This page is here to discuss the current issues going on in the world of Karaoke. To put it mildly, Karaoke and the Karaoke Scene is a mess right now for publishers, disc manufacturers, karaoke hosts and karaoke companies. This has brought forth a need for all of us to join together and move forward positively to better our industry.

Music Industry copyright decisions backing legal claims to copyright protection:

FBI serves warrants - Karaoke Piracy takes a big hit from the good guys!
Karaoke Piracy has taken a big hit from the good guys. One of the most prolific pirates of Karaoke music tracks has been DanSterns@aol.com. We now know that he is Major League Baseball’s failed prospect, Bill Bene of California. His home has been raided, his records from his AOL account have been turned over and he is awaiting charges to be filed by the FBI and LA prosecutors. The sting operation has gone on for nearly 4 years. Fines for copyright violations can be anywhere from $750 on the lowest stated amount up to $150,000 for each incident of willful infringement; Trademark Violations can range from $200,000 to $2 million per incident.

Evidence collected shows Bene has sold around 1800 hard drives for a total of $650,000 in sales with over 120,000 copyrighted karaoke tracks on each drive in addition to another 80,000 mp3 music tracks and video tracks. If the judges threw the book at him as far as fines it would be 1800 drives X 200,000 track X a MINIMUM of $750. It seems highly unlikely that the judge when it gets to that point will access 270 billion dollars in fines, but that is what it adds up to just for the copyright infringement. Trademark Violations could add in as much as $4 million per karaoke manufacturer on the drive (there are about 40 to 50 disc manufacturers on each drive)

Information listed in a federal search warrant, provided by Special Agent Bryan Willet of the FBI, explains that Bene sold drives to two separate C-I’s (confidential informants), which was captured on hidden camera. He also sold drives to individuals working for the two named victims in the case, Sound Choice Karaoke and Stellar Records (Pop Hits Monthly). The FBI has copies of every PayPal Transaction plus every email conversation with every buyer from AOL. As far as other records, PayPal, AOL, all banks that Bene used for moving the money and the IRS, have provided copies of all records to the FBI. Records show $600,000 in transactions since January of 2006 and $650,000 total via the PayPal accounts. According to the warrant, Bene never reported any of the $650,000 as income therefore never payed taxes on any of the proceeds. The FBI also has mailing packages and labels complete with forensic analysis and fingerprints linking them back to Bene, proving he used the US Postal Service in the process of his alleged illegal activities. They also have confiscated equipment for hard drive duplication, computer systems, and have financial records showing purchase of all these items.

Now that I have given you the straight forward listing of facts on this I would like to editorialize on it just a bit! This is entirely based on my opinions and no one else’s. I do speak to the key people at Sound Choice, Stellar, and Chartbuster on a regular basis, but I do not speak for them in any way.

There have been postings on sites such as ourdjtalk.com that Sound Choice is once again beating the good guys into submission.

THEY ARE NOT!

How would you feel if someone stole your life’s work and got rich (if $650,000 in unreported income is not rich – how about well off?), selling it for a fraction of its value. This continues to the point that your life’s work is no longer valuable since the market is flooded with nearly free copies. Sound Choice had about 18,000 tracks on every one of those hard drives. At about $1.25 per song retail that means that 1800 hard drives were sold (by one person) meaning 1800 X 18,000 tracks X $1.25 per song = $40.5 million dollars in LOST sales (had those people paid for all of that music). Alarmingly, that is from only one seller and most of those buyers have duplicated the drive into oblivion. Many of the buyers continue reselling them as their own illegitimate business. There are probably easily 10,000 of these drives in circulation.

We also need to put this in the perspective of a KJ trying to stay legal and operate with music that has been paid for. This means those of us who have paid in excess of $100,000 for music are being obliterated by hosts who have made no investment whatsoever. These illegitimate hosts can afford to do shows for little or no cost. Meanwhile, all the legitimate Karaoke disc manufacturers are going out of business so all we can get is lower quality karaoke tracks from companies that are probably not licensing the songs properly. How dare anyone in this industry point fingers at the legitimate karaoke disc companies for trying to stop this in any way possible!

