Image by Roberto Taddeo
The music industry is slow to keep up with technology, but the law is even slower. Until the mid to late 1920s, sheet music sales continued to surpass disc sales of music (the phonograph was invented in 1877 about 50 years earlier). The idea of a recording artist barely even existed. Fast forward 30 years to 1955, the music industry was still fighting about copyright protection between sheet music and discs (Kaplan, 1995). Fast forward again 40 years to 1999, as shown in the movie Downloaded (Watch Here), Shawn Fanning and Sean Parker launched the file-sharing service Napster and the digital music age arrived—without warning. In the dynamic world of music distribution, the latest fatality of digital music providers is Grooveshark. It's a story of big dreams, bad emails, and a crafty comparison to an Austrian candy dispenser.
A promising start
The music industry has been hostile to streaming music service start-ups since Napster. However, in the case of Grooveshark, things seemed to start off on the right foot. Grooveshark (through its company name Escape Media Group, Inc.) was founded by Samuel Tarantino and Joshua Greenberg at the University of Florida in 2006. It started as a digital music P2P file sharing network called Sharkbyte and it evolved in 2009 into the streaming music service we knew as Grooveshark.
The beginning of the end of Grooveshark started in November 2011. Before 2011, all the way back in 2007, Grooveshark began seeking negotiations with the major record labels to obtain licenses for Grooveshark. Grooveshark claimed that the major record labels encouraged them to develop the service and grow its user base, while declining to grant a licensing deal because Escape was too small and inexperienced. Sounds like a nice arrangement—the music industry calls off the legal dogs while Grooveshark grows? Or was it a trap?
How did Grooveshark respond to this so-called encouragement? They grew as fast as possible and attracted a large number of users while the music industry sat back and watched. Grooveshark claimed that its business model was designed as a licensed exchange for audio files by internet users, which would compensate content owners. After years of development and fundraising, the music industry finally attacked and when it did, there was nowhere left to go.
Let’s keep this quiet for as long as we can
As Humphrey Bogart said in the timeless classic Casablanca (Watch Here), Grooveshark must have thought "this was the beginning of a beautiful friendship." If the record labels were so encouraging, why did they turn on Grooveshark? It appears from emails in the court filings that Grooveshark thought it had outsmarted the music industry. The key email behind the record labels case was an internal email from Grooveshark's Chairman to its CTO, where he admitted:
We are achieving all this growth without paying a dime to any of the labels. My favorite 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. " In our case, we use the label's songs till we get a 100m uniques... then turn around and charge them for the very data we got from them...Let's keep this quite for as long as we can.
Yikes! That's tough to explain away. Generally speaking, Grooveshark's music library (almost over 15 million songs) was pieced together from users who sign up for a free account and submit music files from their personal computers. Grooveshark stored its music library on its own servers, from which free music was available to any of its free users. How did Grooveshark make money if the music was free? Advertising. Was it illegal for Grooveshark to have its users upload copyrighted music to its servers and for Grooveshark to stream copies of this music to its other users?
The nail in the coffin: The technological PEZ dispenser
Other than a really really bad email, what was the final straw that ended Grooveshark? If you've gotten in trouble in a relationship, you may have been told this before: it's not what you said, it's how you said it. Like the act that gets you in the doghouse, in this case, it was not what the team at Grooveshark did but how they did it.
The Digital Millennium Copyright Act (DMCA) offers safe harbors from copyright infringement for innocent internet service providers (think YouTube and Pinterest). Ultimately, the court believed the record label's argument that Grooveshark knowingly pursued an illegal enterprise and was not simply an innocent internet service provider.
The court found that Grooveshark (i) failed to keep records of infringement, (ii) employed a practice of actively preventing copyright owners from collecting necessary information to effect takedown notices, and (iii) failed to terminate repeat infringers (interestingly, the record labels claimed only 2% of the users submitted every single file on the system).
But the nail in the coffin was Grooveshark's practice of preventing copyright owners from being able to identify repeat infringers. The Judge said that Grooveshark's practice worked like a "technological Pez dispenser" making it impossible for the music industry to protect its copyrights. How did this PEZ dispenser work? This is how:
Each time a Primary File for a song is removed due to a DMCA takedown notice, a Non-Primary File is slotted in to take its place, with the process continuing until there are no remaining Non-Primary Files for that particular song, and there is nothing to keep the Non-Primary Files from replenishing. Because it is not possible for content owners to obtain uniform resource locators (URLs) for Non-Primary Files,  and because the only URL visible to a user and content owners is the URL for the Primary File for a song  content owners must submit successive takedown notices even for Non-Primary Files slotted behind Primary Files that have already received takedown notices.
And, ladies and gentlemen, that is how you create a technological PEZ dispenser. With this clever analogy to a whack-a-mole-like game played by Grooveshark, the court had no sympathy remaining for the Florida innovators from The Swamp.
Image by Petras Gaglias.
The DMCA is currently the cornerstone of internet service provider law. You can read this case and think, if you allow users to publish content on your website that infringes on copyrights of others—you will be shut down. No quite. The problem here was the technological PEZ dispenser and the reason it was a serious problem for Grooveshark is that a majority of its content came from very few users. So if you take anything from this case, remember this:
If ur file system doesn't resemble a frustrating game or candy dispenser, u might have a legal music service. Share this