New rules coming on music royalty payments

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New rules coming on music royalty payments

The government is planning to revise laws to help singers, composers and publishers get a bigger slice of the pie from music sales. Music streaming services are fighting the move, saying Korea’s consumers will suffer - and foreign competitors will benefit.

Last August, Minister of Culture, Sports and Tourism Do Jong-hwan promised revisions to Korea’s music sales and distribution laws during a public question and answer session held on the anniversary of President Moon Jae-in’s 100th day in the office.

“Today, 60 percent of revenue from music streaming goes to the song creators, only 10 percent of which goes to composers and lyricists and six percent to singers,” Do said during the talk. The largest proportion, 44 percent, goes to the song’s publisher, usually a talent agency. “To guarantee their livelihoods and support the artists’ creative work, we will reduce the inequality in the revenue model.”

Recently, the Korea Music Copyright Association and other organizations promoting the rights of music copyright holders co-submitted a detailed proposal to revise revenue distribution to the Culture Ministry. It demanded that 73 percent of total streaming revenues go to creators, with singers, composers and publishers taking seven, 12 and 54 percent respectively. This would leave music streaming services with only 27 percent.

The organizations also called for the maximum discount on combined download and streaming subscription packages to be lowered from 50 percent to 25 percent.

Streaming services are fighting back, arguing that they would have to charge customers more for subscription services to ensure their own current profit levels if the government puts the revision into effect. Services like Melon, which has 6.6 million users, and Genie Music, with 2.04 million users, may raise monthly subscription fees for unlimited streaming and download plans from the current 10,000 won ($9.33) to over 30,000 won.

That suggests the new model, rather than helping song creators, could leave them worse off if consumers stop accessing streaming services because of their expense.

“The proposed revision intended to advance creator rights will ultimately hurt the creators as well as consumers,” read an announcement published last Monday by the Korea Internet Corporations Association, whose members include Genie Music.

“It’s unfair for music streaming services to deal with declining profits instead of copyright holders when we have to fight with foreign music streaming platforms like Apple as well,” lamented an employee at a music streaming service.

The music streaming services fear that the new model may drive customers to foreign alternatives like Apple Music and YouTube Red, which do not have to comply with domestic government regulations on sales distribution. YouTube is not even categorized as a music streaming platform as it offers video services as well.

Google, which operates YouTube, negotiates distribution of music sales separately with the songs’ copyright holders. Apple Music distributes music usage fees to copyright holders in accordance with Apple’s global standards, rumored in the industry to be less than a third of what Korean music services dole out.

Consumers are also worried about music service fees getting pricier. “We cannot exclude consumers when debating improvements to the music usage fees,” said Han Seok-hyun of Korea’s YMCA, which acts as a civic group on various issues, at a public hearing on revisions to music usage fee regulations in February. The Culture Ministry plans to announce new regulations on music sales distribution by June.

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