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In a message posted to its website on Thursday, Grooveshark
said that "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 the service."
The settlement ends a four-year legal battle and came as
Grooveshark's parent company, Escape Media Group, was facing
hundreds of millions of dollars in damages in a trial set to
begin in federal court in Manhattan on May 4.
Grooveshark will wipe clean all of the record companies'
copyrighted works and hand over ownership of its website, mobile
apps and intellectual property, including patents and
copyrights, the company said.
Nine record companies, including Arista Music, Sony Music
Entertainment, UMG Recordings, and Warner Bros Records, sued
Escape Media Group for infringement in 2011.
In court papers, they called Grooveshark a "linear descendant"
of Grokster, LimeWire and Napster, all of which were shut down
because of copyright infringement.
The labels on Friday referred to a statement by the Record
Industry Association of America, which called the deal "an
important victory for artists and the entire music industry."
The RIAA said that Escape founders Joshua Greenberg and Samuel
Tarantino agreed to "significant financial penalties" if the
terms of the settlement were breached. A spokesman for
Grooveshark declined to comment.
Gainesville, Florida-based Grooveshark was thriving with more
than 30 million users. The company said it had a policy to honor
copyright holders' "takedown" requests that comply with the
Digital Millennium Copyright Act.
U.S. District Judge Thomas Griesa ruled last week that its
infringement of nearly 5,000 recordings by artists such as
Madonna, Jay-Z and Bob Marley was "willful" and made "in bad
faith," potentially putting Escape on the hook for more than
$736 million in damages.
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