Kakao, BPM at odds over unfair Melon distribution fees

Logo of Kakao Entertainment [KAKAO ENTERTAINMENT]

Kakao Entertainment, the operator behind Korea's major music streaming service Melon, and K-pop agency Big Planet Made Entertainment are locked in a battle over music distribution fees, with the agency claiming that Kakao favors its affiliates.

The K-pop agency representing artists such as Lee Moo-jin and girl group Viviz alleges that Kakao Entertainment's Melon offers cheaper music distribution fees to Kakao affiliates.

“We have acquired evidence that Kakao Entertainment charges discriminatory fees for Kakao affiliates and have filed a report to the Fair Trade Commission [FTC],” Big Planet Made Entertainment said in a statement on Monday. “If needed, we are reviewing to fully disclose the evidence for everyone to see and hear.”

The agency added that it requested the termination of its the music distribution contract after discovering the malpractices, to which Kakao Entertainment refused.

“Complaints have been raised by the domestic music industry over the dominant position of the major platform operator Kakao Entertainment and its expensive distribution fees, but it was difficult to bring the matter to the spotlight considering the company’s influence over the market,” Big Planet Made Entertainment said. “However, we have confirmed its discriminatory actions and cannot stay silent. Therefore, we ask the FTC for judgement and will assert our rightful rights through publicity and legal means.”

Kakao Entertainment refuted the agency’s allegations, stating that no “unfair advantages” were given to its affiliates.

“Kakao Entertainment and Big Planet Made Entertainment formed a music and content distribution contract in October 2021 and it is still valid,” Kakao Entertainment said. “However, the agency is claiming that the contract should be revoked based on falsehoods. Details into each contract that the company established with the agencies are confidential except for the parties involved, so Big Planet Made cannot know the specifics of other agencies’ contracts.”

Kakao Entertainment further elaborated that each agency’s contract clauses and distribution charges are different, taking into account factors such as the provision of advance investment, the contract duration, the offset rate and the valuation of the artists’ music titles.

“Whether the agency is an affiliate of Kakao is not part of our criteria to calculate the distribution fee,” Kakao Entertainment emphasized.

“If Big Planet Made Entertainment continues to demand contract termination and make claims that contrary to the facts, we plan to explore all possible courses of action.”

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]