Why Copyright Law Is Crippling American Karaoke Companies…

The following comes from David Grimes of Digitrax Entertainment, a karaoke company headquartered in Knoxville, Tennessee.

microphoneUS

quotationmarksRight now, American karaoke labels are struggling to compete with foreign competitors who wield huge advantages due to archaic American copyright laws and lax enforcement of overseas restrictions.  The National Music Publishers’ Association (NMPA) was made very aware of these issues at the 2013 Karaoke Summit; all we ask is to be able to compete on a level field.

When a foreign karaoke music company wants to release a new track, based on any popular song, they go to a rights organization, which administers karaoke rights in general, pay a nominal fee (usually 10% of retail), record and release the track.

In the United Kingdom, for instance, this is done with a simple KAR license from MCPS, through PRS For Music.  PRS is the “rights organization”, doing the administrative work of collecting fees and distributing them to the appropriate song publishers.

In the US, the story is very different.

In the landmark ABKCO Music, Inc. v. Stellar Records, Inc. case in 1996, karaoke in America was defined by the courts as an “audiovisual work“, forcing domestic karaoke companies to secure a “video synchronization” license, a lyric reprint license, and mechanical recording license in order to release a karaoke song.

There is no rights organization for video sync.

Video sync licensing in the USA requires the explicit permission of the song publisher, meaning the American karaoke company has tohunt down each song writer or their agent individually, and secure a license under contract, a time-consuming and expensive undertaking.  This is completely at odds with the transient nature of song popularity; by the time songwriters have been located, negotiated with and signed to a contract, the song in question has long disappeared from the charts and the window of opportunity closed.

In addition, there are thousands of popular songs that simply can’t be produced domestically at all, because the songwriters have decreed their songs will not be made into karaoke… in the USA.

But nothing prevents overseas companies from ignoring these edicts, securing a compulsory license from a rights organization, and releasing music from these songwriters and artists.  And it appears that nothing is keeping them from selling those works in the United States, in spite of the fact that the licenses they’ve obtained explicitly don’t cover sales into the USA.

For example, the UK license noted above (PDF) from MCPS allows the company to sell anywhere in the world – except the USA and Canada. It would be a trivial matter for foreign companies to geo-block US IP-addresses and comply with their licenses, but the dirty truth is that the money is just too good.  Red Karaoke, based in Spain, recently noted in an interview (here’s the Google translation) that about 50% of their revenue comes from the US. The company claims on their website that “we have licenses and agreements with the copyright entities and music publishers in the countries where we operate.”

bettyswollocks

However, a quick look at Red Karaoke’s catalog shows an enormous number of songwriters who are on the forbidden list in the USA, including Bruce Springsteen and Paul Simon, freely available to users from inside the United States.  Additionally, the site uses the original album cover art and artist likenesses, rights that presumably would have to be negotiated with the original record labels and the artists themselves, respectively.

(Here’s the list of songwriters who forbid karaoke in the USA.)

At Digitrax, we’ve identified nearly thirty other entities operating outside the US and trafficking karaoke songs back into the USAthat American companies are forbidden by law to sell.  Unless the playing field can be leveled, we three surviving US karaoke labels are going to have a rough time.quotation-marks2

David Grimes 
Digitrax Entertainment, LLC

Here’s Title 17, Section 106 of the Copyright Act of 1976.  

Top image modified under Creative Commons 2.0 from Audio-TechnikaUK; second image licensed under Creative Commons 2.0 from Les Chatfield.

36 Responses

  1. Visitor
    Visitor

    One question for the author of the article. If seems that your company, Digitrax, is offering your karaoke services in foreign countries too. Do you have the proper licenses to operate in all this countries outside the US? Are you paying copyrights locally on any country here you have clients?

    Reply
    • David G.
      David G.

      Excellent question, and the answer is yes. The licenses that DigiTrax operates under are designated “worldwide” in the territory definitions. We have spent a great deal of money to research and secure those licenses, pay large fractions of our revenue directly to those publishers, and are willing to do so, not just because it’s the law, but because it’s the right thing to do – pay the people who wrote the great songs we depend on for our livelihood.
      We are a studio that produces high-quality music, and we want to protect the hard work of our musicians, studio engineers, and support staff just as much as the rights holders whose intellectual properties we license do.

