Once the UK recording industry realized that UK courts would order ISPs to block websites it didn't like, it appears that the industry, led by BPI and PPL began putting together a list of over two dozen sites that they're asking to have blocked by all UK ISPs, even though many of the sites on the list have never been tried in a court of law or convicted of copyright infringement. Included on the list, for example, is Grooveshark, who has been sued, but has not yet been found to violate copyright laws. It may very well be true that there is infringement on many, if not all of those sites. But, generally speaking, there's this thing called due process that allows a site to defend itself before being censored from an entire country. Just because a site has some infringing content does not mean that the entire site should be blocked -- or you'd have absolutely no user generated content sites online, because the liability would be too high. The UK courts started down this slippery slope by allowing sites to be blocked, and now the record labels are just going to keep piling the list higher and higher.

The last big news in the ongoing fight between Universal Music Group and Grooveshark (and its parent company Escape Media) came back in July, when a New York court rejected UMG's argument that the DMCA's safe harbors didn't apply to pre-1972 sound recordings, because, technically, those recordings are not covered by federal copyright law. This was in keeping with the ruling in the fight between EMI and MP3Tunes, and seemed most consistent with the intent of DMCA safe harbors.

Naturally, UMG appealed, and in doing so made some compelling arguments about the wording of the law. The appellate court agreed, and has now issued pretty much the opposite decision: pre-1972 sound recordings are not covered by the DMCA (pdf and embedded below) and thus Grooveshark has no DMCA safe harbors for such songs.

There are a few different parts to the ruling, but the core argument is straightforward: section 301(c) of the Copyright Act explicitly states that no "rights or remedies" under common law copyright on pre-1972 recordings shall be "annulled or limited" until 2067, and it's pretty hard to argue that the DMCA doesn't do that:

Initially, it is clear to us that the DMCA, if interpreted in the manner favored by defendant, would directly violate section 301(c) of the Copyright Act. Had the DMCA never been enacted, there would be no question that UMG could sue defendant in New York state courts to enforce its copyright in the pre-1972 recordings, as soon as it learned that one of the recordings had been posted on Grooveshark. However, were the DMCA to apply as defendant believes, that right to immediately commence an action would be eliminated. Indeed, the only remedy available to UMG would be service of a takedown notice on defendant. This is, at best, a limitation on UMG’s rights, and an implicit modification of the plain language of section 301(c). The word “limit” in 301(c) is unqualified, so defendant’s argument that the DMCA does not contradict that section because UMG still retains the right to exploit its copyrights, to license them and to create derivative works, is without merit. Any material limitation, especially the elimination of the right to assert a common-law infringement claim, is violative of section 301(c) of the Copyright Act.

For defendant to prevail, we would have to conclude that Congress intended to modify section 301(c) when it enacted the DMCA. However, applying the rules of construction set forth above, there is no reason to conclude that Congress recognized a limitation on common-law copyrights posed by the DMCA but intended to implicitly dilute section 301(c) nonetheless.

...

Under such circumstances, it would be far more appropriate for Congress, if necessary, to amend the DMCA to clarify its intent, than for this Court to do so by fiat.

Take note of that last bit, because this ruling has made it more true than ever. And that's where the problems come in. It seems pretty clear that there is some sloppy drafting in how the DMCA is written (which isn't a surprise), in that what you have is wording that can be read this way, even though it clearly goes against the intent and purpose of the DMCA. If the DMCA's safe harbors don't apply to pre-1972 recordings, then the DMCA's safe harbors no longer apply at all to any service that includes music. That can't be what Congress intended, even if the wording of the law can be read that way.

Thus, if you go strictly by the wording, while ignoring the intent, the logic of the decision is sound, but the implications are disturbing: as Grooveshark pointed out in their defense, this interpretation would gut the DMCA. One of the key purposes of safe harbors was to prevent online services from needing to proactively scan for infringing works, since that would drastically and unfairly limit their growth, and we wouldn't have things like YouTube today if that were the case. But if pre-1972 recordings (which is plenty of material) are not included, then user-generated content sites do have to scan everything. And while it might be somewhat easier to identify pre-1972 recordings than it is to identify infringing uploads, it would still be insanely prohibitive — not to mention the massive loss to our culture from having a huge chunk of music history mostly vanish from the internet.

