Grooveshark, EMI Suit: Major Music Label Accuses Digital Streaming Service Of Owing Royalties

By Jonathan Stempel

(Reuters) - Grooveshark has been sued by the large record company EMI Group Ltd, which accused the popular digital music service of paying no royalties since entering a licensing agreement to stream music nearly three years ago.

EMI, which brought the world such acts as the Beatles and Coldplay and is now being sold by Citigroup Inc, filed its complaint against Grooveshark's parent, Escape Media Group Inc, on Wednesday in a New York state court.

The filing came less than a month after three other major record companies - Vivendi SA's UniversalMusic Group, Sony Corp and Warner Music Group - filed a federal copyright lawsuit accusing Grooveshark of pirating thousands of songs.

Grooveshark spokeswoman Kristin Harris said in an email: "This is a contract dispute that we expect to resolve."

The lawsuit was reported earlier by The New York Times.

In its complaint, EMI said Grooveshark has acknowledged in writing or orally owing royalties, but has neither paid anything nor provided any accounting statements.

EMI said Grooveshark has "continued to exploit" its works while ignoring repeated demands for an accounting and payment.

The complaint refers to alleged written and oral estimates by Grooveshark that it owes at least $150,000, but EMI said it believes the actual sum "greatly exceeds" such estimates.

Grooveshark calls itself "the world's largest on-demand and music discovery service," with 30 million monthly active users, more than 15 million songs, and 14 billion streams a year.

It said its policy is to honor copyright holders' "takedown" requests that comply with the Digital Millennium Copyright Act and other applicable intellectual property laws.

In November, Universal agreed at auction to buy EMI's recorded music division for $1.9 billion, while Sony won the bidding for EMI's music publishing operations for $2.2 billion. Both purchases require regulatory approval.

Last May, operators of once popular but now defunct file-sharing service LimeWire, agreed to pay record companies $105 million to end a federal copyright infringement trial.

Grooveshark has offices in Gainesville, Florida.

The cases are EMI Entertainment World Inc v. Escape Media Group Inc, New York State Supreme Court, New York County, No. 650013/2012; and UMG Recording Inc et al v. Escape Media Group Inc et al, U.S. District Court, Southern District of New York, No. 11-08407.

(Reporting by Jonathan Stempel in New York; editing by Bernard Orr and Andre Grenon