Documented cause
Grooveshark was founded in 2007 in Gainesville, Florida by Sam Tarantino and Josh Greenberg as a music streaming platform that allowed users to upload and stream any song — without licenses from the major record labels. The company raised approximately $5.5 million from Valhalla Investment Partners and reached 35 million monthly users by 2012, operating on the theory that its DMCA safe harbor protections as a user-upload platform would shield it from copyright liability. Universal Music Group, Sony, and Warner filed multiple lawsuits. Internal emails uncovered during litigation revealed that Grooveshark employees had themselves uploaded tens of thousands of copyrighted songs to seed the platform — knowingly violating copyright rather than relying purely on user uploads. This destroyed the DMCA safe harbor defense. Grooveshark settled with Universal and Sony for approximately $50 million (in non-cash consideration including equity and royalties). A final judgment against Grooveshark by the New York federal court found it had infringed on 50,000+ songs. On April 30, 2015, Grooveshark shut down permanently, replacing its website with a letter apologizing to the music industry. Co-founder Josh Greenberg died in July 2015 at age 28.
Alternative account: Grooveshark grew to 35 million monthly users as a user-uploaded music streaming platform, essentially operating like a music YouTube. The company sought licensing deals with the major labels but could never close them, and continued operating while negotiations failed. Evidence emerged that Grooveshark employees had personally uploaded thousands of copyrighted tracks before launch to seed the library — destroying the safe harbor defense under the DMCA. Universal, Warner, and Sony all won major judgments. In May 2015, Grooveshark shut down entirely as part of a settlement, pulling all content and issuing an apology to the music industry. The CEO estimated total copyright liability at over $736M.