It's a little unclear just how far-reaching this ruling will be (it's at the state level, and it is in itself explicitly contradicting the earlier MP3Tunes ruling, which it declares to be "wrongly decided") but the potential implications are huge. Exempting all pre-1972 recordings from the DMCA would impact all corners of the internet in a bad, bad way. The only optimistic thought is that perhaps it would force congress to revisit the law, and we could finally push for a Digital Millennium Copyright Act that actually works in the digital millennium.

One of the things that we've found odd about the decade and a half history of the legacy entertainment industry seeking (often successfully) to shut down a variety of new platforms, is that if you actually looked at the artists who didn't completely freak out at these new services and who recognized what the new services were (better platforms for distribution and promotion, rather than the end of all civilization and culture as we know it), you quickly find that, if done right, the platforms could be used to those artists' advantage. We saw artists use the original Napster to their advantage, only to see it shut down. Ditto for MP3.com, Grokster, Kazaa, Limewire, Megaupload and more. Plenty of artists have discussed how incredibly useful The Pirate Bay has been as a platform for distribution and promotion.

Now, admittedly, many of these companies and services were shut down for some form of copyright infringement or inducement to infringement. So, you can argue that they were illegal. But if we went back even further, we saw the same complaints against many other platforms including the radio, cable TV, the VCR, the DVR, the MP3 player and online video services like YouTube. And yet, every one of those has survived, and they have turned out to be very important parts of the market. In fact, you can look and see how each of those helped expand and grow markets, even as they were decried as being tools of infringement when they first came on the scene.

This is why I'm so fascinated by the artists who are the early adopters -- who jump onto these platforms in the early days and show how they can be used to the artist's own advantage. Because it's through those people that we learn how these platforms, be they tools of infringement or not, can quite possibly help artists much more than hurt them -- if those artists learn to use the tools correctly.

All of that is prelude to this case study, concerning a band called Quiet Company that teamed up to take part in Grooveshark's new Artist Development project, in which Grooveshark would see if it could help "break a band" via the internet. Grooveshark, of course, is a company that is currently being sued by a large chunk of the recording industry for its music player. In talking to various artists about it-- even those who often are more willing to experiment with new platforms -- I've seen many artists really dislike Grooveshark. But, clearly, it has built up a giant, loyal and engaged user-base. And, as always, it seems that, if done right, artists could embrace that to a positive effect, which is appears to be what happened with Quiet Company. First up, if you'd like to hear some of their music, you can click the widget below: I spoke to Quiet Company's manager, who told me that the band was being courted by various record labels, but they quickly realized that they were getting offered deals that weren't the most "artist friendly," and that they had no desire to work with a record label unless they knew that the band was the one with the leverage. So, when Grooveshark approached them, noting that Quiet Company seemed to be doing quite well on Grooveshark, and that they wanted to try to help "break" the band online, the band thought it was a great idea. In terms of what Grooveshark did for the band, it included promoting the band more heavily within Grooveshark and in other places, promoting YouTube videos (more on that below), promoting tours with "tour skins" in locations where the band was heading, highlighting releases, doing promos, contests and the like. They also did some more traditional promotions work, including pushing college radio and festivals, while also finding brand sponsors.

There are a number of interesting tidbits in the case study looking at an entire year or so in which Grooveshark worked to help Quiet Company. One thing that's important to note, of course, is that the band didn't just rely on Grooveshark, but worked to use Grooveshark in combination with other platforms to get attention. Grooveshark seemed to drive steady growth in part by using its own tools to help drive growth elsewhere, such as YouTube. Take a look, for example, at the following timeline: You can see that there's a massive spike coming when YouTube engagement ads ran. Those ads are something that Grooveshark launched last year, to help promote artists, and it looks like that clearly had a pretty big impact. The "ads" ask Grooveshark users to view a portion of a music video to get to use the rest of the site ad free for a period of time, and that massively increased the YouTube views for the band. The timing did also coincide with last year's SXSW Music, where the band played (and got significant press attention -- Time, NPR Music, Billboard -- which certainly helped), but the band says that Grooveshark was instrumental in getting the necessary exposure.