Now, for a bit of a warning to every one who bought a drive illegally (no discs for each song on the drive) and are using that drive or a copy of it to run karaoke shows. First thing that you need to know is that Stellar is also deeply involved in this FBI case and Chartbuster is getting actively involved with legal actions. They both have seen the legal course of action make a large dent in the piracy. You will no longer be able to dump Sound Choice and continue running shows with other Karaoke music.

Most of the drives on the market were bought from Bene (aka DanSterns@aol.com) or someone he sold the drive to, who then duplicated them and started their own resale business. If you are running a karaoke hosting business on one of those drives, then I personally hope you continue doing this. The FBI will be turning over all of the names, addresses and contact info for every one of those sales. Sound Choice, Stellar, and possibly Chartbuster (all of this is pure speculation on my part) will probably now have great information to try to find you. As people using illegal hard drives or selling them are found, the manufacturers will file lawsuits against them. They may bargain with the pirates and settle for less in exchange for the list and contact information of all of their sales. This process over time will divulge most of the illegal drives out there and get all of those companies sued. If you would like to avoid this, it might be a great time to retire your karaoke business and actually do something that you have legal rights to do. This is just a thought for you, if you are not doing business legally! I think it leaves you 2 choices, get out of the business if you are not legal or start buying music so you have a disc for every track you are using. Good Luck with whichever route you choose!

One last thought and I know I bore people with my math. If those 1800 hard drives were duplicated numerous times and all of the business on Ebay and Craigslist with 1000’s of sales were added up I would be amazed if it did not yield over 20,000 of these drives. Now let’s take ½ of that to be even more conservative and say that at $1 per song, 10,000 drives X 120,000 Karaoke tracks = over 1.2 billion in lost sales. Now, we all know no one would buy all those tracks, but this is a very conservative estimate as to how many prospective sales have been lost to pure theft. If this were how you made your living, would you be upset and be trying to stop it! I will bet that you would. I personally have been hounding Stellar and Sound Choice for years to get federal officials involved and I owe them an apology as they already had them involved and were waiting for this to happen and could not share that information. Thanks to Stellar and to Sound Choice and I hope to hear of more actions as all of this unfolds.

By the way, Sound Choice also recently sued the Karaoke Kandy Store (also doing business as Cheapkaraoke, LightYearMusic and many named others aliases?) who was one of the major sellers of illegally loaded CAVS hard drives. We will do another story on that situation shortly, but, ditto the same math above and future access to buyer information. Pirates beware!

7-20-09 Phoenix, AZ Takes Center Stage in Karaoke Piracy Battle:

Sound Choice, a leading manufacturer of karaoke discs and member of KIAA (Karaoke Industry Alliance of America) has filed a federal trademark violation lawsuit against 15 karaoke venues and Karaoke Jockeys (KJ’s) in the Phoenix area. Alleging use of illegally obtained and unauthorized copies of karaoke content on hard drives, Sound Choice is asking for a jury trial to determine damages for lost revenues, “statutory damages per trademark infringed by counterfeiting”, and all profits realized by the defendants as a result of their unfair business advantage from counterfeiting of the trademarks. Intellectual Property lawsuits have been prominent in recent news with the RIAA winning a nearly 2 million dollar verdict for willful infringement and a Blogger being sentenced to a year’s probation after leaking a Guns N’ Roses album to the internet.

Local Phoenix establishments and companies listed as defendants in the suit include karaoke hosting companies; Dennis Gorrel d/b/a Big D Productions, Abraham Cortez d/b/a Carousel Karaoke and DJ Company, Dan Dan the Taxi Man (actual identity unnamed), William Ludlow II d/b/a Dirty Goat Productions, Greg Kimble d/b/a Dynamic Sound Production, Debbie Simmons d/b/a Karaoke Fever, Trey’s BadAss Karaoke (actual identity unnamed), Ernest McCullar d/b/a Wired for Sound, and restaurant – bar establishments; Boston’s Bar and Grill located in Tempe, the Breakroom located in Phoenix, the Grapevine located in Scottsdale, Hazelwoods First Place Sports Grill located in Phoenix, Hurricane Bay Nightclub located in Phoenix, Lighthouse Sports Bar located in Avondale, the Regal Beagle Sports located in Chandler. Representatives of Sound Choice with assistance of United States Karaoke Alliance (USKA) members conducted investigations and amassed evidence in the months preceding the lawsuit being filed.

