Richard McGregor of the Financial Times, reports that record companies have found a new target:
[R]ecord companies have launched legal actions against karaoke bars in big Chinese cities, demanding damages for the infringement of their licensing rights by the playing of video discs of their songs.
The karaoke industry represents a fat target for the income-starved labels about 46 per cent of the adult population go to karaoke regularly, according to a 2003 survey by China’s national broadcaster, generating revenues of billions of dollars…
… In taking legal action, the labels have exposed the underdeveloped and in some cases non-existent systems for collecting and paying out royalties for music in China.
The record companies maintain that the bars should pay two fees, as they do in Hong Kong, Taiwan and elsewhere in the world one to the composers, and a second to them as the licence holders of the “public performance rights” for the discs. The amount of money at stake “runs into tens of millions of dollars [a year]”, says Giouw Jui-chian, the regional director in Hong Kong for the IFPI, the global body representing the music industry.
At present, the karaoke bars pay only a token amount based on the number of rooms they operate for the composers’ copyright, which takes no account of how many times a song is played. “They treat it as if it is music played in a hotel elevator,” says Andrew Wu, of Sony Music in Shanghai.
No fee is paid for the public performance rights. However, the record companies have a problem in trying to enforce these rights, as they are not licensed to collect money in China.
As a result, the labels including Sony, Warner Brothers and Universal have sued for damages in the courts, rather than take legal action for the back payment of fees…
…The record companies have won damages in a number of cities, including Beijing, and they are now locked in a tense stand-off with the bars in Shanghai, the country’s largest karaoke market, where two court decisions are pending.
The Financial Times article is here (subscription required).