Internet karaoke gets serious

By Rachel Rosmarin

updated 8:38 p.m. ET Aug. 2, 2006

BURLINGAME, Calif. - Technology changes, but popular taste doesn't. Everyone loves a talent show, which is why audiences tuned into the Major Bowes Amateur Hour radio show in the '30s and why they're watching “American Idol” today. Now a crop of entrepreneurs want to move the talent show from the small screen to the computer screen.

The Internet already serves as an unruly gong show: Would-be stars can put their performances up on sites such as YouTube or GarageBand.com and hope that someone, somewhere notices. In a few cases, that's even panned out, bringing a tiny bit of fame, and very little money, to the new cyber-celebrities.

But startups KSolo, Bix and SingShot — which opened the doors to its virtual Karaoke club Monday — aim to create sites where performances are evaluated and the cream rises to the top.

All three sites ask people to sing along, Karaoke-style, into their computer microphones. Listeners rate their favorites. At KSolo and SingShot, only vocalists are eligible to share renditions, but at Bix singers, lip-synchers, dancers, comedians and artists are welcome to show off through their Web cams.

One challenge facing these sites is that, unlike YouTube, they’ve taken the legal high-road: Users cannot upload copyrighted music or video. This means they’ve spent months wrangling with music publishers such as EMI, Warner Music Group's Warner Chapel and Sony BMG for lyrics and music licenses, and with Karaoke library companies such as Songdog and Soundchoice for rights to instrumental tracks.

“It takes resources to navigate those licensing waters,” says SingShot CEO Ranah Edelin, who relied on his background negotiating content licensing deals for RealNetworks' Rhapsody music service.

If they didn't make nice with the publishers, the startups could be liable for up to $150,000 per song, according to Holland and Knight copyright attorney Edward Naughton. “Since these companies are encouraging people to manipulate copyrighted works, they’ve got to go the old-school route of buying licenses,” he says.

The current tally: Bix has 1,000 songs, KSolo has 4,000, and SingShot launched with 2,500. That's the rough equivalent of a standard night club Karaoke catalog, but they all promise more are on the way. Each site features tunes by the Beatles, but none contain recent radio hits such as Kelly Clarkson’s “Since U Been Gone.” Bix’s current catalog is quite small, and doesn’t even contain perennial Karaoke favorites like the Righteous Brothers. Apple Computer's iTunes store, by contrast, sells 2 million songs at 99 cents each.

While these deals are a boon to the music companies’ profit — they represent a new revenue stream based on inventory they already have on hand — they’re a hardship on the startups who must spend time, and money they haven’t yet earned, negotiating for as many song rights as possible.

Video-upload companies like YouTube and Google's Video search product, however, escape buying licenses from publishers. If their users upload copyrighted works, the companies are betting that they'll be protected by the Digital Millenium Coypright Act, which stipulates that as long as they don’t encourage or profit from infringement, and agree to take down infringing videos, they aren’t liable. The Recording Industry Association of America has already begun serving users of sites like YouTube with “cease and desist” letters, but thus far hasn’t targeted YouTube itself.

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