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The following was taken from Mi2N - Music Industry News Network. News karaoke enthusiasts should be aware of.
When karaoke first appeared in the U.S., some believed it was nothing more than a passing fad. Twenty years later, it's still going strong, but finds itself battling an unlikely foe. The karaoke industry is under attack from the big music publishers and many legitimate karaoke labels may not be able to survive the onslaught.
"Under the guise of fighting piracy and copyright infringement, music publishers are strong-arming unfair fees from licensed and royalty-paying karaoke companies to the tune of millions of dollars," said Rick Priddis, president of Priddis Music, Inc. "I've been in the karaoke business for more than 20 years, and all of a sudden I am looking at the prospect of losing my company because of the publishers' overly aggressive practices – and I'm not alone."
Unlike Napster, companies such as Priddis Music have been paying royalties under existing copyright laws. Although the music publishers have accepted those payments for years, Priddis Music and other karaoke companies are now finding themselves under the Napster-esque label of "willful infringers."
When Priddis started his business, he used cassettes with the song lyrics printed on paper. Mechanical or compulsory licenses were acquired for the recordings and reprint licenses for the lyrics. Priddis Music based its entire business tenure on the terms of the Compulsory License Act and similar mechanical licensing through the publishers' agent, the Harry Fox Agency. When technology changed from cassette to CD, Priddis and other karaoke producers changed the lyrics from paper to a TV screen, with no background images or movies, to display the lyrics.
"The copyright law provides for compulsory licensing of sound recordings," said Priddis. "The publishers don't seem to like the Compulsory License Act because it limits their control and regulates what they can charge. With new technology for distributing music, the publishers have found a loophole in the outdated compulsory statutes and are using it like a sword. They are evading the 'pay-as-you-go' terms of compulsory licensing and are demanding synchronization fees because they claim the lyrics on the TV screen are "synched up" with the music. Now we are being told that we have to re-license all of our songs under synchronization licenses – with one-time up-front fees of up to $1,000 a song – or face litigation. In our business, we have to keep as many songs as possible in our catalogues, whether or not they sell well. With the prospect of re-licensing thousands of songs at a cost of millions of dollars, I don't know too many legitimate karaoke companies who can pay that kind of money and keep their doors open."
Priddis pointed out that the publishers are not above using force. He had been doing business with Hal Leonard Publishing, Warner Brothers Publications and the Harry Fox Agency since Priddis Music began. Under intense pressure from the publishers forcing the synchronization license issue, these companies simultaneously shut Priddis Music off from further reprint and mechanical licensing.
He noted that karaoke licensing is very different in the United Kingdom, where MCPS (the UK Harry Fox equivalent) is karaoke-friendly, not only offering fairly-priced mechanical licenses that include on-screen lyrics, but discounted pricing in order to encourage the karaoke market there. While U.S. publishers have agreed to the UK terms for UK karaoke companies, they are preventing hard-pressed U.S. karaoke companies from taking advantage of that program. U.S. agents require import licenses in order to stop anyone that has not paid their exorbitant fees.
"When I started my business," Priddis said, "I thought the Compulsory License Act was there to protect companies like mine that wanted to legitimately compete in the music marketplace, without coercion from publishers who try to squeeze out the 'little guys.' Now I've learned that the publishers will stop at nothing to make an extra buck. Remember, these are the people who went after the Girl Scouts some years ago for "singing around the campfire" and gave the world unhappybirthday.com, where you are asked to turn in people who sing Happy Birthday without paying fees.
"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."
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