Karaoke music producer Sybersound Records has filed suit in the United States and Canada against a number of other karaoke record manufacturers, alleging unfair competition, unfair trade practices and
NEW YORK -- Karaoke music producer Sybersound Records has filed suit in the United States and Canada against a number of other karaoke record manufacturers, alleging unfair competition, unfair trade practices and tortious interference with business relations.
The suits, filed in the Los Angeles Superior Court and in the Ontario Superior Court of Justice, asks for more than $200 million in damages caused by those trafficking in what it claims are pirated karaoke songs on compact discs.
According to the complaint, royalty payments to license material are among the largest costs associated with producing karaoke records. It alleges that since Sybersound's competitors don't pay these costs in full, they can sell infringing product below costs and steal market share from legitimate companies like Sybersound, which pays these license fees. The complaint says that since the defendants can sell to retailers cheaper product, with a broader range of popular songs, they undercut Sybersound's relationship with retailers.
The defendants named in the U.S. complaint are Fort Mill, S.C.-based UAV d/b/a Karaoke Bay and Sterling Entertainment; Montreal, Quebec-based Madacy Entertainment d/b/a Karaoke Party; Coconut Creek, Fla.-based Singing Machine Co. d/b/a MTV Karaoke; Hilliard, Ohio-based Audio Stream d/b/a All Star Karaoke, Keynote Karaoke and Best Karaoke; Minnesota-based Compass Productions; and Newbury Park, Calif.-based BCI Eclipse, a unit of Navarre Corp. The Canadian suit names as defendants Audio Stream; BCI Eclipse; Navarre; Legacy Entertainment; Direct Source; and Direct Source Special Products.
The complaint says that retailers like the Handleman in Troy, Mich., and Anderson Merchandisers in Amarillo, Texas, which supply discount department store chains like Wal-Mart and Kmart, now have policies and procedures intended to ensure that karaoke vendors possess the proper licenses.
Music publishers about three years ago began requiring karaoke labels to get karaoke synchronization, print and mechanical licenses, which allow them to use a graphic display of the lyrics in sync with the music, print reproduction of the song lyrics and mechanically reproduce the composition, the complaint details. If a karaoke producer only obtains a mechanical license, it infringes the publishers' copyright for that song, the complaint asserts.
Such licenses require an upfront nonrefundable fee of $100 and a guaranteed advance based on 10,000 units at the "penny rate" of 10 cents per song. So a typical karaoke album which includes 16 songs would require upfront payments of $17,600 plus future royalties of $1.60 for each unit sold in excess of 10,000 units.
The profits that can be realized from selling unlicensed records are considerable, according to the lawsuit, which illustrates it by showing that companies that don't obtain the proper licenses and don't pay full royalties can save themselves $160,000 on sales of 100,000 units.
What's more, artists like Madonna, Bon Jovi, U2, Billy Joel, Abba, Yes, the Eagles, Hall & Oates, Jewel, Kid Rock, Led Zeppelin and Pink Floyd supposedly don't want their songs on karaoke packages, yet defendants nevertheless include such songs, making their packages more attractive, the complaint adds.
Defendants named in the lawsuit could not be reached or declined comment.
Los Angeles-based Sybersound, which also operates as Party Tyme Karaoke, licenses the Billboard magazine name to issue product under the logo "Billboard Top 10 Karaoke."