Sound Choice is a leader in the karaoke community and has invested nearly 20 million dollars in their karaoke music catalog. In the mid 90’s Sound Choice routinely put out up to 5 new Karaoke discs per month and employed 75 people. With the actions of those pirating their music, they now employ less than 10 people and their last disc release sold under 800 copies, yet can be found on thousands of karaoke systems across the United States. As stated in their suit, “Sound Choice has been forced to undertake this litigation in order to ensure that it survives and continues to produce the high-quality karaoke music its fans demand, and to level the playing field for the legitimate KJs.”

US Karaoke Alliance President, Eric Godfrey, stated, “As legitimate KJ’s, we support Sound Choice’s endeavors. Due to piracy we can no longer get a fair price for our services as a substantial majority of karaoke jocks are using illegal content. Almost every disc that comes out is now being shared on the internet or sold on hard drives. As a result of this piracy, all legitimate karaoke disc manufacturers already have or are in danger of going out of business”.
            Bobby Brooks, Vice-President of the USKA added, “While KJ’s buying music legally have spent tens of thousands of dollars, KJ’s using pirated content have no cost and therefore have offered services for much lower fees, driving down the actual fair market cost for KJ services”.

            Sound Choice with several other record labels, including, Stellar (Pop Hits Monthly – Sing It Now), Pocket Songs, All-Star and Chartbuster; started the KIAA along with Karaoke resellers and several KJ’s from around the country.   These other KIAA members are watching Phoenix as the test case for legal action. Asked what the future holds, Kurt Slep, CEO of Sound Choice, responded, “We hope to set a precedent in Phoenix. We have already finished investigations in several other markets and those actions will follow in time.”

News Release 6-1-09:      US Karaoke Alliance and Sound Choice work to Combat Piracy

The US Karaoke Alliance is teaming with Sound Choice, one of America’ premier karaoke disc manufacturers, to take a bite out of piracy of karaoke music. Kurt Slep, CEO of Sound Choice, recently visited the Phoenix, AZ metro area and with the assistance of Eric Godfrey, President of the US Karaoke Alliance, Alan Malarkey, owner of AAA Entertainment and Bobby Brooks, owner of UR Entertainment, he visited 10 local bars and night clubs to investigate reports of illegal karaoke content being used. Based on the visits 8 of those 10 establishments and have been sent letters explaining how to determine if a KJ might be using illegal content and how this might adversely affect their businesses. KJ’s have been contacted directly via letters and given a period of time to respond and correct the copyright and/or trademark violations they might have before getting the bar involved an escalating into a legal matter. Clubs visited were in Phoenix, Scottsdale, & Chandler, AZ.

With the growth in new computer technology, piracy of copyrighted materials has reached epidemic proportions. TV shows like American Idol have made Karaoke more popular than ever, yet sales of Karaoke music are less than 10% of previous levels due to illegal downloading, sale of illegally loaded hard drives and duplication of single discs to multiple computer systems. Kurt Slep of Sound Choice stated, “There are actually very few legal karaoke download sites. Most of the sites out there are not properly licensing and paying copyright fees on the music they are selling.”

These download sites are only the tip of the iceberg for piracy problems in Karaoke. Individuals like Dan Sterns have placed illegal hard drives all over the internet selling collections of Karaoke Music that would legitimately cost over $100,000 for sale for under $500.

Eric Godfrey, president of the US Karaoke Alliance (www.uskaraokealliance.com ) and advisory board member of KIAA (Karaoke Industry Alliance of America – www.thekiaa.org) stated “Common sense should dictate to someone that if it is too good to be true, it is not legal. If you are buying tens of thousands of dollars worth of music for a few hundred dollars and no manufacturer original merchandise, it has got to be illegal”. Godfrey estimates somewhere between 80 and 90% of all karaoke companies using computerized systems are using some degree of illegal content.

This has created a huge problem for legal karaoke hosts as the companies who paid nothing for their music are offering to do shows for extremely low fees since they have no investment. This creates an unfair business advantage and has taken away from the value of legal hosts and created a situation where too many venues have karaoke, thus adversely affecting the value of karaoke shows to venues.

