My take on the DigiTrax KaraokeCloudPro service…

For those that missed the Karaoke Cloud Music City Summit 2012 stream on 06/22/2012, here is a not-so-brief summary of one session that was delivered today.

Ryan Sherr from PCDJ, did a demo of using the PCDJ Karaoki software connected to the DigiTrax KaraokeCloudPro service.

In a nutshell, a KJ pays a monthly fee for unlimited access to all of the tracks that will be available from the DigiTrax cloud service. I believe the number that was suggested was in the order of 60,000 tracks with duplication across multiple manufacturers. You can either stream from the cloud live, or you can temporarily store a local copy for offline use when no Internet connection is available. KJ’s would be allowed to synch to up to 3 computers time, but only one computer at a time can be used.
The suggested fee during the presentation was possibly a $99 introductory fee with a regular cost of $199/mo. This would be “per system” which, when clarified, meant that running concurrent shows would require multiple subscriptions. Thus, if you are a multi-rigger with concurrent shows, you have to have a subscription for each concurrent show.

So….

If a KJ were to have 3 shows at 3 venues all on the same night, that would require 3 subscriptions at $199 each for $597/mo.

That is a LOT of money even for the most aggressive KJ/Hosting company. If you only have 1 rig/show running 5+ nights a week, then *maybe* $199/month would be worth it provided DigiTrax produces new music quickly and regularly. But the multi-riggers I know of, don’t buy the exact same new music for every single rig they have in operation. They tailor it to the venue/crowd/location. Thus, a flat $199/mo might make sense for one location where it is way too much to spend for access to new music that will never be requested at another.

But lets keep it simple for now…. 1 Rig/Show

If a KJ runs it themselves (not hiring someone) and they get $125/night for a 5 night run at a venue, that means ~$2500/mo Gross pay. Which also means that 8% (@$199/mo) of the Gross pay gets chewed up with the cloud subscription.

But lets account for different wages –

5 nights x $200/night = ~$4000/mo = 5%
5 nights x $175/night = ~$3500/mo = 5.5%
5 nights x $150/night = ~$3000/mo = 6.5%
5 nights x $125/night = ~$2500/mo = 8%
5 nights x $100/night = ~$2000/mo = 10%
5 nights x $ 75/night = ~$1500/mo = 13%

…and for those who don’t work 5 nights a week –

3 nights x $200/night = ~$2400/mo = 8%
3 nights x $175/night = ~$2100/mo = 9.5%
3 nights x $150/night = ~$1800/mo = 11%
3 nights x $125/night = ~$1500/mo = 13%
3 nights x $100/night = ~$1200/mo = 16.5%
3 nights x $ 75/night = ~$ 900/mo = 22%

The math is pretty simple so you can easily see where you fall into the mix based on nights and wages. The point is, the cloud subscription as proposed now is a fixed cost. The more nights you have and the higher your wage, the easier it is to absorb the cost. It is more valuable on months where a bunch of new, desirable music gets released and much less valuable in months where music sucks eggs.

Regardless, the cost is pretty much out of reach for the low wage/low volume operators.

If we look at it from the perspective of how much new music a host adds per month on average, and we use the preliminary results of the poll I posted, no one is spending $200/month on new music for a single rig. Since established hosts will already have an investment in music, there is nothing to gain from adding the cost of the cloud service except to increase the size of their library (which has a highly debatable impact on marketability).

This seems to suggest that established hosts have nothing to gain from adding the extra monthly cost to their business plan.

However, there are two groups of KJ’s where this model does work out…at least in the short term.

New KJ’s coming on the scene

Instead of purchasing a bunch of music up front, for a mere $199, they can set up shop and have access to a huge library that rivals many long term hosts. The potential for even more market saturation is very high and is something I view as a threat to wages across the board and to the future of independent karaoke hosts as a whole. Long term, I can see bars just setting up their own sound, paying the monthly fee, then hiring hosts at minimum wage to run the shows.

Pirates that want to avoid a lawsuit/go legit

See above. $199 and they are golden.