      Reply
      • happy
        happy

        Well. well, digitrax (alias Chartbuster) crying the blues. Now thy are coupled wirth sound Choice we have the biggest gougers in the Industry right where they belong. Looks good on you and I will dance in your grave when you bite the dust.

        Reply
  2. Gil
    Gil

    Come on David, its pretty obvious how to level the playing field. Start a company in the UK and start clearing all your licenses via the PRS there. Then export them back into the US. 😉

    Reply
    • BeBopDeluxe
      BeBopDeluxe

      Gil– you really dont want him to break the law?
      David is a stand up guy with some integrity. I watched his Karaoke Summit. I think he may be on to something the whole music industry should take notice.

      David Im cheering for you. Hopefully your namesake gives you the same luck against shuch a large monster.

      Reply
  3. Steven Corn (BFM)
    Steven Corn (BFM)

    David uncovers several very important issues.
    First, there is the ongoing battle of reciprocity between the US and ROW for terrestrial radio, master recording royalties.
    Secondly (and this one affects me significantly), there is a leakage of content sold into the US that should not be available. There are 10,000’s of master recordings that are PD outside the US but still protect inside the US. Technically, these should not be made available for sale in the US. And yet, they are easily transacted on sites like itunes without repudiation.
    The reason is that the chain of ownership is so foggy that there is usually no one in a position to positively assert their rights. The end result is that a PD master is being uploaded by many different aggregators and being sold everywhere including the US.
    There is a growing disparity between the ease of global commerce and the local variations of copyright law. The former is moving much faster than the latter forcing an evergrowing chasm between territories.

    Reply
  4. Farley
    Farley

    This is an interesting and important article. And mainly very good comments. My question: what are the reforms to US law that are needed? For people persuaded by the article, what is it they should support; what should they do?

    Reply
    • David G
      David G

      One quick and effective change would be for existing law to be enforced in the USA. At least it would help to level the domestic playing field. We need to work on bringing parity to copyright law abroad as a stretch goal.
      As Steven Corn alluded in his excellent comment, current copyright law enforcement is predicated exclusively on the complaint of the copyright holder. But shenanigans of this nature don’t exclusively harm the copyright holder.
      When the copyright holder is unknown, absent, ignorant or asleep at the wheel, there are big problems. If I could change any single thing, I’d modify the law such that any party demonstrably aggrieved could bring a complaint.
      That would also help clean up a lot of the losses coming from “abandoned” music labels (and there are very many in the karaoke world).

      Reply
      • Robert Cortese
        Robert Cortese

        Mr Grimes,

        I remember at the KIAA meeting I suggested the industry start real lobbying efforts to get the laws changed. Can you tell me how much lobbying the industry has done since the formation of the KIAA? What dollar amount has been spent in campaign contributions towards Senators and Congresspeople that *might* be sympathetic to the producers plight?

        Reply
  5. hippydog
    hippydog

    The comments in this article, and the article itself is almost a perfect example of whats wrong with the music industry..
    1.) it doesnt make sense to allow one thing in a country, then disallow it in another.. I think the main issue with many song writers disallowing it, is they said they didnt want their music used “commercially” .. Which I think in many cases was aimed at “commercials” or companies using their music, but also disallows access from ANYONE wanting a sync license..
    2.) Quote “”There is no Rights Organizations for sync..”
    As it damn-well should be!! ”
    Rights organizations came into being for a reason.. Stuff like this is exactly why they are around today. It also gets a little sickening when a single label can pretty much shut down an entire industry on a whim..
    3.) Whats really crazy, is here are people (the karoake suppliers and distributors) ASKING to give the artists MONEY.. They just want it to be simpler and fairer
    VS what it has become, which is rampant piracy, with no one making any money!
    4.) The other half of the problem is karaoke depends 100% on popular well know music, etc etc.. No artist is going to think of it as “promotional” .. So the ‘inherent’ value of karaoke SHOULD be higher, but its not.. Why?
    In Karaoke’s case, Piracy is more CONVENIENT & cheaper for the end user.. One is bad enough.. but both?? our industry has to take SOME of the blame for that
    To me it just seems amazingly stupid to be leaving money on the table because of disorganization and pettyness.. sure, karaoke is not “big money”, but it is a microcosm of the probems with our industry.. IE: fix “this” problem, and amazingly the other issues will start to get better also..

