In another installment of the “We Saw This Coming,” UMG Recordings (“UMG”) has sued Escape Media Group, Inc. (a/k/a “Grooveshark”), along with several of Grooveshark’s executives personally. (UMG Recordings, Inc. v. Escape Media Group, Inc., 11-civ-8407 (Nov. 18, 2011, S.D.N.Y.).
The Grooveshark website is very slick, with an easy to navigate UI. A search for the artist Jay Z, whose sound recordings are owned and distributed by UMG, results in a list of songs by that artist. A user can click on any song in the list to start it playing (i.e., on-demand). Users can create a playlist, “share” the song through Facebook or Twitter, and even buy the song on Amazon or iTunes. UMG alleges in its complaint that Grooveshark has “no license for the overwhelming majority of the sound recordings available through the Grooveshark website, and [has] no license from UMG for any of its sound recordings.”
More damaging than its general allegations of infringement, UMG alleges that Grooveshark’s executives personally uploaded infringing works and/or directed Grooveshark employees to do the same. For example, UMG alleges that Samuel Tarantino, Grooveshark’s CEO, personally uploaded 1,791 songs, Paul Geller, SVP, uploaded 3,453 songs, John Ashenden, VP, uploaded 9,195 songs, Chanel Munezero, Software Engineer, uploaded 20,756 songs, and Nikola Arababjiev, Quality Assurance, uploaded 40,243 songs.
UMG attaches several emails to its complaint that it alleges support its case that Grooveshark made the business decision to engage in unauthorized use in an effort to quickly build its following. For example, Sina Simantob, a principal at Highlander Wealth Services and Chairman of Grooveshark, in an email to Drew Lipsher, a partner at media VC firm Greycroft, stated “we bet the company on the fact that it is easier to ask for forgiveness than it is to ask for permission. … I think [Grooveshark has] a real chance to settle with UMG within a year and by that time [Grooveshark will] be up to 35m uniques and a force to be dealt with.” In an email to Dr. Jia Gottlieb, who runs the oldest holistic medical clinic in Colorado, Simantob writes “… we are achieving all this growth without paying a dime to any of the labels.”
UMG also attaches what it purports to be a comment left by a Grooveshark employee in response to a story about Grooveshark on the website Digital Music News. The alleged employee writes
“We are assigned a predetermined about of weekly uploads to the system and get a small extra bonus if we manage to get above that (not easy). The assignments are assumed as direct orders from the top to the bottom, we don’t just volunteer to ‘enhance’ the Grooveshark database.”
Grooveshark’s EULA has some interesting language, especially if UMG’s allegations that Grooveshark executives personally uploaded unlicensed content. For example, the site’s policy states
Unless we indicate otherwise, you grant EMG and its affiliates a nonexclusive, royalty-free, perpetual, irrevocable, and fully sublicensable right to use, display, perform, reproduce, publish, and distribute such User Content throughout the world via the Service. You grant EMG and it affiliates the right to use the name that you submit in connection with such User Content. You are solely responsible for any necessary payments that may become due to any third parties as the result of your posting of or linking to the User Content and EMG’s use thereof. (emphasis added)
The EULA goes on to define what types of User Content should not be uploaded to the Service
The following is a partial list of the kind of User Content that is illegal or prohibited on the Service. Prohibited User Content includes but is not limited to content that: … (v) consists of an illegal or unauthorized copy of a copyrighted work, such as sound recordings, musical compositions and videos in which you do not personally own the copyright (including CDs and tracks you may have purchased), or otherwise do not have the necessary authority from the copyright owner(s); …. EMG reserves the right to investigate and take appropriate legal action in its sole discretion against anyone who violates this provision, including without limitation, removing the offending User Content from the Service and terminating the membership of such violators.
Its never good when your executives are alleged to be knowingly violating their own terms of service. Grooveshark settled with EMI and its internal documents indicate it wants to settle with UMG. However, my guess is UMG is in no mood to reward Grooveshark for its past business decision to launch without a license. However, as I said, the UI is pretty slick (I personally think its much cleaner and easier to navigate than Spotify) and I can see this site becoming quite popular. Look for UMG to own most of Grooveshark before this is all over.
The complaint is below:
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