Of course, in both cases, as time goes on, the benefit goes down. For a few thousand dollars, a KJ can buy discs retail, on eBay/Craigslist, or from other KJ’s and have a permanent library that they own outright. After approximately two years ($4776 in cloud service fees) they will have paid as much as what it would have cost to buy the content. Call it poor man’s financing. Some will do it because it is the only means they have. The smart ones will figure out they are not getting a very good deal and either not sign up in the first place, or buy content elsewhere and drop the service. Accounting for the volume and wages calculations above, and it just doesn’t make a very cost effective solution.

What DigiTrax could change…

Lowering the cost is a double edged sword. Lower cost makes it more valuable to the long term KJ but also dramatically lowers the barrier to entry for new/pirate hosts increasing market saturation and driving down wages. This is a tough one to crack – balance value for established hosts vs market saturation vs sales/profitability for DigiTrax. I personally think they will do the latter. After all, the more they sell, the more they make, and I don’t think they have a true grasp on what is “right” for the industry as a whole.

A few variations on a potential solution would be….

Offer a Trade-In Program for a reduce service fee. KJ’s could trade in existing libraries in exchange for a “certification” and drastically reduced fees. This gives established KJ’s “credit” for their existing investment while reducing the cost to access new content dramatically. I personally don’t like the idea of giving up my discs….so an alternative would be…..

An audit, or, since that word has left a bad taste in many a mouth, some means of proving you own an existing quantity of discs and provide a discount based on what is already owned.
In both of these cases, it would be a high overhead/cost/administrative option for DigiTrax so i don’t see it being implemented either. But I want to offer solutions along with my critique.

Another option……

Allow storage of existing physical library in the cloud.

Provide a “ripping service” to convert existing physical libraries into MP3+G and store on DigiTrax Servers. This could either be facilitated by shipping discs to them to rip and then ship back or even store in a secure location, or, just put a disc into a local computer and rip it to the cloud and keep the original locally.

The obvious problem with this is determining if it is an actual original or a burned copy, so some additional verification would be required. Since an audit would add in the administrative costs/headaches noted above, I don’t see that as the solution. It might be possible to do scanning or photos. My bank allows me to scan checks and deposit them via the web, we should be able to figure out how to scan or photograph discs and deposit them to the cloud.

The final suggestion (and what I think is the best solution) is this –

Instead of coming to market with a 60,000 track library at $199/mo, Lower the monthly fee ($19.99 – $39.99/mo) but only provide access to the last 1-3 years of content. Established hosts won’t be paying for access to stuff they bought 5, 10, 20 years ago, new hosts won’t be instantly competitive with established hosts without investing in additional sources of music, and pirates can’t simply go legit without any repercussions. DigiTrax could then charge a much higher fee on a one time basis, for access to older content. Maybe in the order of $1000 or more for access to 5 year blocks of music, or certain collections of older karaoke music. Package it up and sell it a la carte. Just don’t offer financing for it as that defeats the purpose. Make people put skin in the game and put it on their own card or take out a 2nd mortgage or whatever the rest of the REAL karaoke hosts have done over the years.

I am trying real hard to see the benefits of using the DigiTrax cloud over using the current standard of computerized systems, but the costs just don’t play out without some real disruption in the market. I does have the opportunity to bring more legality to the marketplace, but it isn’t going to do the already legal hosts any favors from a wage perspective. KJ Wages are more likely to continue to go down relative to the cost of the service. We *will* end up here, but we may be in for some real shocks and surprises on the road there.

-Chris

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15 Comments on “My take on the DigiTrax KaraokeCloudPro service…”

  1. JW says:

    Chris, I agree and appreciate your thoughts. My concerns mirror yours almost to the tee… I have over $45k invested over the past 17 years just in media. and 1000’s of hours ripping media to mpg+g, dating back to 1998. Until about 2005, I was the only KJ company in the Nashville market using all PC based systems. Countless hours beta testing for MTU, S&D’s, CompuHost and others… The hosting products we current use are very solid.

    We currently use CompuHost exclusively on our rigs. They have developed a product with Chartbuster called KJ Media Pro HD that could be a great platform to use for us legal KJ’s that are greatly invested customers of Karaoke manufacturers like SC, CB, PHM, DK, SF and others… With this product (if you are unfamiliar with it) you download the entire (Chartbuster in this case) digital library that is encoded, and each zipped mpg+g file is locked.