Karaoke disc manufacturers put karaoke music out on CD+G’s, which are CD’s that contain a graphic track that can display the lyrics on a screen. A few of the karaoke disc manufacturer’s have negotiated for rights and are now releasing their songs directly into MP3+G formats that can be used on a PC. Karaoke disc manufacturer’s have previously licensed tracks via CD+G units and can not authorize end users to covert these into other formats. Realizing that users are gong to do this, most of the disc manufacturers have acknowledged that they are not seeking actions against companies who bought originals and converted it unless they did so and made multiple copies for use across several systems. These manufacturers working with KJ’s and distributors started KIAA (Karaoke Industry Alliance of America) to educate KJ’s and karaoke establishments and enthusiasts that anyone using karaoke content that has not purchased an original disc is violating copyright and trademarks of the disc manufacturers, publishers and the artists whose content is being displayed.

You are within your rights to discuss this issue with your KJ and to ask for their assurance that they are running a legal karaoke show. Below is a list of some things to look out for. Note that the presence of these factors does not necessarily mean a karaoke show is running pirated content, but these are fairly universal indications that should raise your awareness and cause you to question your host about the karaoke music they are using in their show.

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Our President Eric Godfrey, has been invited and has accepted a position on the newly formed group, the KIAA, Karaoke Industry Alliance of America.

Rather than mis-state anything in regards to the KIAA we will reference their mission statement:

Mission Statement of the KIAA

The Karaoke Industry Alliance of America is a non-profit trade organization made up of manufacturers, distributors, KJ/DJ hosts, venue owners and karaoke enthusiasts. Our mission is to promote and advance all aspects of karaoke be it as an art form, a form of entertainment, a recreational activity or even as just a casual pastime.

In pursuit of our mission, our primary goal is to foster a favorable business climate that equally supports and promotes the interests of all its members. Through its members, the KIAA endeavors to set a high standard of operation by asserting that its membership adhere to both legal and highly ethical business practices.

We are participating on their board in an effort to make sure that the needs, rights and desires of KJ's are heard and are dealt with in a fair manner. We entirely support all that KIAA is trying to do and will work with them in any way we can to help further both our causes.

We recently sent a press release which will be published in Mobile Beat and the National Entertainer (NAME's Magazine). The article talks about our goals and our plans and then our hopes in what we can accomplish in working with KIAA. The article in no way reflects opinions or positions of KIAA, but does reflect our viewpoints and our goals moving forward:

US Karaoke Alliance formed to assist Karaoke Hosts and energize the industry.

US Karaoke Alliance (www.uskaraokealliance.com) is working to help better the world of KJ’s and rejuvenate the industry. We mentioned a few issues ago that Sound Choice has agreed not to pursue legal actions for use of digital karaoke systems as long as companies can provide proof of one for one copies of content versus number of shows being run simultaneously. This is a huge development in the Karaoke world and a true offering of an olive branch to KJ’s.

As President of the US Karaoke Alliance, I am speaking to KIAA (Karaoke Industry Alliance of America) and serving on their advisory board to create an infrastructure and alliance for Karaoke professionals. The goal of the US Karaoke Alliance is to help the KJ’s that are doing business legitimately and the ones that are trying to do things the right way so they can make more money for their shows, better run their businesses and through KIAA have a way to report companies that are breaking the law. In the past, single companies tried running “regulatory” types of associations. These associations were not truly successful due to a lack of any consolidated enforcement efforts. The US Karaoke Alliance hopes are that with KJ’s, retailers, enthusiasts and all of the major disc manufacturers putting together efforts with KIAA, we can actually have some real enforcement actions and get rid of those who have no desire to do business ethically and legally. Our goal is that in the long run as we build membership and a steadily growing organization that we will have enough impact to either get consolidated agreements from publishers or get some sort of legislation that will define licensing of karaoke tracks once and for all.

Karaoke Legal History 101:

Karaoke is currently not ever mentioned in the US Copyright Law or in the Digital Millennium Act.   This has lead to widespread disagreements.

