The revenue from music sources going to K-pop copyright holders is shrinking due to the complex distribution structure of the domestic industry. The fact that the group Blackpink Rosé withdrew from the Korea Music Copyright Association (hereinafter referred to as the KMCA) is not unrelated to this issue. There are voices calling for a review of the industry structure to increase the competitiveness of K-pop.
In its “Domestic and International Music Streaming Market In-Depth Analysis Report” released on the 22nd, the Korea Music Copyright Association pointed out that “in Korea, the share of music revenue that goes to creators is lower than in major advanced countries.” According to the report, Korea distributes 10.5% of music revenue generated through streaming to copyright holders. This is 2-5 percentage points lower than in the US (12.3%), the UK (16%), and Germany (15%). On the other hand, the share of domestic streaming platform operators such as Melon is 35%, which is higher than in major advanced countries such as the US, UK, Germany, and Japan (average of within 30%).
Regarding this, the Korea Music Copyright Association stated, “In 2008, platforms such as Melon took 57.5%, while copyright holders only took 5%,” and “It has improved to some extent now, but the platform distribution rate is still higher than in other countries.” They continued, “We are trying to correct this, but it is not easy because it requires agreement between the parties involved and approval from the Ministry of Culture, Sports and Tourism.”
In the industry, some point out that "the problem is that there are many middlemen (rights holders) that music revenue has to go through before it reaches the copyright holders." Mr. B, the CEO of an indie agency, said, "In many cases, overseas artists can receive music revenue by simply going through a publisher (a company that distributes music and manages the artist's copyright), but in Korea, they have to go through a copyright management organization after the distributor." He continued, "The reason that many music revenues go to copyright holders overseas is because the profit distribution structure is relatively simple."
Domestic copyright management organizations include the Korea Music Copyright Association, the Korea Music Performers Association, and the Korea Entertainment Producers Association. According to Mr. B, a certain portion of music revenue must be given to all of them as management fees, so the share that is shared with domestic copyright holders is bound to decrease. He added, "In major advanced countries, copyright management organizations are often only involved in 'performance revenue,' not music revenue."
There is speculation that Rosé of the group Blackpink gave up her membership in the Korea Music Copyright Association because of this distribution fee issue. Rosé pays a fee to a local publisher for music revenue generated overseas. If Rosé receives distribution of music revenue through the Korea Music Copyright Association, she will have to pay another fee to the domestic copyright management organization for the remaining amount after deducting the publisher’s fee. This creates a problem of double fee payment. If she could receive 100 won by dealing directly with Apple Music, her income would be reduced to around 60-70 won if she went through a domestic distributor.
The industry predicts that it will take a considerable amount of time for this problem to be resolved. This is because the interests of entertainment agencies, distributors, and platforms are clearly divided. Person B said, "It is a structural problem that will not be easy to resolve," and "From the perspective of domestic agencies, they are blocked by distributors and cannot even communicate directly with the platforms. Therefore, even if they are dissatisfied with the rates, they cannot raise them.
" Person C, who has worked in the music industry for over 20 years, said, "If agencies try to reduce the share that goes to large distributors like Kakao, they are very likely to end up on equal footing with them," and "Platforms like Melon tend to allocate more banners to large distributors. Since streaming revenue increases when large distributors expose their artists' songs on the banners they are allocated, agencies have no choice but to be cautious
In the industry, there are voices saying that in order to increase the competitiveness of the K-pop industry, the complex distribution structure should be simplified to increase the revenue from music sources going to copyright holders.