Furthermore, a closer look at Grooveshark promotions, shows that they also impacted things like visits to the website and Facebook likes. But, perhaps more importantly, the end result of this experiment was that the band started making more money with a much broader, international fanbase. The band had a popular following, locally in Texas, where it was from, but had much less support as they got further from home. On Facebook and YouTube, the "top cities" were all in Texas. However, that changed drastically, leading to the ability to tour more widely. After the partnership, rather than just cities in Texas, they had big followings (via Facebook) in Bogota, Sao Paulo and Barcelona, among many other places. The top countries for followers if you looked at YouTube and Facebook included not just the US, but the UK, Canada, Germany, Brazil and Spain. The band is getting ready to perform outside the US for the first time. And, not surprisingly, with a broader fan base, their touring revenue shot up as well. All in all, it's an interesting case study of a band that had a loyal local following, but hadn't "broken." Then it embraced a platform like Grooveshark and to see if it helped or hurt the band. It certainly seems like the band is in a much better position after working with Grooveshark than before. Even if you make the case that their success had nothing to do with Grooveshark, but was due to other factors, it certainly doesn't look like working with Grooveshark harmed the band, as some would imply.

In talking to the band's manager, he repeatedly pointed out that the exposure from Grooveshark made all the difference in the world, and took the band from having a loyal and devoted local following to a band that really had a big following in many places around the globe. He pointed out that the key, in his mind, was that this was a promotional platform, with the focus being on building up a fanbase who loved the music, and to then tour to make money to support that. When asked if there were any "lessons learned" or regrets, the one thing he noted is that they should have been better prepared to go out on tour as soon as things started to break. He felt that they could have done a bit more if they were ready to tour more widely earlier last year.

Something else really interesting came out of the case study and the discussion: after all of this, Quiet Company actually got a private investment from a group of fans to continue what they're doing. That is, rather than signing with a record label, a huge fan actually approached the band and asked them about investing in them, and set up a deal (with a few other fans) that is better than a record deal in that it's very artist friendly. Quiet Company's manager told me that this fan has been a big supporter of the band for a long time -- often buying a bunch of tickets to their shows and just giving them out to a bunch of her friends, and they were pleasantly surprised when that turned into her investing directly in the band.

Separately, he notes that the band believes strongly that this kind of thing was a result of the band really working hard to connect closely with their fans, and that with this greater exposure, it lets them try to do that on a larger scale.

This isn't, of course, to say that every artist should automatically jump on board with Grooveshark. It's just yet another case study in a growing list that shows that where artists carefully and smartly construct a broad strategy that leverages various tools to help promote and distribute their works, combined with connecting with the fans, they can have really compelling success stories. Even as some decry those platforms for claimed copyright infringement, it seems like these platforms can be helpful in doing the most important thing: building a fanbase. And, from there, the band needs to work to connect with that fanbase, and give them ways to support the band. It would be great if, rather than attacking such platforms over and over again, we spent more time like this, looking at ways that artists can use various platforms to their own advantage to succeed.

Two and a half years ago, Universal Music (UMG) sued Grooveshark (or, really, its parent company Escape Media). The case has had a few twists and turns since then, but the judge has issued a ruling (embedded below) that is pretty clear in suggesting that Universal Music's key argument -- the the DMCA does not apply to pre-1972 songs -- was a massive overreach, and the court will not accept it. Separately, the court flat-out rejected UMG's attempts to have Grooveshark's counterclaims of tortious interference dismissed. There's no way to look at this other than a pretty big win for Grooveshark and a big loss for Universal, though the case is far from over.

On the key point, Grooveshark has long argued that what it does is really no different than what YouTube does, in that it allows individuals to upload content, and if it receives a takedown notice, it proactively follows the DMCA's takedown process and removes that content. Realizing that getting around the DMCA's safe harbors was a longshot, Universal Music instead reverted to a somewhat twisted argument, saying that pre-1972 sound recordings are not covered by the DMCA, and thus there are no safe harbor protections. To understand why they'd make this argument, you can read up on the history of pre-1972 copyrights for sound recordings -- a huge mess that the US Copyright Office is still trying to figure out how to fix. But, the short version is that, currently, sound recordings from before 1972 are not technically under US federal copyright law, but various (and often crazy) state laws. Since the DMCA refers to works under federal copyright law, Universal Music's arguments is that the DMCA doesn't apply, thus the safe harbors don't apply, and Grooveshark can't rely on its safe harbor compliance to avoid liability.

