Grooveshark Built Around "Asking Forgiveness" Rather Than Paying For Licenses, Emails Show

Posted 11/29/2011 at 12:22pm | by Brad Chacos

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When we wrote a streaming music services round-up on Maximum Tech, we only briefly touched on Grooveshark, the popular service based around user uploaded tracks. “And, um, we're still not completely sure that Grooveshark is legal,” was the extent of our coverage. As it turns out, newly revealed emails from Grooveshark CEO Sina Simantob prove that, well, the company’s entire business plan hinges on its dubious – at best – legality.

"We bet the company on the fact that it is easier to ask for forgiveness than it is to ask for permission," Simantob wrote in April 2010. According to CNET reporter Greg Sandoval, who broke the story after perusing records filed in a lawsuit between Universal Music and Grooveshark, the streaming music service claims that the DMCA’s Safe Harbor provision – which protects service providers from being sued for copyrights infringed upon by the provider’s user – applies to the Grooveshark service. Grooveshark's TOS requires users to absolve the company of all legal responsibility for the music they upload, but even still, in order to qualify for Safe Harbor, Grooveshark couldn't profit from or even knowingly host infringing material – facts that Simantob’s emails call into question.

Another email Simantob sent in 2009 shows how Grooveshark planned on using its freeloading success to eventually hold music labels over a barrel, money-wise.

“The only thing that I want to add is this: we are achieving all this growth without paying a dime to any of the labels… In our case, we use the label's songs till we get a 100 (million) uniques (visitors), by which time we can tell the labels who is listening to their music, where, and then turn around and charge them for the very data we got from them, ensuring that what we pay them in total for streaming is less than what they pay us for data mining. Let's keep this (quiet) for as long as we can."

So whaddaya think, Maximum PC readers: are Grooveshark’s actions reprehensible, or are the big labels simply getting some karmic payback for their past actions?