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. Last Updated: 07/27/2016

Songwriters Beat LG in Fight Over Karaoke

Russian songwriters have emerged victorious in a four-year battle with South Korea's LG Electronics.

LG said last week it will tear up a deal with a Korean company that manufactures song discs for karaoke machines without paying royalties to local artists.

But even this concession hasn't saved the company from going to court with singer Alexander Rosenbaum, who is demanding that all sales of the LG karaoke machine be stopped.

Karaoke in Russia means big money for LG.

LG has 70 percent of the local market, which is growing at a rate of 10 percent to 15 percent per year, according to various estimates. The company has sold $125 million worth of karaoke machines worldwide in the last five years.

A spokesman with the Mobile analysis company said the market is dynamic because karaoke machines are frequently damaged and replaced.

"Drunk people sing to karaoke, the equipment gets broken, the children cry and the parents buy new stuff again," the spokesman said.

Things began to go wrong for LG at the end of the 1990s, when Russian songwriters started complaining about the company's karaoke machines.

The discs for the machines carried recordings made by Yanpyan, which had the right to use 760 songs by Russian performers under a 10-year agreement with the Russian Authors Society signed in 1995, said Svetlana Temeshova, a manager with the society.

The society dissolved the agreement in 1998 because Yanpyan regularly violated the procedure for paying royalties of $50 per financial quarter per song, she said, but the company continued to make discs with the music and expanded the number of songs to 2,000.

Songwriters were horrified because their surnames, the names of the songs and even the melodies were often altered, Temeshova said. "We contacted Yanpyan frequently requesting that they halt production of counterfeit goods, but they ignored all our messages," she said.

The authors society then contacted LG directly. When LG declined to negotiate, the authors society asked retail chains to stop selling the discs. A number of agents representing the songwriters won court cases in 1999 and 2000 against stores in Moscow, Samara and St. Petersburg.

LG has dissolved the agreement with Yanpyan and is to sign a contract with Moscow-based Mediokontinental to produce music for the machines, said an LG official who declined to be identified. He declined to give details. Mediokontinental is in talks with the Russian Authors Society for the rights to use 2,500 songs.

Yanpyan was unavailable for comment. The company, however, said in an official letter to the Russian Authors Society in September that it does not recognize the dissolution of the agreement in 1998 and that it has the right to use the works of Russian songwriters.

LG, furthermore, faces a legal battle with Rosenbaum, who is demanding 22.5 million rubles ($710,000) in compensation for using 26 of his songs on the karaoke machines.

The first hearing is scheduled for Dec. 4 in the Zamoskvoretsky intermunicipal court, said Konstantin Rybalov, Rosenbaum's lawyer.