If this argument sounds somewhat familiar, that's because it's the same one EMI tried to use against MP3Tunes, which failed spectacularly. The NY state court in this case appears to be well aware of that, citing the MP3Tunes case at length.

An internet service provider which seeks to benefit from the safe harbor provisions of the DMCA is required, as a condition of receiving such protection, "expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity." .... Certainly the thrust of the DMCA is to relieve internet service providers of the initial need to ascertain the copyright status of the sound recordings that they make available, to place the burden of asserting copyright ownership on the owners of such copyrights, and to require the internet service providers to "take down" infringing material, upon receipt of a valid notice of infringement. There is no textual, or other reason, to think that Congress intended to limit that distribution of responsibilities to only post-1972 recordings.

Moreover, the phrase "copyright owners,".... is applicable to the owner of a common law copyright, no less than to the owner of a copyright under the Copyright Act....

End result? Sorry, UMG, but you can't just use this loophole to get around the clear and stated purpose of the DMCA's safe harbors.

This Court is not attempting to extend the Copyright Act to pre-1972 Recordings, but, nonetheless, does find, based on the relevant language of the statutes and the analysis discuss above, that the safe harbor provision codified by section 512(c)(1) of the DMCA is applicable to Pre-1972 Recordings.

That shoots a pretty big hole in UMG's case, as it's now going to have to show that Grooveshark's activities cause them to lose DMCA safe harbors, which is a much bigger hill to climb.

Separately, UMG failed in trying to get various counterclaims dismissed. The focus here was on claims that UMG contacted two companies -- HP and INgrooves -- to get them to back out of deals with Grooveshark. There are a bunch of different arguments (most pretty technical) that UMG makes to assert that these counterclaims should be dismissed, but the court isn't buying most of them. For each precedent UMG brings up, the court highlights that the facts are different here and UMG's reliance on particular caselaw "is misplaced."

UMG had a couple of relatively minor victories: having one of the counterclaims dismissed (one having to do with antitrust activity, because Grooveshark only showed harm to itself, rather than competition in general) and also a rejection of an attempt to use Section 230 safe harbors, which explicitly carve out intellectual property. Grooveshark/Escape Media tried a rather convoluted argument (sort of the reverse of UMG's pre-1972 DMCA argument, claiming that Section 230 safe harbors could apply to works covered under state copyright law). The court rejects this as silly, but it's effectively meaningless since it still grants the DMCA's safe harbors (which, admittedly are not quite as strong as the Section 230 safe harbors, but this is definitely the more reasonable result).

All in all, there's still a long way to go in this case, but today's ruling is clearly a pretty big loss for UMG and a win for Grooveshark.

Earlier this month, we noted a problematic attempt by Grooveshark's parent company, Escape Media, to subpoena information on an anonymous commenter on the blog site Digital Music News. As we noted at the time, Universal Music had referenced that comment in its lawsuit against Grooveshark. It seemed bizarre to reference an anonymous comment, especially one that seemed like pure hearsay (it made claims about things Grooveshark employees had done). In the lawsuit between UMG and Grooveshark it seemed completely pointless (and, indeed, Grooveshark has been arguing as much in that particular lawsuit). Yet, at the same time, Grooveshark subpoenaed DMN in an attempt to find out who posted that comment. DMN resisted the subpoena, noting that it discards and overwrites its log files every few days anyway, and these files had been long gone already. It also pointed to California's shield law for journalists and the basic First Amendment protections for anonymous speech.

Unfortunately, the judge has ruled against Digital Music News, and ordered it to produce the information. The judge has indicated that he will not require this information during the appeal that DMN's lawyer indicated they would file... but did require "preservation" of the evidence during that time. Beyond the shield law and First Amendment issues raised here (we'll get to those), this raises a very, very troubling proposition for any website that regularly overwrites its log files. Escape Media had argued that even if DMN overwrote the log files, it should be required to hand over the information on the subpoena just in case the overwritten data was still available and could be recovered.