    You can buy “tokens” for $1.99 per song while online, and use those token to unlock songs on the fly during a show; should you not already have the song in your current library.

    Taking this concept and incorporating in into the cloud system or the Pro KJ locally stored library method; this could be a great solution. For example: I am a certified Chartbuster KJ. I bought individual CDG’s over the years, but for simplicity sake I invested in the entire library of CB songs. SO… Based on this documented purchase, anything in the KJ Media Pro HD library could be unlocked at no charge and used at anytime; provided CompuHost could confirm me as a licensed owner of all Chartbuster titles.

    If a method of verifying owners of smaller collections could be verified, the tracks they own could be unlocked accordingly. But, as you mentioned before… That takes us right back to auditing or some other creative way of verifying ownership.

    I have been an IT guy for 28 years… Perhaps companies like Sound Choice could have done themselves a huge service by incorporating Computer Information Systems (CIS-101) strategies 20 years ago, and kept detailed customer records of every single track that every customer purchased. Basically it does come down to… This is what they want to do today, and the fact that they didn’t track ownership effectively from “Day 1” has led them into having to audit pirates and legit customers alike and struggle to find a solution that could have been largely avoided.

    Taking the concepts that IT companies like Microsoft has used for decades, needs to be applied to Karaoke Manufacturers. Don’t get me wrong; I’m not saying that companies like Sound Choice caused the problem that piracy has brought to the Karaoke market (Manufacturers and KJ’s alike suffer in one form or another) But, they do bear some responsibility for failing to recognize protecting the products they own copyrights to should have been addressed the day they opened shop; not 20 years later.

    OK, now that I got that off my chest… That bell has been rung and we can’t go back in time and make it perfect. But let me suggest this… For all of the hard working, 100% invested and legit KJ’s out there; we deserve some sort of recognition for our investment and character. If a system is implemented that will credit me for every track I have purchased AND allow me any easier way of acquiring new music that I don’t have to RIP RENAME and ZIP, then count me in!!! But the cost associated with an audit should fall on the manufacturer that failed to create a simple sales database that shows every single song I have purchased.

    And I would love to see the Karaoke Manufacturing Market flourish again. It keeps the market full of high quality, professional produced music for our customers. And stomping out the pirates that have flooded my local market with crappy PA and an external hard drive they bought from another KJ would be a great thing. However, I would like to see them suffer a bit more than just saying… “OK, start paying us $199 a month now and we’ll call it even”.

    I would gladly walk the lawyers into 100 shows in Nashville that run pirated tracks.
    But, I want these KJ’s gone. Black list them from ever being able to buy a 100% legit system for $199 that I have $45,000 invested in. After Sound Choice stopped making CDG’s, my monthly cost to Chartbuster and Pop Hits Monthly came to around $75 per month. On top of that, I would buy other CDG’s if a customer really wanted a track and [perhaps SunFly had it up for grabs that month. So, on average, I spend about $100 each month in total.

    Now consider 17 years in this Awesome-Godforsaken business.
    My average pay in 1995 was $225 per show.
    My average pay in 2005 was $175 per show.
    My average pay in 2012 is a ridiculous $100-$125 per show.

    And our long term contracts now have turned to constantly having to swat away pirate KJ’s that come in and try to under cut us. Fortunately, the clubs we play in recognize the money we make for them. Even the few gigs we have lost to pirates have resulted in the Club Owner calling me a month later and asking us back. I never go back to an ungrateful club owner that had me for $125 a night that should have been paying me $300.

    Hopefully DigiTrax will form an alliance with ALL manufacturers, both past and present, that hold publishing rights to their catalogs, and make them available to us. At that point, come and audit my digital library and charge me a reasonable fee for the “All You Can Eat Buffet” of karaoke!!! I will gladly pay my current budget of $100 each month for that.

    Pirate KJ’s need to be black-listed from any such arrangement until they have paid some sort of investment that mirrors mine and 1000’s of other loyal customers of Sound Choice, Chartbuster and all the other great karaoke manufacturers.

