Grooveshark, the US-based music downloading service backed by semiconductor technology supplier Intel, has shut down, the company announced yesterday in a blog post.
Founded in 2006, Grooveshark’s platform enabled users to upload and down load music in the form of audio files that could then be sorted into playlists.
Escape Media Group, the holding company that owned Grooveshark, raised $6.9m according to regulatory filings, including $2m from a 2008 round featuring Intel Capital, Intel’s corporate venturing unit.
However, major record labels soon opted to pursue legal action against the service. Grooveshark’s legal battles stretch back to 2009 and they came to a head last week when a judge ruled that its copyright infringement was ‘wilful’ and ‘in bad faith’.
The ruling meant that the jurors in a case brought by nine record companies including Arista, Sony, UMG and Warner Bros in 2011 would have been able to enforce the maximum available damages against Escape: $150,000 per song, which would have equated to $736m altogether.
The ruling led Escape to agree a settlement with the plaintiffs, which it revealed in a statement on the site, urging its customers to try licensed streaming services such as Spotify, Deezer or Rdio. Grooveshark is the second big online name to shut down this week, after social network Secret.
Althouth they also encountered legal difficulties originally, it is worth mentioning that Spotify and Deezer overcame their own disputes with major labels including Sony, Warners and Universal by offering them equity stakes in their companies.
“As part of a settlement agreement with the major record companies, we have agreed to cease operations immediately, wipe clean all the data on our servers and hand over ownership of this website, our mobile apps and intellectual property, including our patents and copyrights,” the statement said.