The Seattle Times, USA - Karaoke industry may be facing the music

http://seattletimes.nwsource.com/html/businesstechnology/2011532299_karaoke06.html
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Karaoke isn't what it used to be. Since hitting a peak in 2002, annual sales of karaoke machines and software have plunged 80 percent to barely $40 million from $200 million.

By Tiffany Hsu - Los Angeles Times

In its heyday, booking a room at the Parao Karaoke Club in Koreatown was tougher than hitting the right note for 'My Way.'

But these days fewer people are coming to bellow their way through Frank Sinatra ditties and Spice Girls tunes. On the weekends, the most popular time for karaoke, room rentals have dropped by a third, owner Randy Chang said.

'People don't have money to celebrate anymore,' Chang said. 'A lot of parties are being canceled. Even advertising doesn't work anymore.'

Karaoke isn't what it used to be. Since hitting a peak in 2002, annual sales of karaoke machines and software have plunged 80 percent to barely $40 million from $200 million.

In 2008, the most recent data available, the drop was the steepest among all music products except for electronic-player pianos.

On top of the slow economy, karaoke clubs are losing some of their bread-and-butter wannabe pop stars and off-duty office workers to living-room video games and online-streaming services.

At the same time, karaoke-record companies are struggling with sky-high licensing fees while the traditional karaoke CD market is being throttled by illegal online downloads.

The industry is in a 'protracted decline,' said music trade group NAMM, formerly known as the National Association of Music Merchants.

Atlanta writer Angela Osiris Maxwell, 32, has abandoned her boxy karaoke machine and cut back on forays to karaoke bars.

Instead, she's created a homespun karaoke haven, hooking up video games to her TV and belting out 'We Are Family' while digitally tracking her performance.

Sometimes, during a game based on the popular singing competition 'American Idol,' she can even earn an insult or two from an animated version of cranky judge Simon Cowell.

Maxwell said she knows she's a lousy singer but 'you don't care because you're having such a good time,' she said.

She's never far from a karaoke outlet. Aside from her Nintendo Wii console, she also runs singalong tracks through her iPod or online through MySpace.

The karaoke machine was already falling from grace. Last year, consumers voted it the world's most irritating gadget.

The contempt may have translated into off-key sales for sellers like The Singing Machine Co., where revenue has slid more than two-thirds in recent years to $31.8 million.

In better times, the Florida company was hauling in $95.6 million. Heavy competition and customers returning the products in droves after the holidays exacerbated the losses.

For what was supposed to have been a flash in the pan, the karaoke phenomenon has had a long run.

Musician Inoue Daisuke created the karaoke machine in 1971 using a car stereo, a coin box and an amplifier. The first karaoke 'box' venue opened in 1984 in a converted freight car in a Japanese rice field.

The 1990s brought a surge in popularity for karaoke, which means 'empty orchestra' in Japanese, not 'tone-deaf' as urban legends say.

Karaoke addicts can now warble on the go with one of the fad's newest manifestations: phone applications such as Karaoke Callout and Karaokini. Karaoke hits also stream on the Internet at sites such as the Karaoke Channel Online from Stingray Digital Group.

Video games offer many more ways to enjoy singalong. With the Karaoke Revolution game, singers can customize their own avatars, or animated figures, as well as the stage they perform on, complete with pyrotechnics.

The Rock Band series has various karaoke versions, including one in which a user can be one of the Beatles. Get On Da Mic focuses on hip-hop, and SingStar has a country edition.

Brooklyn, N.Y.-based journalist Brian Raftery, 34, an avid fan of traditional karaoke who has written a book about it, acknowledges these new video games are tempting.

'If I had been 14 when Rock Band or Guitar Hero had come out, I would probably be completely addicted,' he said.

Still, most experts blame piracy, not pop culture, for crippling traditional karaoke.

Karaoke jockeys, who play their collection of karaoke tracks at parties and bars for a fee, rarely pay $18 for CDs that typically contain only nine songs. KJs, as they are known, carry hard drives that can hold thousands of pirated tracks for $300, said Tom Viveiros, co-founder of the Karaoke Industry Alliance of America

'Piracy is 90 percent of the problem, and it's going to end up being the demise of the karaoke industry as we know it,' Viveiros said. 'There are more venues with karaoke nights than we've seen in 15 years, but with few exceptions they're all stealing music.'

Karaoke companies are also finding it more difficult and costly to get licenses for songs. Record labels are increasingly protective.

'Every karaoke company and major record label I'm aware of has been sued at least once for copyright infringement,' said Viveiros, who also runs Stellar Records in Massachusetts.

All but a few karaoke-label producers have disappeared, crushed by the costs of producing new material amid tanking sales, Viveiros said.

But the industry won't face the music without a fight.

Sound Choice Studios blames piracy for squeezing its sales to under $1 million from $12 million and shrinking its staff nearly 90 percent. So the Charlotte, N.C., company filed more than 75 lawsuits against KJs and bars for alleged trademark infringement and unfair competition.

Club owners are also adapting. Rosen Music Studio in Los Angeles regularly undergoes upgrades, some costing $100,000, to keep its 24 rooms stocked with the newest songs and high-tech equipment as a way to lure people out of their homes.

Submitted by David on 06-04-2010

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