Grooveshark shuts down in Germany

Updated. How about this for a blackout: Social music service Grooveshark has shut down in Germany, blaming the local rights holders group GEMA for “unreasonably high” licensing costs. Unhappy users are asked to redirect their complaints toward GEMA, but the group, which represents authors and publishers, said in a release that it was never actually contacted by Grooveshark.
Germany isn’t Grooveshark’s only trouble spot right now: The company is fighting lawsuits from all four major record labels, which allege that it is distributing their music illegally. Grooveshark, on the other hand, argues that it adheres to the DMCA, taking down music when asked, and the company’s SVP of external affairs Paul Geller told me late last year that it has been striking 10 to 20 deals with indie labels per month.
So why shut down in Germany? The country has long been a kind of battleground for music licensing, particularly for ad-supported services. YouTube (s GOOG) blocked access to thousands of music videos in Germany after licensing negotiations between the site and GEMA resulted in a stalemate.
However, some paid services have been able to come to agreements with GEMA. German Spotify clone Simfy has been operating with GEMA licenses for some time. That’s why it was somewhat surprising to the service that Grooveshark redireced its users to Simfy; Simfy CEO Gerrit Schumann distanced himself from Grooveshark’s statement in a conversation with the German IT news site and said that GEMA’s tariffs for subscription services have been “acceptable.”
Update: A Grooveshark spokesperson responded to GEMA’s statement by saying that the company offered GEMA “€150,000 to officially enter the country and a sustainable rate moving forward” last March.
Screen shot courtesy of Torrentfreak