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Sybersound Records, Inc. Attacks Piracy In Karaoke Industry
Sybersound Records, Inc., an artist-run record company based in Malibu, California, has filed suit in Los Angeles Superior Court and Ontario Superior Court in Canada, seeking more than $200 million in damages arising from music piracy by karaoke record manufacturers. Sybersound produces high-quality recordings for home-market karaoke use, under product lines known as "Party Tyme Karaoke" and "Billboard Top 10 Karaoke." Sybersound obtains karaoke synchronization licenses from publishers for all of the songs released on its albums and pays royalties for all units sold. The lawsuits allege that Sybersound's competitors have failed, unlawfully, to license competing karaoke records, and have underreported sales to publishers as a way of selling product below cost and undercutting Sybersound's pricing. These below-cost sales amount to unfair trade practices, according to the suit. "This has plagued the karaoke business for a long time," said Jan Stevens, President and CEO of Sybersound. "We've always been scrupulous about paying writers for the use of their songs, and have expected that our competitors would do the same. It's time for the rest of the industry to do the right thing, and we hope that our lawsuit will help make this happen." Propelled in part by the success of such television programs as American Idol, the home karaoke business has grown rapidly over the last five years. Karaoke machines and karaoke CD+Gs are now carried by major retailers nationally. The lawsuits allege that Sybersound's competitors infringe on copyrights in several ways. Certain popular writers, such as U2, Bon Jovi and ABBA, do not permit karaoke use of their songs. Nonetheless, many karaoke companies include songs by these writers on their albums. In other cases, companies either fail to secure proper licenses or grossly underreport sales to avoid paying royalties, the lawsuit contends. The result, according to the lawsuits, is that illegal karaoke products are available at many of the major retailers in the United States and Canada. "The last thing we want is for the retailers, who are Sybersound's best customers, to be treated as copyright infringers just because they're misled into selling pirated karaoke product," said Peter Haviland, Sybersound's Los Angeles trial counsel. "We believe that Sybersound's competitors have been engaging in music piracy and unfair trade practices for years," Haviland continued. "We hope to clean this up and collect substantial damages for the injury they've caused to fair competition and to the image of the karaoke industry." Robert Meloni, Sybersound's New York lawyer and an internationally recognized expert on copyright issues said, "Musical copyrights are the fuel which powers the entire music industry engine. Songwriters and artists, and the music companies that finance and sell their music, directly suffer when karaoke vendors violate those rights for quick profits. But when the problem is industry wide, as this lawsuit alleges, legitimate record companies like Sybersound unfairly suffer as well since they are not able to compete on an even playing field." Karaoke albums typically include new recordings of hit songs, with the lead vocals omitted. Sold as CD+Gs, karaoke records include graphics which enable song lyrics to appear on a TV screen with the use of a karaoke machine, as well as printed lyric booklets. The release of karaoke albums requires licensing for the reproduction of musical compositions, for the synchronization of lyrics on screen, and for the printed lyrics. Since licensing fees can be as high as $2 per CD+G sold, companies that avoid paying royalties have a significant price advantage over Sybersound, which follows all the licensing rules. The companies named in the Los Angeles lawsuit include: * UAV Corporation of Fort Mill, South Carolina * Madacy Entertainment Group of Montreal, Canada * Singing Machine Company of Coconut Creek, Florida (Amex: SMD - News) * Audio Stream Inc. and Top Tunes Inc. of Hilliard, Ohio * BCI Eclipse of Newbury Park, California * Compass Productions of Minneapolis, Minnesota The companies named in the Ontario lawsuit include: * Legacy Entertainment, Inc of Stoney Creek, Ontario * Navarre Corporation Company of New Hope, Manitoba * Direct Source, Inc. of Burlington, Ontario * Direct Source Special Products Inc. of Lasalle, Quebec Sybersound CEO Stevens said, "We've found that our karaoke CD+Gs are being purchased primarily by moms for their families. It's great to be part of a business that invites people to sing and brings music into their homes. But unfortunately, behind the scenes, the karaoke industry is corrupted by competitors who fail to license properly and pay royalties to songwriters." The lawsuits allege, among other things, wrongful interference with business, unfair trade practices and unfair competition.
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