Tuesday 29 November 2011, 11:40 | By CMU Editorial
Grooveshark emails on label deals: “It’s easier to ask for forgiveness later than it is to ask for permission now”
Emails from Grooveshark’s Chairman, included in Universal Music’s latest lawsuit against the controversial streaming music platform, indicate that the service’s owners, Escape Media, deliberately set out to make large amounts of unlicensed music available, in order to build audience and generate user data; the plan being that once the firm reached a critical mass of users and stats, the big music companies wouldn’t be able to afford to not do a deal with them.
As previously reported, Universal launched a new lawsuit against Grooveshark last week. The streaming platform allows users to upload content into its libraries, which other users can then access. Although it has licensing deals in place with EMI and a handful of indies, the user-upload element means Grooveshark’s libraries contain many tracks from artists and labels with which it has no arrangements.
While various music types have cried foul regarding that fact, Grooveshark say that it operates a takedown system – removing unlicensed tracks if and when the company is made aware of them – giving it protection from copyright infringement claims under the US Digital Millennium Copyright Act.
While many in the music business reckon Grooveshark pays only lip service to its takedown commitments, and others believe the streaming company is abusing the safe harbour clauses of the DMCA, this is a grey enough area of US copyright law that if a label was to sue, it could not be assured success in court. In fact precedent in American law suggests that Grooveshark may have a stronger case.
With that in mind, Universal has been trying to find a way to sue where the DMCA takedown defence would not stand up, and to that end last week said it had evidence that staff at Grooveshark itself – including key senior executives – had uploaded a lot of the unlicensed content that can be found on the streaming music platform. The DMCA safe harbours would not apply if it’s the Grooveshark team, rather than users, uploading Universal’s music. Grooveshark says Universal has deliberately misinterpreted data it provided (as part of an earlier lawsuit) in order to make these claims.
More of the legal papers submitted to court by Universal as part of its new lawsuit have now been made public, including emails from Sina Simantob, a partner in one of the investment firms backing Escape Media, who has also taken the post of Chairman of the digital music firm.
C-Net has published two of those emails, one seemingly an internal message to one of Grooveshark’s founders, another to a possible investor, both of which seem to confirm the fears of many in the music business, that Grooveshark’s plan is to screw over rights holders now, so they can grow to a point where content firms are forced to do licensing deals. Cynics would argue that YouTube, the company Grooveshark directors often cite (in the context of “if YouTube is legal, so are we”), pursued a similar strategy in its early days.
In one of the Simantob emails published by C-Net, the investment man writes to a Josh in late 2009, presumably Grooveshark co-founder Josh Greenberg. He notes: “The only thing that I want to add is this: we are achieving all this growth without paying a dime to any of the labels. My favourite story related to our case is the story of a kid who appears in front of the judge for sentencing for the crime of having murdered both his parents saying ‘judge have mercy on me cuz I am an orphan'”.
He continues: “In our case we use the label’s songs till we get a 100 million uniques, by which time we can tell the labels who is listening to their music, where, and then turn around and charge them for the very data we got from them, ensuring that what we pay them in total for streaming is less than what they pay us for data mining. Let’s keep this quite [sic] for as long as we can”.
The second email, to a venture capitalist, comes from April 2010, and in it Simantob writes: “We bet the company on the fact that it is easier to ask for forgiveness than it is to ask for permission. When EMI sued, everyone thought it is the end of the company. Once we settled that suit everyone said EMI was weak anyway so the real Goliath to beat is [Universal Music Group]. Well it took the boys a bit before they could re-group but I think these guys have a real chance to settle with UMG within a year and by that time, they’ll be up to 35 million uniques and a force to be dealt with”.
In reality Universal has never really looked likely to settle on this. As with LimeWire, the sense you get from insiders is that Universal just wants this company sued out of business. And emails like these are only going to add to the resentment felt at many record companies regarding digital firms who skirt around copyright laws to build audience, hoping that mega-user figures will ensure more favourable licensing terms down the line. (Of course some people, including some in the music business, would argue that if the record industry made it easier for digital start-ups to get licences they’d be less likely to go the “ask for forgiveness later” route Simantob advocates, though that’s probably a debate for another day).
All that said, while the Simantob emails published by C-Net will piss off many in both the labels and artist community, they are not the smoking gun required by Universal to prove that Grooveshark staff members routinely upload unlicensed content to their own website, thereby committing copyright infringement. And Grooveshark maintains that Universal’s evidence to back up that allegation – the aforementioned data and an anonymous blog post whose author claims to work at the digital firm – is weak.