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The Honolulu Advertiser
Posted on: Sunday, April 4, 2010

Karaoke industry out of tune

By Tiffany Hsu
Los Angeles Times

LOS ANGELES In its heyday, booking a room at the Parao Karaoke Club in Koreatown was tougher than, well, 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, live 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, like many others these days, 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.

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

The karaoke machine was already falling from grace. It was voted by consumers last year to be the world's most irritating gadget, even ahead of mobile phones and alarm clocks. The contempt may have translated into off-key sales for sellers like the Singing Machine Company Inc., where revenue has slid more than two-thirds in recent years to $31.8 million.

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 have it.

"In the beginning, karaoke was kind of a gimmicky thing," said Peter Parker, publisher of Karaoke Scene Magazine. "But it's worked its way into all the cracks in the culture."

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 Inc.

Video games offer many more ways to enjoy sing-along. With the "Karaoke Revolution" game, singers can customize their own avatars, or animated figures, as well as the stage they perform on. The "Rock Band" series has various karaoke versions, including one in which a user can be one of the Beatles.

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

Karaoke companies are also finding it more difficult and costly to get licenses for songs. Record labels are increasingly protective and less likely to sign over the songs' rights without high fees.

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

Sound Choice Studios Inc. 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 Koreatown 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.