The Korea Music Copyright Association (Chairman Juga Yeol, hereafter referred to as KOMCA) commissioned a study from EY HyunYoung, one of the largest accounting and consulting firms in Korea, for an in-depth analysis of the domestic and international music streaming markets and published a report outlining its position on the copyright revenue distribution structure for domestic music creators.

According to the data, the size of the domestic digital music market has grown nearly twofold from about $700 million in 2019 to $1.32 billion in 2023, surpassing Japan, which is a representative music market in Asia. In particular, the streaming institutional sector has grown by about 100% over the past five years, driving the overall digital market growth.

However, despite the explosive growth in market size, the share that goes back to creators remains at a low level. In the U.S., 12.3% of streaming revenue is distributed to copyright holders, 16% in the U.K., and 15% in Germany, while in Korea it is only 10.5%. This is 1.8% to 5.5% lower compared to major countries overseas, which is an inadequate level for a country that is home to K-POP.

The issue of low revenue distribution for domestic creators becomes even more pronounced when looking at the overall streaming revenue structure. In comparison with major countries overseas, the revenue share of streaming platform operators is 29.4% in the U.S., 29% in the U.K., 30% in Germany, and 22% in Japan. In Korea, it is the highest at 35%, meaning that the share returned to copyright holders is lower.

In addition, major streaming platforms in Korea have a vertical structure that encompasses production, distribution, and sales, taking more than 83% of streaming revenue. Considering that the copyright holders who actually created the music receive only 10.5% of the revenue, this is an overwhelming disparity.

Despite the very poor revenue structure for Korean copyright holders, government policy continues to focus on alleviating the burden on platform operators rather than protecting creators. A typical case is the 'music copyright usage fee coexistence plan' implemented since 2022, which, despite its name, has been criticized for resulting in a reduction of the share for creators.

The core of the coexistence plan is to exclude the 'in-app payment fees' paid to app market operators such as Google and Apple from the revenue amount used to settle copyright fees from streaming sales. Previously, copyright fees were calculated based on 10.5% of the total revenue, but after the implementation of the coexistence plan, the applicable rate is now applied to the amount excluding the in-app fees.

Copyright holders, who already occupy a small portion of the total streaming revenue, now bear the burden of app market fees, which is why there have been criticisms that this coexistence plan demands unilateral sacrifices from creators.

This measure has been extended again for two years in 2024. While the copyright fee settlement rate remains the same, the benchmark revenue has decreased, leading to a decline in the actual revenue for copyright holders.

In contrast, abroad, systems are being reformed to protect the rights of copyright holders. In the United States, the largest music market in the world, the streaming rate is set to increase to 15.35% by 2027. Since 2018, copyright laws related to streaming have been amended to introduce protective policies for creators, such as strengthening late payment penalties for delayed payments.

In summary, while the domestic music industry has apparently experienced rapid growth, creators are facing a structural issue of not receiving fair compensation. To fundamentally improve this situation, there are calls for significant structural reforms, such as raising the rates of music copyright trust organizations that most creators are members of.

A KOMCA official noted, "As the digital music market continues to grow, protecting the rightful rights of creators is the way to create a sustainable ecosystem," adding, "We will actively respond to the need for rate increases and policy improvements for the rights of copyright holders."

[Photo provided by KOMCA]

[OSEN]