It has become standard operating procedure for companies that want to distribute content online to ask forgiveness instead of permission. The companies themselves pitch this as innovation, then tell rights-holders to file DMCA takedown notices – often by the thousands. By then, of course, they have far more negotiating leverage. YouTube’s offer to the media business could be summarized, in geek terminology, as ‘all your video are belong to us’ – so you might as well take what we give you.
The obvious problem is this: How much can you trust a company that deliberately attempts to profit from the work of others without providing any compensation? (Whether YouTube’s behavior was legal under the DMCA will be determined in court, but emails that came out in Viacom’s lawsuit make it clear that the company’s employees didn’t think they were going to get rich on cat videos.) Ironically, most online streaming services are actually less transparent than major labels when it comes to royalty accounting – and that’s saying something.
So it’s not all that surprising to hear that the online music service Grooveshark has just been sued by EMI – the only major music company it actually had a deal with. (Universal’s suit against Grooveshark is ongoing, and Sony and Warner recently filed suits of their own.) In its complaint, EMI Publishing – the division of EMI that controls the copyrights to songs, not recordings – that it has “made not a single royalty payment to EMI, nor provided a single accounting statement.” Ouch.
This fits with Grooveshark’s strategy – “achieving all this growth without paying a dime to any of the labels” – as outlined by chariman Sina Simantob in a December 2009 email. Much as musicians who want their work removed from the service have to repeatedly file DMCA takedown notices for the same work, perhaps companies simply have to sue in order to get paid. (Grooveshark told The New York Times that this was a contract dispute it expected to resolve.) Sadly, this would hardly be unprecedented in the music business.
If I had to guess, I’d suggest that Grooveshark’s apparent decision not to pay EMI Publishing could even be part of its legal strategy. Remember that EMI Music Publishing controls the rights to songs released by other major labels, some of which are suing Grooveshark. If Grooveshark were to account to EMI Publishing for those songs, it would mean that the company knew how much they were being played. And the DMCA safe harbor only applies if a company like Grooveshark lacks “actual knowledge that the material or an activity using the material on the system is infringing.”
Please keep in mind that this is just a guess: I’m not a lawyer, and the DMCA is a complex law subject to varying interpretations. But it does seem that it would be pretty tough for Grooveshark to pay song royalties to EMI Publishing for a recording owned by Universal Music Group, while at the same time insisting that it doesn’t know which Universal Music recordings are on its site.