Lee Min-kyung from TenAsia sounds the alarm on the rapidly evolving entertainment industry, highlighting unseen issues and alerting to threats and changes surrounding the entertainment world.
The South Korean government is considering a plan to require pre-approval for how music streaming platforms distribute royalties to creators and other stakeholders. However, the largest copyright trust organization in the country has expressed differing opinions on parts of the proposed changes, indicating potential challenges ahead.
Public-Private Committee Reaches Tentative Agreement on Pre-Approval Requirement
According to industry sources on the 19th, the 'Music Copyright Advisory Committee', a public-private partnership for improving the royalty distribution system, has recently drafted a tentative amendment to the 'Music Usage Fee Collection Regulations'. This committee includes the Ministry of Culture, Sports and Tourism, the top five domestic music platforms like Melon, Google, Apple, and four domestic copyright trust organizations including the Korea Music Copyright Association (KOMCA).
The core of this system improvement is that "the government will manage the royalty distribution contracts that music platforms make with organizations representing creators." Organizations like KOMCA typically collect royalties from platforms on behalf of creators and distribute them to rights holders. If the advisory committee's plan is implemented, KOMCA will need to report and get approval for related contracts from the Ministry of Culture, Sports and Tourism.
Previously, organizations like KOMCA reported contract details to the government but did not require approval. The amendment would allow the government to intervene in the distribution ratios. A Ministry of Culture, Sports and Tourism official emphasized, "While trust organizations report contract details to the government, this information is not disclosed to the public."
KOMCA Opposes Amendment, Citing Flawed Revenue Calculation Method
Trust organizations involved in the advisory committee plan to request the Ministry of Culture, Sports and Tourism to amend the 'Music Usage Fee Collection Regulations' as early as next month. This is the first step required for regulation changes. The advisory committee's proposal can then undergo review by the Copyright Commission and approval by the Ministry of Culture, Sports and Tourism to become officially effective.
However, KOMCA's opposition to this plan suggests that the subsequent procedures may not proceed smoothly. KOMCA's disagreement stems from differing views on the 'platform revenue calculation method' in the amendment.
The advisory committee's proposal bases the distribution to creators on 'net revenue' obtained by platforms from consumers. Net revenue is the amount after deducting promotion costs, in-app fees, etc., from the music platform's revenue. Platform representatives argue, "Previously, 65% of music revenue went to creators. However, if the standard is changed according to this plan, even if the total revenue decreases, a larger 68.5% will go to creators." KOMCA Calls for Change in Platform Revenue Calculation Method
In contrast, KOMCA argues that creators' shares should be calculated based on 'gross revenue', which does not deduct promotion costs, etc. They insist on maintaining the existing method of calculating distribution based on gross revenue. A KOMCA representative stated, "Net revenue is about 5% less than gross revenue," and "applying net revenue will inevitably reduce the amount going to creators."
Whether overseas platforms will accept the plan to require pre-approval from the Ministry of Culture, Sports and Tourism for contract details is another variable. A KOMCA representative noted, "Google, which operates YouTube and YouTube Music, keeps all contract details confidential," adding, "They do not disclose the method of calculating usage fees or the exact timing of contracts. If this plan is implemented, Google may completely withdraw its related services in Korea. Creators earn over 100 billion won annually in copyright revenue through YouTube, and this income could disappear."
Lee Min-kyung, TenAsia Reporter 2min_ror@tenasia.co.kr