Grooveshark Stops Swimming

We all know what happens when a shark stops swimming, right?

Grooveshark, a streaming music service founded in 2006 that grew to over 35 million users in less than 10 years online, shut down last week as a part of an ongoing copyright infringement case. Because the court found that Grooveshark’s infringement was willful — that corporate executives had knowingly uploaded hundreds of songs to build traffic on the ad-displaying site — the company could be held liable for up to $736 million in statutory damages.

In light of this Grooveshark did the sensible and correct thing and shut itself down.

This is yet another chapter in the story of an industry struggling to reinvent itself in the light of disruptive technologies, outdated copyright laws, and a world that grows flatter and flatter by the minute.

  • In 1998 global revenues on recorded music stood at about $26 billion
  • In 1999 Napster arrived on the scene and music digitization ran amok
  • Pandora was founded in 2000, and now has over 200 million users
  • Spotify launched in 2006, came to US in 2011, and now has 60 million users
  • In 2014, global revenues fell to $15 billion… a 40% drop from the pre-Napster era

The courts have not stood still during this dynamic, fast-paced technological revolution. But neither have they really been able to keep up with technological advances.

In the US, the Digital Millennium Copyright Act (DMCA) “criminalizes production and dissemination of technology, devices, or services intended to circumvent the measures that control access to copyrighted works” (Wikipedia). As a demonstration of how digitization makes national boundaries more porous than ever before, DMCA was a reflection of the international agreement known as the World Intellectual Property Organization Copyright Treaty (or WCT).

Still, a recent report by the US Copyright Office found that despite advances in laws, parts of the process that carries music from songwriter-to-studio-to-publisher-to-listener were fundamentally broken:

From a copyright perspective, we are trying to deliver bits and bytes through a Victrola.

(You can click here to read Worshipfuel’s summary of that March report and what it may mean for the music being sung in our churches.)

Despite these changes, are there any winners in this new game?

A recent article from Bloomberg says the US music industry shrank half a percent last year, despite a 29% growth in “revenue from streaming subscriptions, Web radio and online advertising.” And an end-of-year article in The Guardian states that Spotify’s net operating losses — the company is still a long way from┬áprofitable when viewed worldwide — increased 16.4% between 2012 and 2013.

Of two things we can be certain of: First, Grooveshark is just one of the sharks that will stop swimming and sink lowly into the deep as this old-but-new industry shakes itself out.

And second, people will keep trying. Within days of the Grooveshark’s closing a new site appeared — image below — that appears to be seeking an end-around to the latest defeat that copyright laws have inflicted on digital opportunists.


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