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Famous music is after the karaoke manu's like dogs right now and after they are through with them, they will be looking for new blood. I think it's just a matter of time.
I don't expect that to be the case, because in the case of Famous Music and others going after iligit Karaoke Manus they can make a case that they are directly financially hurt by the product. In the case of sony going after the KJ with a iligit copy of a song they are indirectly hurt. They only have lost the royalties the Manu should have paid them.
The directly harmed party in karaoke piracy is the Karaoke Manu, while the indirectly harmed party is going to be the publisher, legit karaoke operators etc. The potential financial benefit to the music publisher would be minor compared to the benefit due the karaoke manu for a case involving Karaoke piracy.
As it comes down to the Karaoke DJ it is a bit safer, sure one can reasonably prosecuted for selling hard drives with 50k songs, but it is not likely that the Manu can get a judge to write a search warrant to check your home to see if you own all of the CDs you use in your karaoke show. They can get around it by the arguement that all computer karaoke is illegal as are backup disks of legit purchases. The manus know that however if they try to really enforce such a legal interpritation with a specific case, they are very likely to loose the suit if the KJ in question really did buy all of the songs that he used in his show and only format shifted. The reason the manus have not attempted to bring a case to trial emphasizing that format shifting is the violation is they are not confident enough that they have a good chance of winning such a case.
In any case despite the large penalty involved in the case, I bet it is highly likely that the legal costs to the music industry were higher then the financial settlement. It mostly only benefits the music industry as an example to scare people away from piracy.
In any case it appears that the music industry just has to appear to not be "TOO" greedy. Already the music industry is chargeing royalties to perform karaoke in a bar (via ASCAP/BMI), plus the mechanical rights fee (same as for any cover version), plus the publishing rights (for the lyrics to appear), plus the "sync" rights to combine the music and lyrics into karaoke.
With four different "incomes" coming from the sale and performance of the same song as karaoke, eventually a reasonable person (read jury) will realize that the music industry is just being unreasonably greedy. Especialy if their legal strategy attempts to prevent an obvious major technical advance in the field (computer based karaoke).