The Copyright Act defines “phonorecords” as “material objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed by any method now known or later developed, and from which the sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.” 17 U.S.C. § 101. “Audiovisual works” are defined as “works that consist of a series of related images which are intrinsically intended to be shown by the use of machines, or devices such as projectors, viewers, or electronic equipment, together with accompanying sounds, if any….”

When karaoke moved from cassettes with written lyric sheets to CD’s containing some pictures and graphic words scrolling on a screen and synced to the music, this opened up the disagreement and the ability for the publishers to negotiate sync licenses at a negotiated rate per contract and the ability to say “No” to karaoke manufacturers unless they were willing to pay the fees requested for a negotiated license the some most refer to as a sync license. The case that set the precedent for this was ABKCO Music, Inc. v. Stellar Records, Inc in 1996, where ABKCO sued on the grounds that Stellar could not just put out karaoke tracks with a section 115 compulsory license filing as compulsories were defined strictly as covering only “phonorecord” recordings. Under the terms of copyright law, they argued that the karaoke tracks closer resembled the definition of “audivisual works” and would require individual negotiated licenses for each track. The courts ruled in ABKCO’s favor thus setting the precedent that karaoke track rights must be individually negotiated for permission and compensation.

In 2005 Rick Priddis of Priddis Music was quoted as saying, "The great irony in all of this is that the publishers, while claiming their actions are trying to root out pirates and willful infringers, are making sure that only the pirates will survive," Priddis said. "The true infringers have never paid fees and never will. If this continues, those of us who have paid fees and royalties all along will be forced out of business, and then everybody loses." His company was sued by EMI Publishing and even though the initial judgment in Utah courts was that “sync licenses” are not required for karaoke products which display only the text of lyrics; (U.S. District Judge Bruce S. Jenkins ruled, because "Absent a series of related visual images, e.g., a motion picture, film or video recording, the display of the lyrics represents the display of a 'literary' rather than 'audiovisual' work.") while the case was on appeal to a higher court,   Priddis dropped out of the Karaoke business and issued a joint statement with EMI in 2008 acknowledging that sync licenses are required for Karaoke tracks. Over the years, DK, Pioneer , Music Maestro, Nutech, Backstage and many other smaller companies have followed suit and went out of business showing that Priddis was correct back in 2005. As of now the only major players remaining active in Karaoke are Sound Choice, Stellar Records, Chartbuster, and Pocket Songs.

Earlier this year, the requirement for this negotiated license was upheld in California’s 9^th Circuit Court when they ruled that in favor of BMI publishing in a lawsuit with karaoke electronic microphone system creator, Leadsinger. Leadsinger had filed for relief on the grounds that their digital chip based system only required compulsories and reprint licenses for lyrics, but their claim was denied and then that decision was upheld upon appeal and it was ruled that since it provided graphics and some images on a screen attached to their system they could be required to pay sync licenses. Leadsinger also argued that their use of tracks fell under “fair use” and that claim was also not found to have enough merit to overturn the lower court decision.

The issue still lies in the fact that “audio visual synchronization licensing” was originally intended to apply to protect artists from having their works exploited for movies and commercials and tied to images of popular stars or products for financial gain. Display of lyrics on a screen is merely a technological advancement of display on paper and designed to make karaoke easier for the singer. It is nothing but a guide to a singer and is not what audio visual sync licensing was intended, but with lack of any legislation this has opened an opportunity for publishers to deny rights to release karaoke tracks and to demand larger fees and is slowly forcing the legitimate karaoke companies out of business.

Our hopes are that if we can create enough of an infrastructure and united front of karaoke enthusiasts that a new type of compulsory for Karaoke can be established with the major labels, either via agreement or via legislation. We must first learn to work together and self police our industry so that we can show the publishers that we are worthy of their time and consideration. When dealing with people that release multi-million selling recordings, we must provide a system that is capable of showing them a financial gain in the future.

While KIAA is serving to combine the efforts of all industry components and will work on legal education, music licensing issues, enforcement and investigation of infringement, The US Karaoke Alliance will be developing a database driven website structure that will provide many benefits to karaoke hosting companies, venues and karaoke enthusiasts while in the future offering KIAA a single contact point resource to set up payment plans and a secondary source to audit karaoke company libraries for compliance.

