New Lawsuit Means All Major Labels Are Suing Grooveshark
Grooveshark, a popular digital music service that is being sued for copyright infringement by three of the four major record companies, now has problems with the one big label that it has a licensing deal with.
Context & Ripple Effects
Grooveshark's legal position has been collapsing in stages. Music publishers filed their own copyright suit against the service in July 2011 (joining the songwriters already in court), and court records made public in November 2011 included internal emails showing the company deliberately built its audience by streaming music without paying, explicitly to gain negotiating leverage over the labels.
What changes with this filing is that the last holdout — the one major label that still had a licensing deal with Grooveshark — has joined the other three in suing. The service now faces every major record company at once, and its sole remaining licensing relationship is the vehicle for the newest claim.
First-order effects
- Grooveshark loses its only major-label licensing deal, leaving it with no direct label relationships while defending copyright suits from all four majors plus publishers.
- The company's stated plan to fight the dispute 'to the finish' now means litigating on multiple fronts simultaneously, with the internal-email evidence available to every plaintiff.
Second-order effects
- With all four majors in court rather than at the negotiating table, Grooveshark's leverage-by-audience strategy is dead — there is no remaining party that needs a deal with it, which removes any path back to licensing short of a courtroom outcome.
- Advertisers and partners on an ad-supported service facing unanimous label opposition face reputational exposure, pressuring Grooveshark's revenue base while the cases proceed.
Third-order effects
- If this pattern holds, the 'stream first, license later' playbook is structurally finished: labels have demonstrated they will litigate rather than negotiate with services that build audiences on unlicensed music, pushing the market toward licensing-before-launch as the default.
- The publisher-side suits alongside the label suits point toward rights holders coordinating across both composition and recording copyrights, closing the gap that upload-based services previously operated in.
The trend: Major labels are shifting from case-by-case accommodation of unlicensed streaming services to unified litigation that forces licensing-first business models across digital music.