Summary of Open Meeting with Kurt Slep in Seattle….

Note – My initial post was an incomplete draft that excluded some responses from Kurt. Please see edits in Blue.

On Saturday, May 12th, Kurt Slep of Sound Choice held an open meeting in the Seattle area for KJ’s, Venues, Singers and anyone else interested in what was going on in the karaoke industry. There was an invite published in the local print and digital version of the Northwest Karaoke and Entertainment Guide.

There were a total of 15 in attendance plus Kurt. One of those was Ty Hughes, editor of the aforementioned guide. There were also two of the local auditors/investigators. I did not get to speak directly to everyone in attendance, but I believe everyone else there was a KJ. No venue owners. No Singers.

Many of the KJ’s had been in business for greater than 5 years. However, one of the KJ’s, Joshua Baron who runs Absolute Karaoke, runs one of the larger operations in the area which he started up about 4 years ago. He also brought in a significant collection of Sound Choice discs to show to Kurt. He runs 5 rigs and they are currently doing an internal audit in preparations for the Sound Choice audit.

I completely forgot to ask how many folks there were already Sound Choice certified, but in the course of the meeting there were two other KJ’s that indicated there were certified. So at least 3 including myself. One of the certified KJ’s was sued in the first round of lawsuits in the Seattle area but was dropped when he went through an audit.

The bulk of the meeting involved Kurt talking about the industry. He provided some history about what happened in the Seattle area, but I think most in attendance already knew most of what he talked about. However, there were some interesting points that were brought up by Kurt himself and throughout the day during Q&A.

Sound Choice can’t combat piracy alone

KJ’s have to purchase and use only legitimate karaoke music. Do this and the problem is solved.

While it was acknowledged by all in attendance that it would be nice to see more singers and venues involved in reporting piracy, it is the KJ’s that are the most informed and the most qualified to identify and report pirates.

More Pressure on the pirates

Kurt confirmed that Sound Choice would be working with Piracy Recovery, LLC to file lawsuits for trademark infringement on Sound Choice and Chartbuster trademarks. The idea is that as hosts have pulled Sound Choice and begun to rely more on other manufacturers, that Chartbuster has started to see a lot more use and likely because Chartbuster music is being pirated. As the pirates realize that Sound Choice and Chartbuster are aggressively suing, they will have to go legit, get out, or pull both SC and CB. The latter means reducing the quality of their selection even further making it more difficult to maintain their shows.

Piracy Recovery, LLC is a good thing

To me, one of the most interesting and thought provoking comments Kurt made involved Chartbuster and Piracy Recovery, LLC.

Piracy Recovery, LLC is a new entity that is investigating and pursuing legal action to protect Chartbuster Trademarks and IP.

Kurt Slep said the following in the meeting –

“Chartbuster cannot be allowed to fall into ‘freeware’ status”.

The more I think about this, the more concerned I get and the more I worry about the future of the “legal” karaoke industry.

Given the large number of manufacturers that formerly produced music, went under, and have no one pursuing legal action, there is a significant amount of “freeware” karaoke on the market. By “freeware” I mean that you could obtain this music and use it without fear of the karaoke company coming after you for piracy because no one is representing their rights. You would still have the record labels, artists, etc. to worry about, but we all recognize how minimal that risk is.

My opinion – You can say what you want about the Sound Choice lawsuits and the yet to be seen Piracy Recovery, LLC process, but it seems very clear that if Chartbuster were to fall into “freeware” status with no one pursuing any legal action, this would result in a very significant selection of quality music on the market for the pirates to leverage in their shows. This would allow them to pull not just Sound Choice, but also Stellar/PHM from their libraries if they wanted to insulate themselves from legal action, and still have a very large, high quality karaoke library.

It is absolutely in the best interest of all legal hosts that Sound Choice and Piracy Recovery, LLC are aggressive in their legal actions. If not, then the pirates will ultimately gain access to two of the most diverse, and highest quality karaoke libraries ever made…..for free….and without any fear of legal action. For those that have been legally hosting for 5, 10, 20 years, it would be a slap in the face for those libraries to essentially go into the public domain allowing *anyone* to run a karaoke show for the cost of the hardware alone and have no fear of ever coming under any scrutiny.

Sound Choice and DigiTrax

Kurt mentioned that Sound Choice and the newly formed DigiTrax are already going to the music publishers seeking new distribution rights. The focus is on rights to distribute on SD and Hard Drive media though they are also inquiring about streaming rights for home use. Kurt was pretty adamant that until technology improves, he had no interest in pursuing streaming rights for commercial applications. I personally think this is a bit short-sighted because most suburban and metropolitan areas have quality internet connections and there are technologies for buffering that would accommodate temporary connection loss or bandwidth issues. While this may not apply to rural or otherwise sparsely populated areas, it would still be an additional revenue stream for Sound Choice and should not be so quickly dismissed.

He did confirm that he was negotiating with the DigiTrax folks on including Sound Choice material for distribution through their portal/services.

Sound Choice and the future

Kurt confirmed that Sound Choice wants to produce new content and that they are pursuing the appropriate rights and licenses. He stated that he was 95% certain that this would happen, but that he would not provide a timeline because of the variables involved. He also confirmed that the new content would likely be available only to certified KJ’s and GEM licensees. Distribution would be directly from Sound Choice and perhaps in conjunction with DigiTrax.