    Hard drive space in not an issue. 2TB’s of space will likely hold almost every track ever made on the CDG format. Load me up with encrypted tracks and unlock the tracks I already own. Lease me the rest for a fair value based on what I do not have in my library and charge more for those who own less or nothing at all….

    Sell the whole Sound Choice library to a pirate for $5000 and unlock it for them. But don’t lease them everything for anywhere close to what a certified KJ should pay. It simply allows them to be able to afford to walk into my venues and charge $50 for a show they have never had an investment in.

    Wow, I meant for this to be a paragraph or two… Was this too long?

    • Brian says:

      I read the entire article and normally don’t reply with an opinion, but in this case I figured that mine should stand out. I was in the business from 1984 when I brought karaoke from Japan to Chicago playing laser discs. I owned the 1st karaoke bar in the US and from the grand opening for 3 years it was a hit. In 1987 I moved to Las vegas and using the same name “Who’s Next? Karaoke”, got licensed and started to make a really nice income within the bars. I stayed away from the casinos. Way too much drama. A few years later as the CD+G was being marketed, I couldn’t buy them fast enough to keep up with the demand of my clients/singers. If the disc was made, I had no problem purchasing it. By the mid 90’s, Vegas had an influx of pirates which devalued the karaoke market. My fee up until this point was 25% of all sales through the bar, whether it be alcohol or food. Most Kj’s knew my rates and therefor the pirates would be able to go into the venue I was playing and offer to do what I do for 10% gross, and also keep the customers that attended my shows. Of course this never panned out for the pirates and I would have the venue calling for me to return, but I am one who lives by principle and and would kindly tell the venue owner… “Your S.O.L.”!

      In the late 90’s, Soundchoice formed KIAA to combat piracy that was running rampant across the US. I was always on the frontlines with them.

      In October of 2001, the karaoke paper here in Vegas “Karaoke Entertainment Magazine” and a local unnamed KJ (You know who you are) outright called me a “Terrorist” because I fought side by side with “The License Bureau”, (To combat unlicensed karaoke shows). “Soundchoice and KIAA” (To combat the piracy issue). I beleived in Soundchoices claims that they could actually get something done. By 2005, and with a total investment of well over 2mil. in state of the art sound, intelligent lighting and just about every disc ever produced in over 40 languages, I had to call it quits. The cost of the licensing here in Nevada outweighs what a legitimate KJ would actually make. There is no profit margin.

      In 2011/2012, Soundchoice once again came on the scene with there claims to clean up piracy and KJ’s who use illegal HDD’s to run there shows. No longer in the busines, I made a choice whether or not I was gonna put myself out there again to help them get there fight going. I decided to give a helping hand ony to see that once again, Soundchoice, after filing multiple suits, never showed up in court or filed the correct documents to take these KJ’s and venues down.

      And now at this point in time…

      As you all have read about the karaoke cloud, this is nothing new. I over the past year have sent numerous emails, and left numerous messages for the owners of all the major CD+G manufacturers regarding what I am looking to do. I offered all the manufacturers as little as .5 with no investment and up to .35 for a minimal investment, everytime one of there songs was played at a venue. I spoke directly to Norbert Stovall who said ” Why didn’t you come up with this a year or 2 ago”, right before he told me that he had to step down as CEO of Chartbuster karaoke/Big Mamas. Both Chartbuster and Soundchoice could profit extensively from this, but Digi-trax decided to do what I have been promoting. This is a product that would be contracted directly through the bars and a bare minimum of Kj’s. This system would also be used by the average homeowner who would like to just go online and stream the karaoke to their big screen or just straight to their laptop. We already have a slew of venues, some of which host karaoke 7 days a week, interested and waiting on our launch.

      Finally, I’d like to say to all CD+G manufactures… Thank you for letting me invest so much into your products with nothing to show in the end.

  2. Chris Avis says:

    Thank you for the reply JW! I share the same sentiment and could not have said it any better (or any more briefly!) than you did. I am also long time IT and wish the manufacturers would have been more proactive with policies. While I have only been hosting for about 2 years now, i still have a very sizable investment in my CDG library. I could have walked in with pirate hard drive and been profitable by my second week, but I chose to do things on the up and up. It will be years before I come into the black and perhaps never if the piracy continues to run rampant.

