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Eagle vs. shark

Grooveshark gets hooked by a $17 billion lawsuit — and brings the national debate over copyright infringement to Central Florida

Photo: Cover design by Jeff Drew, License: N/A

Cover design by Jeff Drew

Photo: Paul Geller, License: N/A

Paul Geller

Photo: Paul Geller, License: N/A

Paul Geller

Paul Resnikoff, publisher and founder of Digital Music News, objected to the subpoena, calling it “burdensome and unfair” and posted a lengthy response on his site that accuses Grooveshark of intimidation. Resnikoff declined to comment for this story due to the pending litigation.

When asked for his take on the suit, Geller reiterated what Custer had said, adding: “Grooveshark welcomes the opportunity to present the facts to the Court and has full confidence that it will prevail in the litigation.”

Repeated calls to attorneys representing UMG were not returned at all.

Just six years after its founding, Grooveshark employs about 130 people, Geller says (120 in Florida, with others in Nashville, New York City, Washington, D.C., and Los Angeles), and as the company grows, he says, it’s likely to foster spinoffs and more entrepreneurial endeavors – a point that Geller is sure to point out to Florida legislators when he’s in Washington, D.C., or Tallahassee lobbying on behalf of the company.

He’s also trying to change the way Grooveshark is perceived in the media. For a long time, he says, the company didn’t do a very good job responding to allegations, mostly by record labels, that the company intentionally steals music and refuses to pay artists.

Though it does have a licensing deal with EMI Entertainment World, that company is also suing Grooveshark. EMI insists that Grooveshark breached its 2009 contract. “Defendant has, to date, made not a single royalty payment to EMI,” the suit claims.

Geller says the suit is just a “contract dispute” that he hopes will settle. Exhibits contained in the suit indicate that the crux of the suit is disagreement over how much Grooveshark should pay for the songs its users have streamed – EMI wants $300,000, but Grooveshark says it only owes about $150,000.

Despite negative press these suits have brought, Geller says the goal of Grooveshark has always been to run a legit business that pays musicians. However, record labels are the gatekeepers and they haven’t always been eager to work out reasonable licensing agreements. Geller says Grooveshark does have licensing with “some of the biggest indie aggregators” in the business, as well as EMI, and it hopes to contract with all of the major labels eventually. But for now, a spokeswoman for the Recording Industry Association of America says that “four out of four” big record labels in the United States are in some kind of litigation with Grooveshark. (Geller says this is misleading – on Dec. 15, 2011, according to court documents, Sony and Warner joined UMG’s suit but did not file suits of their own against the company.)

Then there’s the nasty business of the U.S. DOJ’s recent interest in busting copyright infringers. SOPA and PIPA may be dead (for now), but the federal government’s recent enforcement actions have created a chilling effect that has sent some of the most well-known sharing sites scrambling to change their policies. Filesonic.com has disabled its sharing features, for instance, while 4shared.com has stopped offering incentives to users who store files on its site.

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