Online music streaming service Grooveshark was taken to court by the record labels due to allegations that it had broken copyright laws by allowing users to stream music without providing proper compensation to artists, according to Reuters. The company admitted to having made “very serious mistakes” as it joined the long list of now-defunct music services that have been shut down over copyright infringement.

Grooveshark Shuts Down

Grooveshark founders admit mistakes

“Despite best of intentions, we made very serious mistakes. We failed to secure licenses from rights holders for the vast account of music on the service,” reads a post on the Grooveshark website. “That was wrong. We apologise. Without reservation.”

Grooveshark was set up in 2007 by three undergrad students at the University of Florida, and was originally a paid download service, albeit with content that came from a dubious source. The music was from a Sharkbyte, a proprietary peer-to-peer network that was once a rival to more famous services like Limewire.

The reported settlement brings 4-years of legal wrangling to an end, and comes as Grooveshark’s parent company, Escape Media Group, was about to face a jury over hundreds of millions of dollars in damages. The case was due to be heard in a federal court in Manhattan, starting on May 4.

Grooveshark grouped with LimeWire, Napster

This week, a judge called the copyright violations “wilful” during pre-trial hearings. Grooveshark was accused of sharing nearly 5,000 songs illegally,and would have been liable to pay up to $736 million in damages, although its defense team would have hoped to reduce that amount.

Under the terms of the settlement, Grooveshark is required to erase all of the copyrighted works and transfer ownership of its website, mobile apps and intellectual property, such as patents and copyrights. A group of nine record companies, including Arista Music, Sony Music Entertainment, UMG Recordings and Warner Bros Records, first sued Escape Media Group for copyright infringement in 2011.

They accused Grooveshark of being a “linear descendant” of Grokster, LimeWire and Napster, other music services that were shut down due to copyright infringement. The Record Industry Association of America (RIAA) called the settlement “an important victory for artists and the entire music industry.”

The RIAA statement also claimed that Escape founders Joshua Greenberg and Samuel Tarantino had agreed to “significant financial penalties” should the settlement be breached. Grooveshark declined to comment.

Paid streaming services thriving

Over 30 million Grooveshark users will now have to find a new service from which to stream their music. Consumers are not short of options, with a huge number of services such as Spotify, Deezer and Rdio offering a simple way for people to legally stream music. Since the days of Napster and LimeWire, music piracy has been declining, providing evidence that if people are offered an easy, attractive platform through which to listen to paid-for music, the majority will do so.

The Grooveshark settlement is a major victory for the record industry and proof that the war against music piracy is being won battle-by-battle. After initially seeming unsure how to deal with the proliferation of digital music, the industry is now successfully shutting down proponents of piracy and bringing the large majority of consumers onto paid-for services which pay for the right to use artists’ material.