    Thanks again for your comment!\

    -Chris

  3. DJ-Mace says:

    I “only” have in the neighborhood of 20,000+ songs at the moment… the entire Sound Choice Gem series and the Chartbuster 12000+ Digital package, plus selections that were in my original CD+G collection from older Manufacturers like Music Maestro, DKK and others. I have always been 1 to 1 compliant and resent the Pirates that caused all of this garbage. Lower prices per show and unfair competition from people that downloaded pirated tracks for dirt cheap or even free, have very nearly killed this business. My only saving grace is that I have invested MEGAbuck$ in my sound system and these Pirate Pukes can’t touch that kind of investment, so the people that sing with me are much happier with how they sound! (heck, most Bands wish they had my system!) I don’t know where this industry is going BUT, as long as it means getting rid of the cheaters, it’s going in the right direction as far as I’m concerned.

    • Thank you for the comment, DJ-Mace. I too would like to see the pirates just go away. That alone would have a tremendously positive effect on the industry. We know that won’t happen (at least not overnight) so until then we have to adapt. i am anxious to see if DigiTrax is listening to the Professional KJ community on this and if they will modify the pricing/implementation so that we can survive.

      -Chris

  4. Sue says:

    Then there are those of us that are not professionals that have spent years gathering our karaoke libraries just to enjoy in our homes and with friends. I was one that really liked the KJ song hard drive that Chartburster offered because we could purchase songs as we needed them. I realize that our situation is not as critical as those of you that are pros, however I hope that Digitrax offers a viable solution for non-professionals that have invested lots of money trying to be honest and have a decent library for karaoke get togethers.

  5. There was a trade show in Vegas this past week where DigiTrax had a booth (I was not there so this is second-hand information). Apparently they want to do a hard drive offering similar to what Chartbusters had in the past. Since DigiTrax took over most of the IP and Assets of Chartbusters, they have a good baseline to work from. It shouldn’t bee too difficult for them to make this happen. We will just have to be patient and see what they come up with.

    -Chris

  6. Trent says:

    I am late to this discussion but hopefully someone will read this! I am not a professional KJ–I have a small portable PA and have done free shows for some friends at their homes or at small bars (like my brother’s birthday). My question is how to tell if someone is legit–is it just owning the actual CDGs? I have not used downloads or MP3-Gs at all–just regular CDGs I have purchased from music stores, online stores, retail stores, and eBay. My issue is how do you know that the CDGs you buy are legit–can’t they be pirated as well? I know some of the discs I have gotten off eBay seem a little…fishy.

    I am considering buying an Acesonic karaoke player that will allow me to rip my CDGs to a hard drive so I can play them off that instead of the discs–I am tired of replacing CDGs, and some I have are no longer made (it is impossible to find Sound Choice’s Headbangers’ Hits pack!).

    Would the above strategy be “legit” if I ever did want to do a show for money? Along with that, who are some other good companies out there now that Sound Choice and Chartbuster had stopped making discs?

    Appreciate any replies I get to this!

    –Trent

  7. Steve Hess says:

    Trent, generally having the physical CD+G is evidence of being legit. However, it is possible to have pirated CD+G’s as well. I have seen pirated off-brands like “Dangerous” and “Sweet Georgia Brown” quite often on eBay for sale. If you see an entire set of 50+ disks for $30……well you know what they say about “if it seems too good to be true…”

  8. Liz in LA says:

    I presume a venue would still have to pay ASCAP/BMI fees on top of the monthly DigiTrax fee in order to be fully legit, right?

    • Steve Hess says:

      The ASCAP/BMI fees are generally the responsibility of the venue, not the entertainer. Whether you stream the music or use disks I don’t think it would make any difference in that regard. The venue still needs to pay those fees.

      • Liz in LA says:

        Thanks for the fast reply Steve! I run a small nonprofit community center and we are exploring the possibility of adding some karaoke nights as a profit venture to support our work. (We have an amazing space and video and sound equipment on par with some of the dedicated karaoke venues in our areas) But frankly given all the fees and taxes it probably wouldn’t work. Oh well. Anyway I really enjoyed reading some of your posts! Thanks again for the feedback and best wishes for you and your profession. (I love to Karaoke, and appreciate real Pro KJ’s – they me sound so good! 🙂

    • Steve Hess says:

      Please don’t take my advice as lawyerly advice, but I think you will find that it is the way things go.

