“Grooveshark was recently forced to make the difficult decision to part ways with EMI due to EMI’s currently unsustainable streaming rates and EMI’s pending merger with Universal Music Group, which we consider monopolistic and in violation of antitrust laws. To date, Grooveshark has paid over $2.6 million to EMI, but we have yet to find sustainable streaming rates.”
That was a statement from Grooveshark confirming that EMI, one of the largest music vendors in the world, had terminated its contract with Grooveshark. The contract allowed Grooveshark to play music from the EMI label and pay royalty fees to EMI based on the number of plays of each song.
This does not seem to have taken off well as EMI now claims that since the two signed the agreement in 2009, Grooveshark has not paid EMI royalties consistently, and only recently had to take the streaming service company to court to force them to pay a $100,000 debt owed to EMI.
This, however, is a lesser part of the larger issue that has enshrouded Grooveshark and other music streaming companies, which is finding a sustainable streaming rate to charge customers or third-party advertisers to pay off royalties sustainably.
Grooveshark, which relies exclusively on advertising revenues, has now seen the departure of its final record label partner and now has to remove all original recordings from EMI from its database.
The ills that have befallen music-streaming companies draw fire by rising animosity between media companies and Internet companies, as the former accuses the latter of aiding piracy in direct and indirect ways, and this final development could very well be a further realignment of these two forces.
Grooveshark allows user-shared content so their music database may not be severely depleted, but the departure of EMI now puts the squeeze on the company to try and keep users interested and enthralled in a wide range of music, as well as keep advertising bucks rolling in.