Professor Peter S. Menell
Herman Phleger Visiting Professor of Law (2011-12), Stanford Law School
Robert L. Bridges Professor of Law and Director, Berkeley Center for Law & Technology
University of California at Berkeley School of Law
December 21, 2011

As fans of the 1970s television hit “Happy Days” will recall, the final curtain became inevitable when a water-skiing Fonz, wearing swim trunks and his trademark leather jacket, jumped (à la Evil Knievel) a confined shark to prove his manliness.  Although the show continued for several years after this ridiculous stunt, it rapidly descended from an entertaining coming-of-age sitcom set in a 1950s Midwest suburb to a parody of television programming that had exhausted its premise.  The phrase “jumping the shark” came to symbolize the point where a brand, design, or creative effort moves beyond redemption.

We may be approaching another “jump the shark” moment, this time in the music marketplace.  In 2007, three enterprising University of Florida undergraduate students launched Grooveshark, a music streaming service.  Grooveshark hosts music files “uploaded” from its user base onto its servers and streams this music on demand.  Grooveshark even offers a “Popular” button on its “Explore” page that reveals the most popular files within the library.  (Until recently, the “Popular” button appeared on Grooveshark’s homepage.)  Not surprisingly, the most popular songs are major-label releases.  The three most popular songs on Grooveshark are LMFAO’s “Sexy and I Know It,” Rihanna’s “We Found Love,” and Flo Rida’s “Good Feeling.”  LMFAO’s and Rihanna’s releases are part of the Universal Music Group (UMG) catalog.  Flo Rida’s music is controlled by the Warner Music Group (WMG).  The “Play All” button cycles through the list.

Grooveshark boasts 15 million songs on its site and more than 35 million registered users.  Grooveshark streams more than 100 million songs per month.  It earns income from advertisements on its website, subscriptions, and mobile apps.  Grooveshark Plus ($6 per month, $60 per year) provides additional functionality and removes advertisements from the user interface.  Grooveshark Anywhere ($9 per month, $90 per year) offers access to the Grooveshark mobile applications on Palm, Nokia, and BlackBerry devices).

Although Grooveshark eventually negotiated a deal with EMI, it never obtained licenses from the other major record labels: UMG, WMG, and Sony.  (UMG recently agreed to acquire EMI’s record divisions.)  So how does Grooveshark maintain a reliably available catalog containing substantially all of UMG’s, WMG’s, and Sony’s recordings?

Grooveshark points to its large user base supplying content and the Digital Millennium Copyright Act’s (DMCA) Online Service Provider safe harbor.  In a statement following lawsuits filed by UMG, WMG, and Sony during the past several weeks, Grooveshark stated:  “We respect the intellectual property of all artists, and our strict policies are designed to ensure that our users only upload content to which they are entitled.  This is a policy which we vigorously enforce within DMCA requirements.”  Grooveshark believes that its only responsibilities under the DMCA are to inform users of their policy to terminate “repeat infringers” and remove files that are the subject of specific takedown requests by copyright owners.

Grooveshark also contends that the prominence of UMG, WMG, and Sony hits being promoted by its “Popular” button does not send up any “red flag” signaling apparent infringing activity.   According to one of Grooveshark’s vice presidents, the “popular list” is merely “an automated list of songs, based on day-to-day activity on our site.”  “This isn’t a list that we are going out of our way to put together.  We have really no direct control of the songs that pop up in the ‘popular’ section.”  Perhaps Grooveshark employees, including those maintaining the website, never monitor that page or traffic on the site.  Perhaps they don’t know that many of the most popular artists are on UMG, WMG, or Sony labels.  That would be astonishing for a company that advertises itself as “the world’s largest international community of music lovers” that is actively seeking licensing deals from record labels.  Or perhaps they are willfully blind to what’s going on.

It is at least surprising that Grooveshark could maintain such a reliable catalog of major label content in the face of takedown requests.  UMG’s amended complaint (filed Dec. 15, 2011) offers a potential explanation.  It appends an Oct. 17, 2011 post to Digital Music News, a popular music and tech industry news blog and portal, by a person purporting to be an anonymous Grooveshark employee:

We are assigned a predetermined amount of weekly uploads to the system and get a small extra bonus if we manage to go above that (not easy).  The assignments are assumed as direct orders from the top to the bottom, we don’t just volunteer to “enhance” the Grooveshark database.
Are the above legal, or ethical?  Of course not.  Don’t reply to give a lecture.  But if the labels and their lawyers can’t figure out how to stop it, then I don’t fell bad for having a job.  It’s tough times.
All search results are monitored and when something is tagged as “not available,” it gets queued up to our lists for upload.  You have to visualize our database in two general sections: “known” stuff and “undiscovered/indie/underground.”  The “known” stuff is taken care of internally by uploads.  Only for the “undiscovered” stuff are the users involved.  Practically speaking, there is not much need for users to upload a major label album since we already take care of this on a daily basis.
Why am I disclosing all this?  Well, I have been here a while and I don’t like the attitude that the administration has acquired against the artists.  They are the enemy.  They are the threat.  The things that are said internally about them would make you very angry.  Interns are promised getting a foot in the music industry, only to hear these people cursing and bad mouthing the whole industry all day long, to the point where you wonder what would happen if Grooveshark gets hacked by Anonymous one day and all the emails leak on some torrent or something.

UMG’s complaint further alleges that Grooveshark executives – including its CEO, vice presidents, and engineers – have uploaded more than 100,000 sound recordings to the Grooveshark website.

If these allegations can be substantiated, they reveal a safe-harbor charade.  Even if Grooveshark followed the letter of the law, its ability to prosper substantially on the copyrighted works of others suggests that the safe harbor may well be too safe for the Web 2.0 age.

Grooveshark e-mails appended to the UMG complaint reveal a disturbingly cavalier attitude toward copyright owners.  Grooveshark’s chairman acknowledges that Grooveshark “bet the company on the fact that it is easier to beg forgiveness than ask permission.”  In another, he describes Grooveshark’s cynical modus operandi:

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 [sic] I am an orphan.”
In our case, we use the label’s songs till we get a 100m uniques, 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 quite [sic] for as long as we can.

YouTube has shown that pre-filtering user-uploaded content is feasible and sensible for high volume, piracy-prone hosting services.  Even though Congress did not specifically anticipate the emergence of effective filtering technologies when it crafted the DMCA, the DMCA safe harbors as well as recent Supreme Court jurisprudence (MGM v. Grokster, 545 U.S. 913 (2005) and Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011)) afford courts adequate flexibility to reach Grooveshark’s willful blindness.  If not, then Grooveshark serves as Exhibit A for reforming the DMCA.  Grooveshark illustrates the very real potential for pirates to find shelter in the DMCA safe harbor.

As deals with iTunes, Amazon, Rhapsody, MOG, Rdio, and Spotify attest, the major record labels are now willing to license their content to a wide range of download and streaming services.  Yet these businesses are hobbled by competing with Grooveshark and other enterprises that abuse the DMCA safe harbor.  Perhaps the digital age analog to “jumping the shark” ought to be “jumping the Grooveshark”: the shuttering of piratical Internet services that are beyond redemption.