Grooveshark on Wednesday lost its only big label supporter when EMI pulled out of a recently signed deal because the music streaming service failed to pay its bills. EMI had originally sued Grooveshark over the use of EMI owned songs but then agreed to sign a contract.
EMI in a new lawsuit claims non-payment on license fees while Grooveshark maintained that it has made $2.6 million in payments.
Based in Florida the music streaming service have run into various snags in its business plan, among its worst luck has been the company’s app bans from the Google Android and iOS markets. In another embarrassing moment an e-mail between Grooveshark executives showed that the company planned to avoid payments to labels then build a massive following at which point they would let record companies mine user data in exchange for allowing the service to continue without royalty payments.
Grooveshark currently earns all of its revenue through ad displays and subscription fees. EMI claims that Grooveshark signed an “unconditional” promissory note on November 29 that promised $450,000 in payments however the company missed its first $100,000 installment starting on March 15th.
Grooveshark soon tried to claim that it broke off the EMI partnership because they couldn’t reach a deal based on EMI’s “unsustainable streaming rates” and because of “EMIs pending merger with Universal Music Group, which we consider monopolistic and in violation of antitrust laws.”
Fans of Grooveshark can still access the program via Android and iOS devices by taking advantage of the music streaming service’s HTML5 web based app.