For a moment five years ago, Grooveshark looked like it would evolve into Spotify. The free Gainesville, Florida, music-streaming service had 35 million users, some of whom considered it “a true Internet Robin Hood.” The company of tech-savvy kids believed it could skate into meetings with record executives and license songs based on the quality of its service. It didn’t work out that way. “We could have used better advisors,” says Jack DeYoung, 29, a Grooveshark executive from 2007 to 2012. “I use the word ‘naivete’ way too much.”
Grooveshark made a deal with one label, EMI, and scored big-name advertisers like Mercedes-Benz. But eventually, every label, including EMI, sued the service for copyright infringement. The company recently shut down and issued an apology on its website. “We started out nearly 10 years ago with the goal of helping fans share and discover music,” the statement read. “But despite best of intentions, we made very serious mistakes.”
Executives at major record labels, which received $75 million in copyright-infringement penalties from Grooveshark after years of litigation, were dubious about the “best of intentions” line. “In terms of using our content without permission, it all falls under the rubric of illegal piracy,” says a label source. “Grooveshark indicated it wanted to become a good actor and get right with everybody…It turned out they didn’t live up to their agreement.”
Grooveshark reps refused interview requests, but two former executives, DeYoung and John Ashenden, 28, who have moved on to other jobs, told the company’s rags-to-riches-to-rags story.
DeYoung: I was hired as an intern for about two weeks. I figured out people would come to the office late at night, and I would go there five minutes before I thought I would need to be there, so I would look like I was burning the midnight oil.
Ashenden: The atmosphere was absolutely one of likely success. There were hundreds of online music services when we started, with Pandora and Rhapsody the only two large [streaming] players.
DeYoung: A lot of [employees] went to the University of Florida. We weren’t close to the music industry at all. We just had a great product. Everybody came in thinking we’d create this musical utopia that would really help artists, thinking the music industry would see it as this incredible product to take away from piracy. That was the prevailing view.
Ashenden: There was a shift when we went into embracing streaming full-on, and started stepping away from the download model, and our user base started to crank. It was obvious what people were hungry for…Nobody wants to download and keep track of thousands of MP3 files.
DeYoung: Spotify was still years away. We heard the rumors of Spotify. They couldn’t get the major-label deals in the U.S.
Ashenden: We weren’t seasoned startups like the Rdio guys, who’d come out of successful Skype runs and knew how to run a business from the ground up. Literally everybody at the business, including the CEO himself, was figuring this out as we went along.
DeYoung: I worked at a used record store and a used bookstore before I worked at Grooveshark. We all lived together.
“We went to Lollapalooza, and I recognized a music executive at a major record label. He used the phrase ‘legal jihad’ for the first time.”
DEYOUNG: There was a time — two or three months — we didn’t get paid at all.
ASHENDEN: We had come out of the Napster generation. All of us were young kids who went through high school immersed with unlimited availability to music, through the Internet, that I don’t think any generation before us had. The only other options were “continue down the overpriced CD model” or “go through the one and only gateway that was iTunes for getting legal music” or “rip it from your friends” or “steal it from the Internet.”
DeYoung: We went to Lollapalooza, and I recognized a music executive at a major record label and ran over. “What happens now? Can you give some sort of insight?” We’d met at a conference or something. He used the phrase “legal jihad” for the first time.
Ashenden: We were two or three years too early for the space, and somebody else was able to step in behind us and ride the momentum and carry the torch forward.
DeYoung: People won’t meet with you if you don’t have money. That’s a bit of a challenge.
Ashenden: When we first secured that EMI license, within the company, that was celebrated. That was a sign of good news; of potential longevity. We all had the feeling it was only a matter of time that the other deals were to follow. That honeymoon period lasted for maybe eight to 12 months. Then we started [to be] peppered with smaller lawsuits. We were out in Vegas for CTS [the Consumer Telematics Show], and one morning we were woken by a frantic phone call by an individual in our Florida office letting us know we’d just been served a lawsuit with Universal Music Group in the State of New York. It was kind of shock — a “what the fuck” moment. It started to feel like a game of unfair paintball.
DeYoung: I don’t think we ever came back from that.
Ashenden: I recall getting a phone call from our head of sales, letting you know that Mercedes had just pulled, like, a half-a-million-dollar ad sale.
DeYoung: It splintered what was the most close-knit group of people I’ve ever worked with in my life.
Ashenden: Best friends started to struggle.
DeYoung: We left in 2012. We weren’t there for the latter years. I still feel connected to them.
Ashenden: It was emotionally very hard.
DeYoung: We were never nefarious. It was not like people sitting around in monocles and maniacally counting our money. We joked and said if we were ever going to write a book, it was going to be called “The Accidental Thousandaires.”