Despite a defiant response yesterday, Grooveshark appears to be a company on the brink of failure. New York Judge Thomas Griesa all but negated the company's Digital Millennium Copyright Act safe harbor defense that has protected YouTube and others, ruling on Monday that Grooveshark and parent company Escape Media were liable for copyright infringement by its employees who were encouraged to upload 5,977 tracks without proper licencing.
The court's decision came after an email from Grooveshark CTO and co-founder Joshua Greenberg was revealed.
Safe harbor protects digital companies who take down infringing material after notification from the rightsholder. But what if those infringing were staffers of the company itself?
As early as 2007, Greenberg demanded that his employees upload tracks to see the service. One email read:
Download as many MP3’s as possible, and add them to the folders you’re sharing on Grooveshark. Some of us are setting up special "seed points" to house tens or even hundreds of thousands of files, but we can’t do this alone… There is no reason why ANYONE in the company should not be able to do this, and I expect everyone to have this done by Monday… IF I DON’T HAVE AN EMAIL FROM YOU IN MY INBOX BY MONDAY, YOU’RE ON MY OFFICIAL SHIT LIST.“Each time Escape streamed one of plaintiffs’ songs recordings, it directly infringed upon plaintiffs’ exclusive performance rights,” Judge Griesa wrote in his 57-page decision.
Thus far, the judge has not awarded damages or ordered Grooveshark to shut down; and snce 2008, Grooveshark has cut some deals with labels and publishers. But other important deals are not in place; and assuming the judge follows precedent when awarding damages, it seems doubtful that Grooveshark could pay damages and survive as a company.
