Following a move to collect copyright royalties for background music in 2002, the recording industry is taking another big step: Safeguarding copyright of videos at karaoke venues.

Karaoke venues in China pay royalties to the Music Copyright Society of China, the copyright management collective for musicians.

However, the recording industry raised another issue this year that music videos used in karaoke venues should also be subject to copyright dues.

At least 49 recording companies sent legal notices to about 12,000 karaoke venues across the country in March this year. The notices demanded karaoke venues stop using copyrighted music videos and pay damages.

Some karaoke venues compromised, but most do not. A few cases made it into court.

On the one hand, many karaoke venues believed they had already paid, because the Music Copyright Society collects money from them annually to pay copyright holders.

On the other hand, the notices did not provide an accurate standard of how the compensation should be calculated.

According to Qian Jian, the legal adviser to a karaoke venue in Beijing, the notice said compensation would be calculated based on the size of the karaoke venue and the number of rooms available.

Many karaoke venues worried that they might be overcharged.

According to earlier judgments on a few similar lawsuits, the accused karaoke venues were asked to pay compensation of 100,000 yuan (US$12,000) for each music video.

If the compensation is calculated this way, karaoke venues fear they would suffer huge losses. Karaoke venues usually would have thousands of songs in stock and many of the music videos played are transformed directly from video recordings.

More importantly, the recording industry has not indicated what they will do about the royalties of music videos in the future.

If karaoke venues compromise now, they may have to pay much more.

"Karaoke venues will also pay business taxes, about 23 to 25 per cent of their revenue. If each recording company asks for 10,000 yuan for each music video, karaoke venues are left with only one way to go - shutting down," Huang Shiqiu, head of Guangzhou's entertainment business association, told the Nanfang Daily.

In summer, 30 karaoke venues in Shanghai countersued the recording industry and their lawyers, claiming damages to their reputation.

The lawsuit has been accepted by the Shanghai Second Intermediate People's Court.

The plaintiff demanded 1.01 million yuan (US$122,000) in compensation, both for the damage to the reputation of karaoke venues and for the decline in business after the original notices were delivered in March.

So far, the lawsuit has not been tried.

According to Wang Ju, secretary-general of China Audio & Video Association, lawsuits relating to the dispute have ended up with recording companies as the winner in nearly all cities except for Shanghai.

With accurate names of the music videos given, the court tended to regard these music videos as cinematographic works under the protection of Copyright Law and thus rule in favour of recording companies, insiders said.

But according to a report by the China Youth Daily, an anonymous official with the National Copyright Administration pointed out that there is still a lack of legislative authority to collect copyright royalties for music videos from the whole karaoke business in China.

The amended Copyright Law, effective in 2001, stipulated that music broadcasted in public is subject to royalties or permission from copyright holders. There was no mention of music videos. Insiders point out that China's copyright protection stepped into a new stage that year.

Before the amendment of the Copyright Law, it was totally free to broadcast background music in stores, restaurants and entertainment venues, on airplanes, trains, television and radio.

"Many stores didn't know it was a duty to pay for music they broadcast," Fang Fang, a staff member at the Music Copyright Society, told the Xinhua News Agency.

Starting from 2001, Beijing businesses have begun to pay for background music they broadcast.

The capital's 63 hotels alone have paid at least 100,000 yuan (US$12,000) to the society for the copyrighted music they used as background music in 2001.

At present, the society manages copyright of more than 60,000 songs and has at least 1,700 members.

(China Daily 10/11/2004 page5)