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EMI abandons Grooveshark, alleges non-payment

updated 10:00 pm EDT, Tue April 3, 2012

Grooveshark claims it dumped EMI

Grooveshark, a rogue streaming music service that has now been sued at least once by all the major labels over copyright issues, has lost its only partner. EMI, which had sued the company and then agreed to sign onto the service under the condition that Grooveshark license the EMI catalog, has terminated its agreement and sued the company anew, alleging non-payment on its license fees. Grooveshark claims that it has paid EMI over $2.6 million.

The Grooveshark service, based in Florida, has had a string of problems with their business plan, including being banned from the Android and iOS markets over copyright issues and lawsuits from all four of the major record labels claiming that no royalty payments have ever been received from the service. An embarrassing e-mail was brought to light during one of the suits that showed that Grooveshark executives originally planned not to pay for the music they streamed, hoping to build up a huge audience before the record companies could bring them to court. It would then offer to let the record companies mine user data in exchange for allowing the service to continue.

Currently the service makes money from ad revenues and subscription fees, but the labels all say they haven't seen a penny of it. The latest lawsuit from EMI alleges that Grooveshark managers signed an "unconditional" promissory note on November 29th that the company would pay EMI $450,000 in license fees on a payment schedule. Grooveshark did not pay the first instalment of $100,000 due March 15th, so the label terminated the agreement and sued.

Grooveshark later issued a response claiming that it was it that parted ways with EMI, saying it could not reach a deal with the label over "unsustainable streaming rates" and due to "EMI's pending merger with Universal Music Group, which we consider monopolistic and in violation of antitrust laws." Universal is one of the record companies, along with Sony and Warner, suing Grooveshark for copyright infringement, saying it streams songs it doesn't own and doesn't pay royalties.

Following the banning from both major app markets, the company launched an unofficial Android app and an HTML5 web app for desktops and mobile.

By Electronista Staff
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