So, what do you do in this situation? Under the judge's order to "preserve" data that has already been deleted, what is a site to do? Do they have to immediately stop using their existing hardware and set up an entire clone -- hanging onto all of the original hardware for who knows how long, just in case a forensics expert can find a tiny piece of (useless for this case anyway) data that has been overwritten probably a hundred times already? That seems crazy. Paul Levy, from Public Citizen, who is representing DMN on this issue, highlighted many of the issues in his blog post about this:

The imposition of data preservation requirements on a journalist who is not a party to the litigation raises questions apart from the merits of the order. Journalists need to be able to discard data when they no longer have any of their own use for it.  Yes, “the public has a claim to every man’s evidence,” but don’t members of the public who are not involved in litigation have the right to discard information despite the fact that it might turn out to be useful evidence for somebody else’s case?  Does the public have a claim to heroic efforts on every man’s part?  Shouldn’t there be higher standards for subpoenas demanding intrusive searches for discarded data in the hands of third parties?

The problem is compounded when it is a journalist that has been subpoenaed.  To what extent does society have any entitlement to make journalists in particular take heroic measures, such as searching the nooks and crannies of their computer equipment for fragments of discarded data?  The judge was sensitive to the fact that our client here is a journalist, telling Escape Media that he was not prepared to allow it to make any general search of Digital Music News’ computers.  But an issue that we may have to pursue on appeal is whether a journalist should ever have to undertake such drastic preservation efforts in aid of a lawsuit in which he is not involved, particularly given the relative unlikelihood that fragments of identifying data remain on his computers somewhere.

Indeed, the problem is broader than just journalists.  Companies often keep log files with respect to server visits (and hosted comments), but there is little business justification for keeping those logs forever; so generally speaking they are discarded after a period of time (EFF's best practices recommendations are worth a look in this regard).  Does the mere act of discarding log files set a company up for the possibility of a demand for forensic examination of the underlying servers, in the hope that some fragment of the data might be recovered?  In this regard, the trial court's order has chilling implications for other California companies, even beyond the issue of journalists. 

Issues of how to preserve the data remain to be decided.  This is not like just leaving one of your file cabinets untouched for a period of time; it is not even as easy as making sure you don't delete any of your email.  Preserving the web site while creating a copy of the underlying servers is a complicated process, requiring the services of a forensic specialist, and the cost could be substantial.  The estimates that we have been given are well into the five figures; but even the cost of several thousand dollars would be an enormous imposition on this small company.

It really is quite a difficult issue, and if the ruling stands, could become a massive headache for any company in California.

Separately, we should not ignore the First Amendment and shield law issues. DMN is not a party in this case, and it's not even clear why this information is needed. Escape/Grooveshark can and should point out that the information contained in the comment is pure hearsay so it shouldn't have to deal with it in the original case. The company has not filed a defamation claim against the commenter and does not appear to have met the high bar required to unveil an anonymous commenter anyway. This is a pretty big concern for any journalist or blogger out there. Being dragged into a third party dispute because someone comments on your site can represent a pretty big problem for a lot of smaller sites.

While Grooveshark's legal fight against the major labels certainly raises some interesting copyright questions, it's disappointing to see them going down this path and potentially creating serious problems not just for Digital Music News, but tons of journalists and websites.

We've covered parts of the various lawsuits against Grooveshark by the recording industry. I have no idea how those lawsuits are going to turn out, but a bit of a sideshow in one is touching on issues that are extremely important around here: the right to protect anonymous commenters, and shield laws protecting journalistic sources. Last fall, in the latest effort by Universal Music against Grooveshark, the company quoted an anonymous comment from a blog post on the popular music industry blog, Digital Music News. The comment claimed to be from an employee at Grooveshark, and reads (in part):

I work for Grooveshark. Here is some information from the trenches:

We are assigned a predetermined ammount of weekly uploads to the system and get a small extra bonus if we manage to go above that (not easy).The assignments are assumed as direct orders from the top to the bottom, we don't just volunteer to "enhance" the Grooveshark database.

All search results are monitored and when something is tagged as "not available", it get's queued up to our lists for upload. You have to visualize the database in two general sections: "known" stuff and "undiscovered/indie/underground". The "known" stuff is taken care internally by uploads. Only for the "undiscovered" stuff are the users involved as explained in some posts above. Practically speaking, there is not much need for users to upload a major label album since we already take care of this on a daily basis.

