6:47pm PT by Billboard Staff
Grooveshark to Shut Down
A prolonged legal battle between Grooveshark and the three major labels has reached its conclusion. Escape Media, parent company to music streaming service Grooveshark, has agreed to settle with Universal Music Group, Sony Music Entertainment and Warner Music Group and cease all operations, effectively "wiping its computer servers of all the record companies’ music, and surrendering ownership of its website, mobile apps and intellectual property," according to the Recording Industry Association of America (RIAA).
An RIAA statement issued on Thursday, April 30 goes on to say that under terms of the settlement, "Grooveshark founders Josh Greenberg and Sam Tarantino admit to creating and operating an infringing music service."
The Gainesville, Fla.-based service, which the labels took to court for lacking licenses, was dealt its most recent legal blow in early April when EMI, now owned by Universal, was granted a motion for summary judgment. At that point, total damages were estimated at $420 million based on the court's finding that 2,807 EMI-copyrighted sound recordings existed on Grooveshark's servers.
Escape claimed protection against infringement claims under the DMCA safe harbor. The provisions of Section 512 shelter digital services from the infringing activities of their users as long as certain conditions are met. While Grooveshark does license content from some small labels, it has a YouTube-like model that also allows users to upload content to be streamed by other users.
As news arrives today, Grooveshark was facing up to $736 million in statutory damages at a trial that was about to begin. The maximum statutory penalty per infringement is $150,000 for willful violations.
Said the Grooveshark founders via the RIAA statement: “Despite the best of intentions, we made very serious mistakes. We failed to secure licenses from rights holders for the vast amount of music on our service. That was wrong. We apologize.”
The company also posted a letter on its website urging visitors to consume legal and licensed music.
As for the record companies, another upside, besides the legal victory, is that they won't have financial secrets -- like the labels' deals with Spotify -- leaked in open court.
When contacted by Billboard, a rep for Grooveshark declined further comment.
This article first appeared on Billboard.com.