      That would mean that if you run the center you would likely be responsible for those fees!

      If you know of any regular karaoke venues, please let me know about them!
      https://www.karaokeacrossamerica.com/

  9. I REALLY appreciate this review. Even as a latecomer! I was initially excited to see the introduction of PC Cloud Pro, but I was not too happy about the $199 monthly fee, so I held my breath and money. They seemed to have changed to to $99, which is more reasonable. It’s unfortunate to see low-balling ruin the DJ-KJ industry. I tried to start independently, 7 years ago, but couldn’t compete with people looking for a $100 DJ, believing that it was a fair price to pay – and they’d find that DJ too! I’m trying to re-enter as a KJ first, oldies DJ 2nd, showcasing the Motown sound with the entire Singing Machine library of original Motown tracks issued in the last decade. I’d like to add a more Motown titles, not included in the library, as well as a complete general karaoke library – ALL legit. PC Cloud can make it possible and quicker to do so and $99 makes it a little easier to swallow. I will still buy more Motown CD-Gs as I find them. The plan is an to ATTEMPT rise above the fray of a saturated market of wanna-be KJs and DJs. One side-bar on the monthly fee is, at least its a tax write-off for doing business. But $99 is still more sustainable than $199 a month!

  10. jruder says:

    As much as I am sure some of you will *hate* to hear this, it should be said. First off, I have invested tons of money being legit — even all the way back to vinyl and CD’s for my regular music. And yes, I have a very impressive sound and lighting system. However, the market pressure for a small venue will determine the value of a DJ. With the computers and the new sound and lighting systems (LED and speakers like the QSC) the cost of entry is just too low to keep the prices up in the 200.00 and above ranges for long. And the sad fact is that it just is not that hard to do a decent Karaoke show. I have done large DJ shows, run nightclubs, DJ’d on the radio, run sound/lights for bands etc. Sitting there playing Karaoke music so people can sing while doing a bit of dance music in between is something that I just hire somebody else at 10.00 as hour to do now – and after a few nights they do it just fine. I’m sorry but the 30 people showing up at a small show really don’t care how good of a DJ you are, just “when am I up next and do you have that new song?” To expect the manufactures to *really* care about the fact that we have invested a bunch of money in their product 5, 7 or 10 years ago is simply silly. It is like me complaining that I used to be able to charge 125.00 an hour to install antivirus software for people — it is just too easy for them now. You should have made your money off of your investment all ready, I know I did. Remember when somebody used to pump your gas and the gas station charged more for it? Remember the huge complaints about the quickmarts going to “ruin” the industry? Guess what? They are now on every corner and nobody runs out and pumps my gas. The fact is, the price point WILL change – all the whining about it will not stop that. Either figure out a way to make money at it or change to something else. I am not saying that we should let the pirates get away with it — somebody running illegal should be fined and stopped. But to insist that the manufactures owe some type of moral obligation to artificially keep the entry level high is really just sticking your head in the sand. It is not going to happen and you should figure out a way now to deal with it vs later. I think that some of the ideas presented here are great and make sense. I just don’t think they will happen and I cannot bet my entire business on the manufactures doing the “right thing” – they are going to do whatever can and will make them the most competitive and the most profit. The quicker we come to terms with this reality the better for all of us. I know, I know… but “my customers appreciate the show I put on — they love me and the bars know the value I bring” — Great! that is really awesome…so what are you here complaining about? I will put my show up against yours any day — and you know what? I have no idea whose will “win” — but I can assure you that at the end of the day if you really think bar owners will pay more to get more – week in and week out then I think you have overestimated the business savvy of your typical consumer. Myself, I make my money doing 700.00 – 1000.00 weddings on the weekends and I use the karaoke nights to help sell those. Short sighted? maybe. But it is easier (in my area at least – St. Louis metro) to sell a 1k wedding than to get more than 175.00 for a bar night. All the bitching and complaining simply won’t change that fact.


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