Naver Introduces New Royalty Settlement Method: Fees Paid Only for Music Directly Heard

[Asia Economy Reporter Buaeri] Naver is changing the music service 'Vibe's royalty settlement method to a user-centric model called the 'Vibe Payment System (VPS)'. The aim is to address issues such as music streaming manipulation.

According to Naver on the 9th, it has decided to change 'Vibe's royalty settlement method from the current proportional distribution to a user-centric model within the first half of this year. This move by Naver is interpreted as a commitment to solving chronic polarization problems in the music industry, including music streaming manipulation. There have been ongoing criticisms that the real-time charts and revenue distribution structures of major music sites worsen the rich-get-richer, poor-get-poorer phenomenon among singers.

Currently, most domestic music sites adopt a 'proportional distribution' settlement method that distributes the total revenue from users' streaming service monthly subscriptions and advertising fees according to each singer's streaming share. In this method, the monthly subscription fee of a user who only listens to indie bands can end up being allocated to idol singers at the top of the charts.

For this reason, user-centric settlement methods have emerged as an alternative in the US and Europe. This method calculates royalties by dividing the subscription fee paid by an individual user by the total number of plays, then multiplying by the number of times a specific track was played. Although the calculation is complex, it directly connects users and creators, allowing new artists to earn money proportional to the number of times their songs are played.

Lee Tae-hoon, Naver Music Business Leader, said, "This change in the royalty settlement method is a meaningful first step for Vibe in support of artists," adding, "We will continue to develop effective measures through further improvements so that artists, fans, and the service can grow together."

However, many steps remain before the settlement method structure can be changed. First, creators must agree to the change. Currently, the royalty settlement method is decided through consultations between creators and music service providers and approved by government review. Regarding this, a Naver official stated, "Other music sites are also paying attention to this issue, so it will be resolved gradually through discussions."