Grooveshark internal emails reveal scandalous business strategy

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Grooveshark, the international online music streaming service, is currently embroiled in a lawsuit with Universal Music to the effect of a million dollars. The lawsuit is said to be relation to over 100,00 illegally shared tracks and could cost Grooveshark up to £150,000 per song if it is proven that company employees uploaded the infringing material. Grooveshark has remained adamant that they are protected by the Digital Millenium Copywright Act, but prior knowledge of the infringing material is what could see them face staggering fines.

Today saw internal company emails made public, revealing the true nature of Grooveshark’s business strategy.

Grooveshark Chairman Sina Simantob wrote in a series of emails in 2009: “The only thing that I want to add is this: we are achieving all this growth without paying a dime to any of the labels…we use the label’s songs till we get a 100 (million) uniques, by which time we can tell the labels who is listening to their music, where, and then turn around and charge them for the very data we got from them, ensuring that what we pay them in total for streaming is less than what they pay us for data mining. Let’s keep this quite for as long as we can.”

In April 2010 he wrote to Andrew Lipsher, a partner at Greycroft, a venture capital firm: ”We bet the company on the fact that it is easier to ask for forgiveness than it is to ask for permission… When EMI sued, everyone thought it is the end of the company. Once we settled that suit everyone said EMI was weak anyway so the real Goliath to beat is . Well it took the boys a bit before they could re-group but I think these guys have a real chance to settle with UMG within a year and by that time, they’ll be up to 35 million unique and a force to be dealt with.”