    Reply
    • David G.
      David G.

      In Karaoke’s case, Piracy is more CONVENIENT & cheaper for the end user.. One is bad enough.. but both?? our industry has to take SOME of the blame for that
      To me it just seems amazingly stupid to be leaving money on the table because of disorganization and pettyness.. sure, karaoke is not “big money”, but it is a microcosm of the probems with our industry.. IE: fix “this” problem, and amazingly the other issues will start to get better also..
      All the other points you made were also outstanding, but I particularly wanted to repeat the above – it should probably be chiseled in stone.
      There were plenty of karaoke labels in the mid-90’s acting in bad faith, just out for the quick buck, who disappeared the instant the hammer came down. I think we’re still paying somewhat for that legacy.
      Look not-very-far down the road at what’s coming when 3D printing reaches the average household. When that stuff hits the fan, it’s going to make the problems we’re talking about here look like child’s play.
      Perhaps if we can make some progress on these issues, as hippydog has said, we can figure out some strategies that help copyright law keep pace with technology going forward.

      Reply
  6. Curious
    Curious

    Mr. Grimes,
    Since you all have been researching companies outside the US that are allegedly operating under less than proper circumstances, I was wondering what your take is on the Canadian company TriceraSoft and the legality of their download offerings in the US…

    Reply
  7. Curious
    Curious

    Oh…also, what exactly are the “three remaining labels” in the US you are referring to? I thought there was at least four or five left…

    Reply
  8. Curious
    Curious

    Ok…maybe one more! Did you all get permission from Audio Technica to display their logo/product in this article??? lol

    Reply
    • Read Much?
      Read Much?

      Top image modified under Creative Commons 2.0 from Audio-TechnikaUK; second image licensed under Creative Commons 2.0 from Les Chatfield.

      Reply
  9. NoNotice52
    NoNotice52

    U.S. publishers certainly do not support or condone foreign licensing bodies usurping their right to approve or deny the licensing of their copryights in the U.S.; if they had the power to do so they would certainly move to stop such activity and it is likely that they have tried. The policing of such activity falls with the government that often lacks the teeth, political will and/or manpower to do so, which means in many cases we end up with loopholes such as those in Karaoke licensing detailed above.

    Reply
  10. Ben Stauffer
    Ben Stauffer

    David, I know that this isn’t the focal point of your argument, I think that one part of your discussion is rather misleading:
    “Video sync licensing in the USA requires the explicit permission of the song publisher, meaning the American karaoke company has to hunt down each song writer or their agent individually, and secure a license under contract, a time-consuming and expensive undertaking.”

    The vast majority of songwriters behind the songs that you would license for karaoke have publishing deals, and I would guess that most of those publishers would have large administrators (Music Services, Kobalt, etc.) who issue licenses on behalf of the publisher for such songs. Therefore, you don’t have to track down each individual writer (though, yes, there may be multiple publishers/admins to track down for each song) and get them to sign off on it–you only need to contact the pub/admin.

    Reply
    • Out of work Karaoke Producer
      Out of work Karaoke Producer

      With all due respect Sir, Your thought in theory makes perfect sense, however by the time you get the song cleared it is no longer a must have hit, therefore too expensive to record; meaning when it’s a hit the fans will buy it, when it’s on the way down it won’t sell in a viable range and at $800.00 average recording cost it will not recoup the recording cost. So US companies don’t record and the song writers lose out to EU or Canadian sales. Several Canadian and UK sites have been selling illegal karaoke for years, I know they killed me. If the present system actually worked the industry would not be in its present condition.

      Reply
  11. Dragonman

    I note that Harry Nilsson is on the list of “no US karaoke”. Keep in mind that dear harry’s been dead and gone 20 years as of January. It’s not him, it’s the dickheads that own his catalog. They’ve proven their dickheaded-ness over and over again on many different issues over the last two decades, not just regarding karaoke…

    Reply
  12. Visitor
    Visitor

    “there are thousands of popular songs that simply can’t be produced domestically at all, because the songwriters have decreed their songs will not be made into karaoke”
    So what?
    Like you, they are free to do what they want with their property.

