To have a better understanding of whats happening, watch this clip. This is Kurt Slep of Sound Choice talking at the 2013 Karaoke Summit
Retrieved from http://www.nwkaraokeguide.net/washington-news/sound-choice/25-oregon-businesses-named-in-lawsuits-for-trademark-infringement
THE HAMMER DROPS ON PORTLAND, OREGON
By Kurt “Swingcat” Johnson
Piracy of karaoke music has become rampant throughout the Karaoke music and hosting industry. It takes many forms: (1) Illegal copying of karaoke CD+G discs; (2) Streaming of illegally uploaded karaoke songs and videos to the internet (including YouTube); (3) Downloading of karaoke songs from illegal websites in commercial settings (bars, etc); (4) Sales of illegally preloaded hard drives with massive song collections; (5) Finally, the use of unauthorized copies of karaoke songs across multiple systems (multi-rigging).
The results of piracy include: (1) An unfair commercial advantage for venues willing to hire “cheap” KJs who don’t purchase their music legally; and (2) An unfair commercial advantage for pirating KJs who underbid legitimate and professional KJs, forcing the rates lower in an industry that deserves top dollar.
The effects of piracy snowballs throughout a community. Bar owners are in the habit of, and have become conditioned to hiring KJs using pirated music in order to save money, retain their karaoke customer base, and protect a much needed revenue stream.
The downward spiral continues in a slow vortex with the resultant loss of gigs for legitimate karaoke professionals, a loss of quality shows for the karaoke singing enthusiast, and a loss of revenue for the venues wishing to provide legitimate shows.
Not to mention, the devastating effect it has on the manufacturers of the karaoke music itself. They lose massive amounts of revenue and the profits required to maintain their business and produce new music releases. When they suffer massive losses from pirating, it directly results in lost jobs, layoffs and can ultimately put them out of business altogether.
The brand recognized throughout the karaoke industry as the standard for quality is Sound Choice, the label produced by Slep-Tone Entertainment Corporation. They have experienced all of these negative effects, including large revenue losses which resulted in substantial layoffs of hardworking employees. Sound Choice has not released any new products in over two years, and it has now been several months since Chartbuster has released any new songs. However, both Sound Choice and Chartbuster are taking steps to fight back. The goal is to reduce piracy and unfair trade practices, recouping lost revenues.
In a telephone interview, Slep-Tone Entertainment’s President, Kurt Slep, explained their “Get Legit or Quit” campaign of education backed by enforcement. “The overall goal is to reduce piracy and unfair competition, so that in the long run, we might return to producing and releasing new music, which of course, was our original business model. We can’t sell enough products to recover our costs with the current level of piracy. And of course there are no funds available to sponsor promotional events, which typically benefit the singers.”
“We are trying to reverse the downward spiral that has occurred over the last 7-8 years, and accelerating in the past few years with the availability of cheaper media storage and a bad economy.” When we file lawsuits, invariably some pirate hosts simply disappear, and some venues, deciding they can’t justify paying the price for a legitimate host, simply stop doing karaoke. This results in singers from those venues going to another show, often back to the original, legitimate show they were lured away from. The venue, seeing an increase in business, can then justify paying their host what they deserve, especially given the potential cost of being sued themselves for vicarious infringement.
By significantly reducing the number of pirate hosts and their supporting venues, legitimate hosts, when paid a fair wage, can afford to invest in new music. Manufacturers will be able to profitably record and release new music products again. Plus, the threat of costly litigation for both venue and host serves as an additional deterrent to benefitting from piracy”.
As part of the “Get Legit or Quit” campaign, Sound Choice has sent numerous email blasts, set up educational Web sites, sent letters and mailings to over eight hundred venues throughout the Northwest. Safe Harbor direct mail literature outlining steps to avoid lawsuits were sent, not to mention, strategically placed articles and ads in several major karaoke-related publications. Sound Choice was proactive in offering the venues an opportunity to enter into their “Safe Harbor” program (www.SCSafeHarbor.com). While enrolled, a venue can avoid the liability of unwittingly hiring a host with an illegal library.
Unfortunately, all of their efforts at persuasion through education have been for naught, according to Slep, so they have had to move to the enforcement phase. System owners and operaters with unauthorized manufacturer content are subject to investigations and federal trademark infringement lawsuits. Sound Choice is now beginning to file vicarious infringement suits against the venues who continue to employ hosts that operate illegally.
According to sources, in the Northwest as a whole, over 100 cases are still waiting to be filed. In Washington State (Seattle/Tacoma area) only two are embroiled in litigation as a result of the first round of lawsuits. The rest named have worked out settlements.
In Portland, the first wave of lawsuits were recently filed, listing 25 “entities” (individual KJs or venues). The list of defendants includes one multi-rig operation that performs at ten separate venues, and two individuals found to be selling preloaded hard drives. This filing also lists the additional locations where the defendants perform their show, so these venues might anticipate being sued for vicarious infringement if they continue to employ defendants who have not settled or hire hosts who violate the rights of the manufacturers. These venues risk the possible loss of their liquor license and Lottery machines. The price of infringement can be extremely costly. The geographic reach of this Oregon lawsuit is substantial, with not only the immediate Portland metro area, but also Eugene, Salem, Stayton, Gresham, Tualatin, Beaverton, Silverton, Canby, Woodburn, and Dallas being represented.
According to Slep, the first round of Oregon lawsuits have already begun to yield positive results. Nine of the 25 defendants have settled. Two of the venue-owned operations elected to discontinue karaoke, and two of the karaoke hosting companies actually purchased additional systems over and above their settlement amount in anticipation of the need for more legitimate hosts. Local venues are beginning to realize that the risk of having illegal hosts may be extremely costly for them.
On a positive note, one of the few local, certified hosts picked up a 7-night per week gig when a venue whose host was being sued, took advantage of the Safe Harbor program, firing the defendant to hire the certified host.
In Florida, one certified KJ went from three shows per week to over 15 in the space of a few weeks. Since he was the only certified host in the area, he picked up all the business. Furthermore, the venues here are acutely aware that if they want to offer karaoke, they MUST hire a certified host, or be held in contempt.
Says Slep, “It just amazes me that KJs are willing to play a game of “wait and see if we get caught”, instead of licensing their music at a reasonable rate or face three times the cost after they are sued. Even more amazing is that venues are willing to risk losing their liquor license and Lottery machines rather than take advantage of the FREE Safe Harbor opportunity.
For only $50 or $100 more per night, a venue can afford legal hosts. For less than $230 per month, a KJ can finance his music with Sound Choice.
This is just the first wave of Oregon filings. There are at least 80 additional “entities” already investigated that we are preparing in the next wave of filings. Nationally, over 400 investigations have been completed, with filings pending.
In this area, the P.I. firm did investigations for both Chartbuster AND Sound Choice, so the Chartbuster lawsuits may not be far behind.
Those KJs who think they are avoiding scrutiny by not playing Sound Choice tracks may already have been investigated. And if they haven’t been investigated by Sound Choice, it’s going to make it easier for Chartbuster to sue them.
Oregon venues and KJs that may be using pirated karaoke music need to think long and hard about the costly ramifications that karaoke music piracy can have on their businesses. Find more on Sound Choice lawsuit activity and a link to the first Chartbuster label lawsuit on the Sound Choice Web site at www.soundchoicestore.com.