To be honest, when I saw the original filing mentioning this comment, I was pretty surprised that Universal would use it in the lawsuit. After all, it's an anonymous comment on a blog. It's pure hearsay, without any actual evidence that the commenter actually works at Grooveshark. It's completely useless as evidence.

Of course, you might think that Universal Music would then issue a subpoena to discover who the commenter was. But... instead Grooveshark issued a subpoena (pdf and embedded below) seeking to identify the commenter. This is also strange. If UMG was able to identify the individual, then Grooveshark would find out that info. But if (as appears to be the case so far) UMG does nothing, the claims by this individual are useless in the lawsuit anyway.

Either way, Paul Resnikoff from Digital Music News worried about the subpoena, as DMN has a policy of not revealing its anonymous commenters (and often using them as sources). So, he decided to push back, noting a few key points. Public Citizen's Paul Levy recently agreed to represent Resnikoff in this matter and sent a letter to Grooveshark's parent company (embedded below) detailing why Grooveshark should stop barking up this particular tree. Beyond the First Amendment issues, the right of a journalist to protect sources, and the uselessness of the original comment in the first place, there's also the simple fact that DMN doesn't retain comment logs for very long, and has no useful information in response to the subpoena anyway.

That letter also highlights that Grooveshark is also interested in a much more recent comment on a blog post about Grooveshark's subpoena, in which a commenter (in a rather difficult to read manner) spins another conspiracy theory, suggesting that the original comment was a setup against Grooveshark by supporters of the lawsuit. To be honest, this comment seems about as credible as the original comment that kicked this off.

Whatever you might think of the Grooveshark lawsuit, this action by Grooveshark's lawyers seems like a mistake and overkill. Not only is it unlikely to turn up anything useful, going on a fishing expedition against anonymous commenters on a blog opens up a huge host of problems around First Amendment issues, which it appears Grooveshark either failed to consider, or doesn't much care about. That seems like a mistake.

Want just a glimpse of the future under SOPA, should that bill pass? Over in Denmark, where the local anti-piracy agency Antipiratgruppen has been successful in getting courts to order ISPs to block access to sites like The Pirate Bay, it appears the group is now targeting Grooveshark for a similar blockade. Of course, Grooveshark functions no different than YouTube functions. It obeys the DMCA and takes down content when requested. Users do upload their own music, just as they do on YouTube, and Grooveshark has done some additional licensing deals -- such as with EMI. But apparently, rather than deal with the actual law, the group in Denmark just wants Grooveshark added to the country's blacklist. Apparently, the fact that there's tons of legal music on the site is meaningless, just so long as one group declares that the site is dedicated to infringement. That, of course, is exactly what SOPA will allow as well. Make an accusation and you can totally shut down a competitive startup. In fact, some have responded to this lawsuit by noting that it came after competitor Spotify (which is owned, in part, by the labels) entered the market, suggesting that the timing of the attempted blockade is no surprise, and that's it's really more about clearing the decks for the RIAA's own offering.

Grooveshark has been involved in a series of lawsuits from the recording industry and, as with the Limewire lawsuits, it looks like the music publishers are piggybacking on the labels by suing later. We've already explained why Grooveshark appears to follow the rules set out by the DMCA, but I would imagine that Grooveshark is the sort of site where judges simply won't like the idea of it, and will thus figure out a way to rule against it. That could be very problematic.

To make their case, the publishers are trying to claim that Grooveshark is not a service provider for the purpose of the DMCA. It's going to be difficult to have that claim stick, as courts have generally (correctly, in our opinion) deemed a wide spectrum of offerings to meet the "service provider" hurdle. And then the lawsuit gets even sillier. It claims that Grooveshark itself is doing everything that its users are actually doing. It's as if the publishers wish to simply pretend that the DMCA doesn't exist and that liability automatically applies to the service provider.

I think it's difficult for anyone to argue that Grooveshark is any different technically from YouTube, but when it comes to these sorts of things the industry isn't known for actually understanding what these offerings are really about, preferring instead to leap straight to the freak-out-that-must-be-illegal stage...

