When hosting karaoke in a bar, restaurant, or other commercial establishment, it's important for the venue owner to pay for a license.
Yes, the karaoke host must also have a legal karaoke library. The karaoke music collection must be sourced legally, which means the host is either purchasing CDG discs and ripping them (one-for-one conversion), purchasing a la carte downloads from legal karaoke manufacturer websites, or subscribing to a commercially legal karaoke subscription service like PartyTyme.
That’s only one side of the coin. The other is that the venue must pay BMI/ASCAP for a license to offer karaoke in the establishment.
There is quite a bit of (mis)information floating around the internet and various groups on Facebook about what the cost for the venue is to add karaoke. The truth is, it's not nearly as expensive as many believe. In fact, it's down right affordable, especially considering how much revenue a karaoke night can bring into the venue.
As the image above showcases, Karaoke falls under "Enhanced Recorded Music" subcategory, under "Recorded Music". Venues that offer any of those types of recorded music playback (DJ/Jukebox etc.) already have to pay for a license. Adding Karaoke, albeit a sliding scale based on occupancy, raises the cost minimally.
ACTUAL COST OF KARAOKE: So lets assume an imaginary bar seats 100. Let's assume they regularly play some type of prerecorded music in the background, either from Pandora or other streaming, their PC or iPod, a radio, CD player, or whatever. WITHOUT karaoke, that would cost them $300 a year. Adding Karaoke will cost them $325 a year. SUBTRACT the 300 they are already paying (because they take the higher number) and that means they add karaoke for $25 a year!
That nudge in fees is a drop in the hat, and the venue seeing a return on investment a 'gimme'. So is karaoke "worth it"? Without a doubt, yep.