My Tough Comment and Suggestions

I originally compiled a long list of items I was going to hit Kurt with at the meeting. The night before I reviewed it and realized that there was really only a single multi-faceted item I wanted to address with Kurt. It revolves around the settlements that Sound Choice offers to those that get sued and are found to not be One-to-One Compliant. The following is a little more verbose than what I said in the meeting. There were also other questions that arose that prevented Kurt from responding directly to all off these items. I am following up with him in email to address the items we could not cover in the meeting –

1) Issue – The pirates that settle pay their settlement and in return get access to the GEM series which is undeniably a very good quality selection of Sound Choice music at a fraction of the cost of retail. Even those of us that scour eBay and Craigslist or buy out other local hosts, would spend a comparable amount of money to obtain those same 4800 tracks.

a. Resolution A – Ideally, I would like to see the pirates be told they are no longer allowed to use ANY Sound Choice material ever again. Alternately, stipulate they can’t use Sound Choice material for some significant period of time (perhaps 1-3 years)

b. Resolution B – Separate the settlement from the GEM series and make them pay separately for the GEM if they want to continue using Sound Choice material. Do NOT finance it for them. Make them pay for it in full at full retail. Increase the cost of staying in business to be more in line with what a true legal host incurs.

Kurt’s response – Sound Choice would continue to look at the legal remedies for future lawsuits. He suggested maybe reducing the amount of tracks offered in settlement from the current 4800 Tracks or “maybe 3000 or something smaller”

I don’t think that goes far enough, but I saw him taking notes during this discussion so I am hoping he is writing down these suggestions for future thought.

2) Some pirates may have been running their shows for only a year while others may have been running for 10 years or longer with material they essentially stole from Sound Choice. The fact is they are stealing the music. Yet they ultimately get to keep their gigs because they settle. This does absolutely nothing to help the KJ’s that have purchased music legally for that same 1-10 years.

a. Resolution – If it is an option, Sound Choice should pursue action to stop them from delivering a karaoke shows at their existing venues. If Sound Choice doesn’t have the legal rights to prevent them from doing a karaoke show at all, they can still stipulate that Sound Choice material can’t be used ever again as a part of a settlement. See above – Make it as difficult as possible for the illegal KJ to stay in business and give legal KJ’s an opportunity to take over.

This topic got sidetracked by other questions and comments.

3) Issue – Once the pirates settle and the receive the GEM Series as part of the package, they now get to market themselves as “certified” by Sound Choice. This further impedes the ability of newly established legal hosts as well long term legal hosters hoping to expand from picking up gigs from the pirates.

a. Resolution – Again, stop giving them the GEM series. If the GEM is still going to be provided, don’t grant them “certified” status. If certification status is still going to be provided, make them wait 1 year before their certification becomes active to prove they aren’t going to go back to their old ways.

Kurt’s Response – See above. But he did say that there was only so much that Sound Choice could do. Securing a gig, regardless of the circumstances falls to the KJ. I agree with this. I just want it to be on an even playing field and without battling against a pirate that became certified only because they were sued.

 

We ran a couple hours longer than we were scheduled for and I had to get out to get ready for my own karaoke show. This left me with one final point that I was unable to speak to Kurt directly about –

 

Long Term Vision

With a lawsuit and a subsequent settlement that Sound Choice recovers lost revenue for the company. Sound Choice has the right and should be pursuing legal action to recover costs. However, under the current model, once a pirate settles and they have the GEM series, there is no incentive for them to ever purchase anything from Sound Choice again because they already have the best tracks Sound Choice has to offer. Sound Choice could argue that they now have a new “legal” KJ that *might* purchase from them in the future if Sound Choice starts distributing music to Certified and GEM Series hosts. But these hosts weren’t purchasing of their own free will before getting sued. Their hand was forced with a lawsuit and a settlement. I have a hard time reconciling that any company would want to partner up with someone that stole from them – perhaps for 10 years or more! – and actively contributed to the near demise of the company. It seems very risky to bank the future of the company on former pirates going legit and then happily buying Sound Choice material in the future.

Instead, continue to pursue legal action and when someone settles, don’t give them the GEM Series and don’t certify them. Additionally stipulate in the settlement that they aren’t allowed to use any Sound Choice material ever again or at least for some extended period of time. If they want to continue using Sound Choice material, make them buy it like everyone else. Effectively give them the burden of operating their business as a business instead of subsidizing them. make them prove with their wallets that they want to be in this business and they are going to support it.

Furthermore, give the legal KJ’s that have always supported Sound Choice the opportunity to make a pitch to get the pirate out and establish a legal show in its place. Giving a GEM Series and a Sound Choice certification to a proven pirate flies in the face of those that have supported Sound Choice for years. It completely undermines the ability of legal hosts to expand their operations and all but negates the ability for a new host to even get a foothold in the market.

Replacing the known illegal hosts with legal hosts could potentially mean bringing a new rig online for the legal hosts. That means the purchase of a GEM or other retail Sound Choice material, and, since these are operators that were already purchasing product of their own free will, they are more likely to continue to do so in the future. The generates short and long term revenue for Sound Choice and does so in a manner that is much more agreeable to the industry. From a PR perspective, this would be a much better proposition – Sound Choice helps establish someone in a gig that has always been a Sound Choice supporter and is much more likely to purchase Sound Choice material in the future. Long term, this is a much more viable and profitable position to be in.

-Chris

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