Millennium Copyright Act (DMCA). The DMCA shields “companies that give the public a place to store or share material online” from liability if they take down infringing material after receiving a “takedown” notice from the content owner, and if they do not know about or benefit financially from the infringements. (See my previous blog post for more information on ISPs and the DMCA).
Grooveshark takes the controversial stance (along with other sites like Youtube) that its only obligation under the DMCA is to comply with takedown requests. Adding fuel to the fire, Grooveshark’s CEO, Sam Tarantino openly admits he thinks recorded music should be free.
It is no surprise then that the major record labels fired back, beginning with a 2011 lawsuit against Grooveshark and its officers. The majors not only alleged Grooveshark’s infringement was “willful, intentional and purposeful,” but also called out the Grooveshark executives themselves for copyright infringement, claiming they also illegally upload thousands of infringing sound recordings and instructed their employees to do the same. In their lawsuit, the major record labels also claim “these flagrant acts of infringement by [Grooveshark] and its senior officers and employees reflect the essence of [Grooveshark’s] business and culture.”
Evidence of Grooveshark’s officers’ own participation in uploading songs may cost the website its safe harbor protection under the DMCA.
And it gets worse for Grooveshark, as there appears to be another lawsuit looming. In a recent interview with Digital Music News, David Israelite, the President of the National Music Publishers' Association, stated “It is unquestionable that interactive streaming requires a mechanical license (and payment!) . . . NMPA is looking at the matter and is also aware there is already litigation initiated by the RIAA [Recording Industry Association of America] and some of our member companies. We clearly consider [Grooveshark] bad actors who steal from songwriters.”
According to the labels’ lawsuit, Grooveshark “bet the company on the fact that it is easier to beg forgiveness than ask permission.”
Yet, asking permission may have just become easier. In efforts to “streamline the licensing process” for digital music services, two weeks ago, the RIAA, NMPA and Digital Media Association (DiMA) reached an agreement “setting mechanical royalty rates and standards that supports a slate of new cutting-edge business models to help consumers access and enjoy music.”
According to the RIAA, the agreement provides for the development of new digital music services and business models offering music to consumers by creating new royalty rates and terms for five new categories of digital content, which include:
1. Mixed service bundles (for example, a “locker service,” limited interactive service, downloads or ringtones combined with a non-music product such as a mobile phone, consumer electronics device or Internet service)
2. Paid locker services (subscription-based locker providing on-demand streaming and downloads)
3. Purchased content lockers (a free locker functionally provided to a purchaser of a permanent digital download, ringtone or CD where the music provider and locker have an agreement)
4. “Limited offerings” (subscription-based service offering limited genres of music or specialized playlists)
5. Music bundles (bundling music products such as CDs, ringtones and permanent digital downloads)
As described by NMPA’s Israelite, the “agreement represents the culmination of months of discussions among the music industry, digital service providers and technology companies, and will provide more consumer choice with respect to when and how to access music while ensuring songwriters and music publishers continue to thrive in the digital age.”
While the agreement means, nonetheless, that it will be easier for new digital media companies to license content, it has not gotten any easier to beg for forgiveness. Grooveshark may be the company that finally kills the “it’s easier to beg forgiveness than ask for permission” adage.
