Grooveshark shuts down after settlement with record companies

Streaming music service Grooveshark has closed down as part of a settlement with major record companies that had sued it for many years for copyright infringement.

The music service, which started in 2006, is ceasing operations immediately and will erase all the copyrighted works of the record companies, besides surrendering ownership of the website, mobile apps and intellectual property, Grooveshark said on its website on Thursday.

“....we made very serious mistakes. We failed to secure licenses from rights holders for the vast amount of music on the service,” Grooveshark wrote in the post on its website.

Music trade group Recording Industry Association of America said Grooveshark parent Escape Media had entered into a settlement Thursday with Universal Music Group, Sony Music Entertainment and Warner Music Group.

The music service’s founders Josh Greenberg and Sam Tarantino admitted to creating and operating an infringing music service, while Escape Media agreed to financial penalties if the terms of the settlement were not followed, RIAA said.

Grooveshark said that when it launched there were few music services that “provided the experience we wanted to offer - and think you deserve.” It added that there were now other services, including Spotify, Deezer, Google Play, Beats Music, Rhapsody and Rdio. It recommended that people used a licensed service that compensates artists and other rights holders.

A jury trial on statutory damages against Escape Media in the U.S. District Court for the Southern District of New York was adjourned earlier this week to May 4 from the scheduled date of April 27, apparently because of the settlement discussions.

The court had earlier ruled that Grooveshark could not take refuge in provisions of the Digital Millennium Copyright Act, which limits the liability of websites in certain cases for infringing content that was uploaded by others. The infringing content was uploaded in this case by Escape Media employees at the direction of the company, and not Grooveshark users, District Judge Thomas Griesa wrote in an order last week.

For each infringed work, the statutory damages may be awarded in the range of US$750 to $30,000. But if the copyright owner is able to prove that the infringement was willful, the damages may be enhanced up to $150,000, the judge wrote. He said he would recommend the $150,000 cap. There were 4,907 recordings cited in the suit, taking potential damages to $736 million.