Danny_G,
In my opinion, you are right on the money on that one! 
Here are two very confusing answers to a couple of questions posed on the Kapa Website, and Kapa’s answers:
Question:
Am I allowed to make a copy of my discs for archive purposes?
Answer:
This is one of the most confusing issues involving copyrighted music. It is also one of the arguments often presented by those who want to break the copyright laws. This entire issue revolves around the definition of the class of copyrighted material.
By law, you are permitted to make an archive copy of "Software" class copyrighted material.
However, music
(including Karaoke CDG’s) is part of the "Phonorecord" class of copyrighted materials. Archive copies are not permitted in this class. So, no, you may not make an archive copy of your Karaoke discs.
Question:
May I use an archived copy of a CDG that I broke in my show?
Answer:
No. As explained above,
no such archived copy should have been made in the first place. If you have a damaged disc, you should contact the manufacturer. Some Karaoke music companies have replacement policies that will permit you to replace the damaged disc at less than the full price of a new disc.
For those of you who are interested in learning more about Danny_g’s points, here is the link to Kapa
http://www.karaokeantipiracyagency.com/info-law.html
Regards,
Jon