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

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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Comments

  1. Robert Balchunas says:

    for all you stupid DJ’s who think that since you can download things so you have it right away for your computer knock it off!!!!! Spend money and buy your disc’s. Work like all us older crews have. This is why someone like me who has been a DJ since 1996, has to take a hit on gigs cause of you wanna be’s out there. Just cause you have some songs regular or karaoke doesn’t make you a Dj of any kind!!!!!

  2. Andy Bramwell says:

    Cowboys are hurting legitimate operators down under also. I have competitors using downloaded music – either obtained by file sharing or purchased from itunes. Neither are legal here in New Zealand, itunes implicitly states that music purchased from them is NOT for commercial play. These operators are selling their services for lest than half the average pro fee and often being highly unprofessional in their performance (drunken behavior, inappropriate dress, bad song choices etc).

    On the up side, I only have to buy compilation hit disks monthly (or less) as most of my clients have either conservative tastes and/or like my extensive back catalogue digitized from records (which nearly fill my garage!). Not sure about other countries, here we can play music owned by the client and the onus is on the client to prove ownership, however, we have to delete the track after the gig – otherwise we would be stealing it.

    Always ensure the venue you are playing at has an up to date performing rights site license and pays the appropriate licensing authority for the privilege of having prerecorded works played for their customers. Or if possible, register yourself and build the licensing fees into your hire cost (We have both options here). The other thing we have to do here is keep our personal music for home enjoyment separate from our pro catalogue – due to different license privileges and to prevent attracting fringe-benefit tax from using business tools for personal benefit.

    Cheer folks
    Andy
    29 years full-time experience. Bose series ii, Mac Pro, Ableton Live 7, x session pro, xbox 360 controller.

  3. Finally! I’m so tired of losing shows in my area to these KJs that use the illegal drives. I started karaoke in 1989 and made a minimum of $350 per show and now it’s difficult to get more than $150. I recently lost a regular show to an $80/night KJ because he had more titles (not better titles, more titles) on a hard drive. I have stopped marketing karaoke to bars because it is no longer worth my effort at the pay in this area.

    Kudos to Sound Choice and Stellar for their progress. I’m glad Limewire is getting the axe too.

  4. Awesome that someone is doing something about this. You should really write up a full story on the lawsuit against the Karaoke Kandy Store. I keep seeing these ads and the way it is written sounds like they are associated with Dan Stearns. Is this true?

  5. kudo’s to you Chris Michaels. I am tired of losing business to kj’s that will do it for a case of beer too. How the heck can I compete with someone who has every karaoke song on a laptop and never bought any of the disc.

    My friend contacted the Karaoke Kandy Store about a month ago and from what I have heard from more than one person is that they boldly said that they had a digital license to sell over 70,000 dj and karaoke songs that they were offering for a ridiculous deal. I even contacted the RIAA who represents all the actual artist and they even said that it did not sound right based upon the prices it was being sold for. Go figure.. Maybe Soundchoice is wrong and that company does have a license. Either way, my friend did not buy from them because she smelled too much fish, lol.

  6. Aubrey Moore says:

    There are two people in Seagoville TX that has all the karaoke sewed up. They don’t own any karaoke of their own. They have downloaded all their karaoke. One man host hes karaoke twice a week at Wendy’s in Seagoville. Wendys doesnot pay him but offer him free food and drinks. He has quite a following since Wendys has a dollar menu. And wendys offer every one one free drink. I have contacted Wendys and said they can be responsible for a lawsuit. That they should look at the KJ’s CDs and see that they are only copies. I have noticed that he has 6 counterfit cds.
    Low quality ink on the face. Plus their are tracks on the back of the Cd. On an original there are no tracks. Both men have put me out of business. and others in the area that are trying to host karaoke legally.

    Aubrey

  7. Ken Sykes says:

    Sorry Chris, gotta disagree with you on that one. Where you get your music dosen’t have anything to do with it. Problem is, everybody thinks they can buy, or get some music and be a DJ. It’s an easy way to make some money, buy some music and play it for money. So,,,,, everybody does it. Don’t have to be a rocket scientest or go to law school. Just play some records. Now you have 2 DJs on every block,the market is flooded and the price goes down. All a matter of supply and demand.

  8. Ken, what Chris says is right on the mark, where you buy your music from is everything, the less that you have invested in your business the cheaper you can sale your services, be able to recoup your investment and start turning a profit. Usually kj’s going that route have subpar pa’s, lights, etc…… People like that hurt the kj’s that actually take pride in their shows with nicer systems.

  9. Janet Valenti says:

    I need to contact Brian Pyler about purchasing discontinued Sound Choice disc. I do not know how to reach him.
    Btw I have a lot of friends that sing at karaoke shows and they all want to go to the shows that have a huge selection. As far as I am concerned I just like to go to the shows that have good sound and can play my disc. Hint, only the legal ones can play my disc.

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