    Reply
    • Visitor
      Visitor

      Exactly. So why are companies outside the USA allowed to do what domestic ones are not? Is that something that the songwriters have decided they want? If so, is it beyond the pale to question why songwriters with an undeniably patriotic image, such as Bruce Springsteen or Jon Bon Jovi, want American companies to be squeezed dry?
      This is essentially a situation where American companies are punished for following the letter and the spirit of the law, while others can flaunt it at will.
      If the songwriters in question want to grant the rights to karaoke to American companies, that would level the playing field. But so would denying such rights to companies outside the US. Either would work, but the imbalance in place now is strangling the domestic industry, possibly to death.

      Reply
  13. Visitor
    Visitor

    “There is no Rights Organizations for sync..”

    As it damn-well should be!!
    Sync is the only thing that songwriters have these days to squeak by a meager living. If you want to ‘eff’ with that, you -will-be-black-listed. Proceed at your own risk…
    That ‘other’ countries do things different is fine as well. The USA is a net exporter of music and culture. You will find US music playing all over the world…. i can’t say i’ve ever listened to [name some obscure country]’s artist before, besides maybe a few EU countries and Aus.

    Should we add your name along side of Tim Westergreens?

    Reply
    • David G.
      David G.

      DigiTrax has no problem paying the songwriters their legally-mandated fees. After all, if it weren’t for the great songs they write, we wouldn’t be having this conversation, because we wouldn’t exist.
      But perhaps you missed the point. Companies outside the USA are producing songs that can’t be produced inside the USA, then exporting it back into the USA. All our research is telling us that no licenses exist that would allow them to do this legally, but no one is stopping them from doing so.
      Our question is… why?

      Reply
      • Visitor
        Visitor

        Why? Because it would cost more than you would recover tracking down and suing a Korean or Chinese Karaoke company. Who knows how much money in total is not being distributed to songwriters, but the solution is NOT to cut our own throughts in the USA.

        If you provide a value to the songwriters they will license to you. On the other hand, isn’t it funny how Google/YouTube seem to get a free pass across the board for every type of infringement and exloitation?

        Reply
        • Bob Wills
          Bob Wills

          The problem exists. I run karaoke shows, I need the new hits, I need ABBA, Bruce and the Eagles. I am going to buy them, licensed or not, I will find them and play them at my gig because my following wants to sing them.LISTEN to your fans!
          The fans want to sing and don’t know law, don’t care about law, they just want to sing Adel, they don’t care if she wants them to or not, they like her and sing her.
          So I think David has makes a convincing argument for reform, or a strong argument for a server in UK or EU, maybe Russia. Good luck David. PS I do buy your monthly hits

          Reply
          • Guest Star
            Guest Star

            I want to FREE BMW. I am a fan of BMW so they should just give it to me because that is what the fans want. We don’t care about the legal BS . . . . .

          • Virginia

            I’ll hold off on laying into your terrible metaphor because there’s a serious chance that you have some kind of disability… It’s actually like “I like BMWs and I want one and tons of people are buying illegal knockoffs that capitalize on the hard work of that company without paying them for it so I bought that, too but since I am not a total scumbag I would BE WILLING TO BUY ONE FAIR AND SQUARE BUT THEY HAVE MADE IT IMPOSSIBLE TO TAKE MY MONEY” if you’re gonna be a wise-ass try getting the “wise” part down first.

  14. Annonymous

    Does Digital Music News have any more information about the pending Universal Music and Digitrax battle? All I know is that Universal sued Digitrax for distributing unlicensed content on the “Karaoke Cloud”. Then Digitrax counter sued Universal because Digitrax thought that an email agreement was enough to get started. If you search the web you can find some information about the suit but not much. I would love to find out more.

    Reply
  15. Mike

    In the early to mid 90’s, I worked at The Harry Fox Agency, which is the licensing and collection arm for the NMPA. I worked in Synchronization Licensing and we licensed hundreds of thousands of songs to Karaoke companies, both domestic and foreign. The foreign companies were opening studios and offices in New York and LA to compete in the US and then many of them backed out due to the crazy competition and high overhead due to Licensing fees being charged by Labels and Publishers. While I support the rights of songwriters and publishers, Karaoke as a business will not survive here in the USA until the Music Industry creates a standard that will breathe life into the opportunity for Karaoke companies to succeed and compete globally. That has always been the problem. Labels and publishers need to abide by a standard for this genre and allow the fee to be reasonable so we as a country can compete in this arena. It’s a ripe opportunity and can become a very viable medium and business that will really infiltrate social media and American Society and Pop Culture like never before.