Member benefits of the US Karaoke Alliance will include:

Ability to have a cursory or in depth audit of karaoke libraries conducted for certification of companies status. (Companies that are certified will have this added to their profiles and their listings will move to a higher point on lists made available to clubs looking for legal Karaoke hosts.)
Ability to subscribe to ongoing monthly karaoke releases from major vendors for each set of music. (since it is via a private, membership based program and not open to the general public, karaoke monthly releases will be below normal MAP price points.) Those subscribing will also have this added to their profile and will show higher in listings on various websites for finding hosts.
Liability insurance for business to protect venues and availability of equipment and music coverage as well.
Discounted rates on business management and web-site hosting products via strategic partners.
Discounted rates on search engine listings of Karaoke Bars and hosting company databases.
Bi-Monthly newsletter with updates on industry happenings and special offers from national karaoke retailers.
Central contact point for companies wishing to set up plans and work with major karaoke disc manufacturers to pay for content and bring all libraries into 100% with disk manufacturer policies. (Some older songs can not be licensed any longer, however manufacturers are currently developing plans for “covenants not to sue” or agreements to accept existing digital content and not pursue copyright infringement suits.)
New benefits will be added over time as membership and resources expand

For more information on any of these organizations or to get involved go to www.uskaraokealliance.com. Let’s all work together to fix the problems that confront the karaoke industry.

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This new stance has resulted from no cases directly dealing with format shifting and no legislation that deals with these issues. Background on using hard drives is derived from the following legal documents.

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Now let's get back to some facts.

1. The Karaoke industry is being damaged severely by pirating, illegal copies, illegal downloads etc. I will never disagree with this and you would be hard pressed to find anyone in the industry who does not agree with this.

2. If you are making copies of an original karaoke disc and selling them...on hard drives, burnt discs, DVD's, Super CDG's.. whatever format... you are breaking the law!

3. If you are buying 1 copy of a disc and you are then putting that on a hard drive or burning multiple copies for use at shows... you are breaking the law! Anytime you buy 1 copy of a disc and make multiple copies to be used at simultaneous venues, you are displacing a sale and taking money away from the manufacturer.

4. Downloading from any shared site without a legal license and payment per song is a violation of copyright laws. Many file sharing sites have popped up and are rampant for providing songs at no cost, which displaces a sale. This is illegal. We have done extensive research including talking to the top person at Chartbuster, Sound Choice and Stellar. There currently is NO LEGAL KARAOKE DOWNLOAD SITE ANYWHERE. THE LICENSE DOES NOT EXIST to distribute content via the internet. One is on it's way by spring or summer of 2009. But not yet. Buying content on discs and ripping them yourself is not legally addressed and many KJ's say it falls under fair use, but until it goes in front of a court and is ruled on it is all gray area!!

5. Buying a hard drive loaded with songs instead of buying through normal channels (manufacturers) is displacing sales and is illegal.. Once again, no argument. This takes money away from manufacturers and artists and it gives companies music with nearly no cost allowing them an unfair competitive advantage in the market.

6. In all of these areas we fully support any manufacturer who is trying to keep the industry legal and fair to all hosting companies, artists, singers, etc.

7. Companies using copied discs or hard drive based systems or illegally copied or created Super CDG's are not supporting the manufacturers of the music or the artists and composers. They have the ability to do Karaoke Bars at extremely low costs as they have nearly no overhead. This is unfair to companies doing business legally and hurts the overall Karaoke industry by not returning revenues back to the companies that are providing all of us with music.

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Karaoke is by it's nature a copied non-artist representation of a song with graphic lyrics. It needs to be addressed on it's own as none of the other laws pertain specifically. As of now it is not addressed as it can be logically asserted that it does not meet the criteria for any of the other classifications. With Sound Choice joining with other Karaoke Manufacturers in this new group KIAA, we can all move forward to work on the real problem, stopping the people using illegal hard drives, illegal file sharing, copied CDG's that have no originals to back up each copy of their content.

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Thomas verdict: willful infringement, $1.92 million penalty Original article found here:

Not good enough

Thomas verdict: willful infringement, $1.92 million penalty
Original article found here: