FBI serves warrants – Karaoke Piracy has taken a big hit from the good guys!

May 14, 2010 by Eric Godfrey

Karaoke Piracy has taken a big hit from the good guys.  One of the most prolific pirates of Karaoke music tracks has been DanSterns@aol.com.  We now know that he is Major League Baseball’s failed prospect,  Bill Bene of California.  His home has been raided, his records from his AOL account have been turned over and he is awaiting charges to be filed by the FBI and LA prosecutors.  The sting operation has gone on for nearly 4 years.   Fines for copyright violations can be anywhere from $750 on the lowest stated amount up to $150,000 for each incident of willful infringement; Trademark Violations can range from $200,000 to $2 million per incident.

Evidence collected shows Bene has sold around 1800 hard drives for a total of $650,000 in sales with over 120,000 copyrighted karaoke tracks on each drive in addition to another 80,000 mp3 music tracks and video tracks.  If the judges threw the book at him as far as fines it would be 1800 drives X 200,000 track X a MINIMUM of $750.  It seems highly unlikely that the judge when it gets to that point will access 270 billion dollars in fines, but that is what it adds up to just for the copyright infringement.  Trademark Violations could add in as much as $4 million  per karaoke manufacturer on the drive (there are about 40 to 50 disc manufacturers on  each drive)

Information listed in a federal search warrant, provided by Special Agent Bryan Willet of the FBI,  explains that Bene sold drives to two separate C-I’s (confidential informants), which was captured on hidden camera.  He also sold drives to individuals working for the two named victims in the case, Sound Choice Karaoke and Stellar Records (Pop Hits Monthly).  The FBI has copies of every PayPal Transaction plus every email conversation with every buyer from AOL.  As far as other records, PayPal, AOL, all banks that Bene used for moving the money and the IRS, have provided copies of all records to the FBI.   Records show $600,000 in transactions since January of 2006 and $650,000 total via the PayPal accounts.  According to the warrant, Bene never reported any of the $650,000 as income therefore never payed taxes on any of the proceeds.  The FBI also has mailing packages and labels complete with forensic analysis and fingerprints linking them back to Bene, proving he used the US Postal Service in the process of his alleged illegal activities.  They also have confiscated equipment for hard drive duplication, computer systems, and have financial records showing purchase of all these items.

The warrant is posted at http://www.USKaraokeAlliance.com/KaraokePiracyWarrant.pdf for anyone wishing to enjoy some interesting reading.

Now that I have given you the straight forward listing of facts on this I would like to editorialize on it just a bit!  This is entirely based on my opinions and no one else’s.  I do speak to the key people at Sound Choice, Stellar, and Chartbuster on a regular basis, but I do not speak for them in any way.

There have been postings on sites such as ourdjtalk.com that Sound Choice is once again beating the good guys into submission.

THEY ARE NOT!

How would you feel if someone stole your life’s work and got rich (if $650,000 in unreported income is not rich – how about well off?),  selling it for a fraction of its value.  This continues to the point that your life’s work is no longer valuable since the market is flooded with nearly free copies.  Sound Choice had about 18,000 tracks on every one of those hard drives.  At about $1.25 per song retail that means that 1800 hard drives were sold (by one person) meaning 1800 X 18,000 tracks X $1.25 per song = $40.5 million dollars in LOST sales (had those people paid for all of that music).  Alarmingly, that is from only one seller and most of those buyers have duplicated the drive into oblivion.  Many of the buyers continue reselling them as their own illegitimate business.  There are probably easily 10,000 of these drives in circulation.

We also need to put this in the perspective of a KJ trying to stay legal and operate with music that has been paid for.  This means those of us who have paid in excess of $100,000 for music are being obliterated by hosts who have made no investment whatsoever.  These illegitimate hosts can afford to do shows for little or no cost.  Meanwhile, all the legitimate Karaoke disc manufacturers are going out of business so all we can get is lower quality karaoke tracks from companies that are probably not licensing the songs properly.  How dare anyone in this industry point fingers at the legitimate karaoke disc companies for trying to stop this in any way possible!

Now, for a bit of a warning to every one who bought a drive illegally (no discs for each song on the drive) and are using that drive or a copy of it to run karaoke shows.  First thing that you need to know is that Stellar is also deeply involved in this FBI case and Chartbuster is getting actively involved with legal actions.  They both have seen the legal course of action make a large dent in the piracy.  You will no longer be able to dump Sound Choice and continue running shows with other Karaoke music.

Most of the drives on the market were bought from Bene (aka DanSterns@aol.com) or someone he sold the drive to, who then duplicated them and started their own resale business.  If you are running a karaoke hosting business on one of those drives, then I personally hope you continue doing this.  The FBI will be turning over all of the names, addresses and contact info for every one of those sales.  Sound Choice, Stellar, and possibly Chartbuster (all of this is pure speculation on my part) will probably now have great information to try to find you.  As people using illegal hard drives or selling them are found, the manufacturers will file lawsuits against them.  They may bargain with the pirates and settle for less in exchange for the list and contact information of all of their sales.   This process over time will divulge most of the illegal drives out there and get all of those companies sued.  If you would like to avoid this, it might be a great time to retire your karaoke business and actually do something that you have legal rights to do.  This is just a thought for you,  if you are not doing business legally!  I think it leaves you 2 choices, get out of the business if you are not legal or start buying music so you have a disc for every track you are using.  Good Luck with whichever route you choose!

One last thought and I know I bore people with my math.  If those 1800 hard drives were duplicated numerous times and all of the business on Ebay and Craigslist with 1000’s of sales were added up I would be amazed if it did not yield over 20,000 of these drives.  Now let’s take ½ of that to be even more conservative and say that at $1 per song, 10,000 drives X 120,000 Karaoke tracks = over 1.2 billion in lost sales.  Now, we all know no one would buy all those tracks, but this is a very conservative estimate as to how many prospective sales have been lost to pure theft.  If this were how you made your living, would you be upset and be trying to stop it!  I will bet that you would.  I personally have been hounding Stellar and Sound Choice for years to get federal officials involved and I owe them an apology as they already had them involved and were waiting for this to happen and could not share that information.  Thanks to Stellar and to Sound Choice and I hope to hear of more actions as all of this unfolds.

By the way, Sound Choice also recently sued  the Karaoke Kandy Store (also doing business as Cheapkaraoke,  LightYearMusic  and many named others aliases?) who was one of the major sellers of illegally loaded CAVS hard drives.  We will do another story on that situation shortly, but, ditto the same math above and future access to buyer information.  Pirates beware!

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Eric Godfrey (14 Posts)

Eric Godfrey
www.starzentertainment.net
info@starzentertainment.net
Highest Customer Service Rating in Phoenix Market – theknot.com – Best of the Knot 2007 & 2008
Voted Best DJ In Phoenix – www.citysearch.com – 2007 & 2008
Voted Best Karaoke show in Phoenix – azcentral.com – 2007 – Starz has hosted the Karaoke at Stadium Club in Chandler for 7 years.
AZ Bride – Voted BEST OVERALL WEDDING VENDOR IN ARIZONA 2006
AZ Bride – Voted Best DJ Service in Arizona – 2006