If you talk to folks in the recording industry, they seem to insist that Grooveshark is absolutely illegal. However, the company has structured itself in a way that it believes is perfectly legal -- which is why it's now upset that Google and Apple have each pulled its mobile app from their marketplaces and has issued an open letter, explaining why it's legal and asking Google and Apple to let it back into their app stores.

First, the company makes the distinction between "licensed" and "legal":

First, there is a distinction between legal and licensed. Laws come from Congress. Licenses come from businesses. Grooveshark is completely legal because we comply with the laws passed by Congress, but we are not licensed by every label (yet). We are a technology company, and we operate within the boundaries of the Digital Millennium Copyright Act of 1998 (DMCA). Some would have you believe that those of us who use the DMCA to innovate are inherently infringers and that claiming Safe Harbor under the DMCA is as good as admitting guilt. Not so.

The DMCA's Safe Harbor component encourages technology companies to innovate in hopes that they will eventually solve some of the problems that are plaguing content producers today. The Safe Harbor provision reads like it was written specifically for YouTube and Grooveshark, and its necessity continues to be illustrated every day. If it weren't for this notion, many of the products and services that are now taking a bite out of piracy would never have been born.

While I agree with the importance of the DMCA's safe harbors, and the idea that they are important to encourage innovation, Grooveshark is being a little misleading in the whole licensed/legal arena. It really should go into more detail. The way Grooveshark operates, is that (like YouTube), users upload content, which others can then stream. Grooveshark works to abide by the DMCA to discourage and takedown infringing material -- and notes that it has taken down 1.76 million tracks and suspended 22,274 users who abused the system. As it notes, those are "not the characteristics of a company 'dedicated to copyright infringement.'" It also pays performance rights organizations for the streaming content.

The real issue is whether or not the users have the rights to upload the works. That's where the licensing aspect comes in. Grooveshark has been trying for a while now to get record labels to agree to effectively offer a blanket license to its users, so that they can upload those songs, and the labels can then make some money off of the usage as well. In some ways, it's like YouTube's ContentID system, in helping labels monetize their music that users are hoping to share. Both EMI and Universal Music have sued Grooveshark, with EMI dismissing the case after agreeing to a license. Universal Music is still fighting the lawsuit.

So, effectively, the way Grooveshark is structured today is that its users might infringe on copyrights, and the company keeps seeking licenses that would make those uses authorized. The somewhat open legal question is whether or not Grooveshark itself is liable as well. It claims that it follows the DMCA safe harbors and is protected (and, for that reason, I'm sure is very, very, very interested in the eventual outcome of the YouTube/Viacom lawsuit concerning the overall contours of the DMCA safe harbors). The labels, I'm sure, claim that Grooveshark is "inducing" infringement through its overall design.

Not surprisingly, I think Grooveshark presents an interesting legal situation, which should be legal under the DMCA. Unfortunately, the courts often get a little wacky when it comes to interpreting the law in these situations. If YouTube continues to prevail over Viacom, Grooveshark is in a much stronger legal position. If the appeals court reverses, however, it may have more trouble. Of course, given all this, it is somewhat amusing that Google would dump Grooveshark, suggesting a violation of its terms of service. If Google is arguing that YouTube is legal, you would think it would recognize that Grooveshark relies on the very same line of legal logic.

Dante Cullari made an observation on the Music Think Tank Open blog last month that seems to have gone unnoticed: Grooveshark's privacy policy has a "soul" clause. Unlike other "immortal soul" clauses, I don't think Grooveshark's is intentional.

"This [personally identifiable] information may also be kept longer than 6 months by EMG if a user is found by EMG's soul judgment to be suspect of carrying out illegal, unlawful, or dangerous actions with or in this service. Prior to keeping IP address information for more than 6 months, the user will be notified via email about their suspect status."

The privacy policy still says that, though Dante also grabbed a screenshot.

Somehow, I don't think Grooveshark actually intends to judge a person's immaterial soul for evidence of suspicious activity. But, lest you think it's a lone typo, the phrase "soul purpose" also appears later in the policy.

"EMG may allow 3d parties to place cookies and other tracking technologies, such as web beacons, clear GIFs, web bugs, tracking pixels on the Site for the soul purpose of allowing that 3d party to record that a User has visited the Site and/or used the Service."

I think they meant "sole." Somewhere, in the depths of my own soul, it feels like somebody was relying on spell check a bit too much...