Melody karaoke bar operator on Tuesday afternoon became the first of such operators facing legal action to reach an agreement with the two law firms hired by 49 recording companies, sources with the law firms said Thursday.

Melody, one of the largest Beijing-based karaoke operators, promised to compensate 360,000 yuan (US$43,373) for playing music videos at three chain bars in the past years, said Chen Xiaoming, deputy manager of the Melody.

The two Beijing-based law firms have started to send letters to 12,000 karaoke bars across the country, demanding millions in royalty fees for illegally using music videos, which has sparked serious disputes among Chinese karaoke operators across the country.

Many karaoke operators argued that they had paid music royalty fees through the China Music Copyright Association and need not to pay extra fees for the videos that accompany the songs.

Some operators accepted that they should pay for music videos, but they found the demands of record companies too expensive and unacceptable. Most of them said they would be out of business if they paid fees according to demands by the recording companies.

"After receiving the letter, Melody expressed its active attitude for the reconciliation. We reached an agreement on the whole on March 10, and discussed the details in the past days," said Sun Jianhong, lawyer of Yingke law firm, one of the two firms.

"We have considered the differences among the different karaoke bars across the country and demanded different one-time compensations according to their positions, sizes and operation situations, from 7,000 yuan to 120,000 yuan for one bar," said Sun.

(Xinhua News Agency March 26, 2004)