How the Music Industry Finally Sunk Grooveshark

Grooveshark finally lost a major court case to the recording industry, but not because it was hosting millions of unlicensed songs at the time of the lawsuit. Instead, its founders got hit because, when they were growing the service, they uploaded some of those songs themselves.

Before there was Spotify, there was Grooveshark, a music streaming website that, despite tons of legal challenges, somehow managed to let you stream nearly any song you could think of for free.

On its face, the service appears blatantly infringing: All the songs you can stream are user uploaded and there's clearly no license on most of them.

But Grooveshark managed to take advantage of a provision in the Digital Millennium Copyright Act that says websites are not responsible for the copyrighted material their users upload, as long as the website removes the illegal content whenever a content creator issues a takedown request.

So Grooveshark began playing a huge game of whack-a-mole with the recording industry: Record labels would issue a takedown notice, Grooveshark would remove the song, then someone else would reupload the same song. Grooveshark would continue raking in millions with its advertising deals with some of the world's largest brands (the company even successfully defended itself in court on these grounds).

But the record labels eventually got word that, when it was starting up (and perhaps more recently), Grooveshark employees, including founders Samuel Tarantino and Joshua Greenberg, uploaded content to the service themselves.

That effectively destroyed Grooveshark's "safe harbor," Thomas Griesa, a US District Judge in New York City, ruled yesterday. Tarantino and Greenberg could be on the hook for millions of dollars of damages.

That brings us to a bit of a chicken-and-the-egg conundrum. Much like Reddit, which grew popular on the backs of tons of fake accounts started by its founders, Grooveshark grew its initial library on the backs of its employees' illegal music collections.

While Grooveshark appeared to have found a loophole in US copyright law, it was only able to exploit it by, well, making a service that a lot of people would want to use. And it made Grooveshark into a popular service illegally. From internal company forum post made by Greenberg and sent to employees in 2007 that was cited in the decision:

"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."

Would Grooveshark have become popular without that initial push? Probably not, but it's hard to say. In any case, Grooveshark is still running today but I wouldn't expect it to survive much longer, considering how, last year, Tarantino said he was "broke" and considering how this lawsuit is likely to cost the company seven figures.

With Spotify, Rdio, Beats, and all manner of other reasonably-priced or free streaming services out there, you likely aren't going to shed a tear now that Grooveshark is probably going to take a fall. But hey, looking back, we had some good times, didn't we?