Nix the Contests!!!
Simply put, in a contest you have one winner and a room full of losers!!! No judging method can ever be perfect, and most are seriously flawed. Karaoke is intended to make everyone feel like the "star performer" during their 3 minute song. Contests shatter that illusion for everyone but the winner. Unhappy customers find other places to frequent.
If you MUST hold a contest, I suggest RANDOM DRAWING from the names of all participants. Coupled with MULTIPLE PRIZES, this method will insure the least number of hurt feelings/lost customers.
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