Music Industry Discrimination: Google & Association Harm Domestic Artists?

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South Korea’s Music Industry Faces Copyright Fee Battle as Deadline Looms

A contentious dispute over revisions to music copyright fee calculations is escalating in South Korea, delaying a crucial decision and threatening the stability of the domestic music platform market. The core of the conflict lies in a proposed shift from calculating fees based on “gross sales” to “net sales,” a change fiercely opposed by the Korea Music Copyright association.

The Ministry of Culture, Sports and Tourism initially aimed to finalize the “Amendment to the Collection Regulations for Musical Copyright Royalties” on November 9th, but deliberations have been postponed until January 9th of next year, according to a statement released on Thursday. This delay stems from a failure to reach consensus among stakeholders, with the Music Copyright Association voicing strong objections. “The collection of opinions on the amendment has been completed, and the review of the amendment is carried out by the Copyright Commission,” an official from the Ministry of Culture, Sports and tourism explained. “We have extended the deliberation period by two months as we need time to collect opinions on the amendment.”

Currently, copyright fees for streaming music are determined by the higher of two calculations: multiplying total sales by a set rate (6.25% for performers) and a music copyright management ratio, or multiplying a monthly fee of 420 won per subscriber by the total number of subscribers. Though, the current system is criticized for overcalculating fees, as “total sales” include commissions paid to app stores like Google play and Apple, and also othre associated costs.

To address this, the Ministry proposed shifting to a “net sales” standard, while concurrently increasing the commission rate by 0.33 percentage points. This adjustment aims to mitigate potential revenue loss for copyright holders resulting from the change in calculation basis. While the majority of major copyright organizations – including the Korea Record Industry Association and the Korea Music Performers’ Association – support the amendment, the Music Copyright Association remains steadfast in it’s opposition. The Association maintains that either the commission rate must be considerably higher under the net sales method, or the existing gross sales method should be retained.

Did you know?-South Korea’s music copyright fees are currently calculated using either a percentage of gross sales or a per-subscriber fee. The proposed change aims for a more accurate reflection of platform revenue.

Domestic music platforms are urgently calling for the amendment’s passage, arguing that the current system unfairly disadvantages them. They contend that including app store commissions – which can reach up to 30% – in the sales calculation constitutes discriminatory practice. The rise of YouTube Music is also a key concern,with industry observers noting its competitive advantage stemming from bundled subscriptions with YouTube Premium and potentially more favorable copyright settlements. “Unlike all domestic music business operators who pay copyright fees in accordance with the Ministry of culture, Sports and Tourism’s ‘Music Transmission Usage Fee Collection Regulations’, overseas platforms apply different regulations to their contracts,” one industry official stated.

pro tip:-App store commissions, potentially reaching 30%, are a major point of contention. Domestic platforms argue these inflate sales figures used for copyright fee calculations.

the Music Association acknowledged differing contract terms with YouTube Music, stating, “We have a contract with YouTube and YouTube Music, but since they are both video and music platforms, the contracts (with domestic companies) are different and the rates are bound to be different.” The specifics of these contracts remain undisclosed.

Reader question:-the Korea Music Copyright Association’s income has increased significantly, largely due to YouTube Music payments. this raises concerns about its neutrality in the fee debate.

A representative from the domestic music industry warned of dire consequences if the issue remains unresolved. “The domestic music industry currently has to bear all the costs of discount promotions, so it is effectively competing on a tilted playing field,” they said. “If this is not corrected, the domestic platform will eventually dry up, further reducing the income of copyright holders, and the entire domestic music industry will fall into crisis.”

Adding another layer to the complexity,the Music Association’s copyright fee income has surged in recent years,increasing by 51.3% from 288.5 billion won