    Reply
    • Patrick

      Well said. The whole point of the article, when you come down to it, is that US producers want to be on a level playing field as the foreign ones. They’re not asking for a handout or to cheat the artists. If the governments can’t stop foreign content from leaking into the US, then change the licensing somehow to even the playing field.

      Reply
    • Dave

      Exactly my thoughts. Question is, rather than trying to get everyone OUTSIDE the U.S. banned, has Digitrax or Phoenix/SoundChoice actually approached this route. Has anyone inside the U.S. actually approached the major labels about this. I mean, I’m just putting this out there because honestly as KJ I ALWAYS buy Digitrax/Chartbuster or SoundChoice over competitors due to quality differences with a few exceptions that Zoom is best in. Even if I already have a copy, if karaokecloud releases one later I still buy it because simply having the track isn’t enough, my singers want the best version available and if any other KJ has Chartbuster or SoundChoice and I have to settle for SBI, they will go to them. This is a goldmine for a music label, so I think it could be done if it were approached instead of the “let’s just ban everyone” approach. The No-Fly list has labels written all over it. Katy Perry is seen in karaoke bars all the time, U2 and Green Day are both Anti-Establishment, Madonna is obsessed with fans remix and covering her work, Kurt Cobain is DEAD as are others on the list–I highly doubt they are as opposed to karaoke as the No-Fly list suggests. The artists on the list just don’t make sense. I think a fresh approach is needed, instead of viewing each other as enemies, why don’t Digitrax/Phoenix et al sit down with Sony, WB, EMI, et al and hammer out an agreement. A central place where karaoke rights can be purchased. The songwriters can name their price or whatever and wala–I just don’t understand why this is so difficult to do. As someone else said earlier, my regulars won’t take “You Can’t sing Green Day here because they said no” as an answer. First, because the only artist on that list that I can find a record of actually saying no is Don Henley, and second because it just doesn’t make sense. Green Day is known for their anti-establishment stance, they are known for being fan oriented, as are many others on there. Thus they’d go to one of my many competing shows that have Green Day, Adele, Abba, Eagles, etc. There has to be a resolution other than simply getting all of the most well known, non-country artists in the world banned from karaoke production all together. Besides, it’s just like weed or alcohol, you can fight it all you want–but it will still exist, the solution is prohibition, it’s finding a way to regulate and make it fair.

      Reply
      • Dave

        Correction: “the solution ISN’T prohibition, it’s finding a way to regulate and make it fair.” not sure how that typo happened. . .there are a couple of others, but this is the only one I really felt needed to be fixed urgently.

        Reply
  16. Roy

    Hey Dave I believe you hit the nail right on the head with the question “why don’t we all get together and fix this problem?”
    it’s that simple right?
    why does it have to be so hard?

    I have an app on the Android market called VOCAL ADDICTION that plays CDG & zipped MP3+G libraries, we have spent good money to purchase master tracks from a major disc manufacturer with rights to resell the songs as Permanent Digital Downloads directly through and into our app but we cannot legally sell those songs in the USA due to complicated and expensive process we must follow.

    I Do wonder if I could just have my users select their country (wich will change the amount of available songs in our store) depending on which country they select. Then we just pay the licensing in place for those countries for each song sold,

    We are so close to having this app and download store working favorably for us but we are stuck in the mud.

    If anyone has good advice,offers or input feel free to contact me through the google play store contact developer link for VOCAL ADDICTION karaoke app. I would love to hear from you
    Roy

    Reply
  17. R Moffett

    Unfortunately, I cannot sympathize with U.S. karaoke manufacturers. The issue here is not Copyright Law – it is U.S. Anti-Trust Law Title 15 and proposal for very serious deregulation with repercussions that would reach far beyond karaoke.

    The kind of singular license agency being sought is prohibited for good reason, and with a lot of corporate historical basis to support it. That so many U.S. karaoke manufacturers also were not properly complying with the law is further testament to why such regulation should remain.

    While it may not be convenient, it is possible to acquire the licensing needed for this product. It is indeed an audio-visual derivative product and the authors/publishers should retain control to license all or part the the varied license types.

    This playing field simply isn’t worthy of being leveled at the cost of undermining USC Title 15.

    Reply

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