First Hearing on Administrative Lawsuit Against Ministry of Culture, Sports and Tourism on 13th
Issues Raised on OTT Music Copyright Collection Regulation Amendments
Violation of Equality and Proportionality Principles... Double Collection Problem Also Highlighted
Need for Discussion on Sales Standards Beyond Copyright Rates
OTT-Music Copyright Association Win-Win Council... Multiple Discussions Only
[Asia Economy Reporter Cha Min-young] "The government said it would lead the growth of online video services (OTT)..." The domestic OTT industry, aiming to become the 'Korean version of Netflix,' is struggling due to disputes over music copyright, causing internal frustration. Promised government promotion policies such as tax benefits and the introduction of a voluntary rating system remain distant.
According to the related industry on the 10th, the OTT Music Copyright Countermeasure Council (OTT Music Council), which includes Wave, Watcha, and TVING, will hold the first hearing of the administrative lawsuit filed against the Ministry of Culture, Sports and Tourism at 2:30 p.m. on the 13th at the Seoul Administrative Court. The legal representatives for the OTT Music Council and the Ministry of Culture, Sports and Tourism are law firms Yulchon and Sejong, respectively.
At this hearing, the OTT Music Council plans to point out the problems with the music copyright collection regulation amendment announced by the Ministry of Culture, Sports and Tourism at the end of last year and argue for its invalidation. The amendment mainly involves raising the rate from 1.5% this year to 1.9995% by 2026. The amendment violates the administrative law principles of equality, which requires 'the same rate to be applied to the same service,' and proportionality, which requires 'a reasonable proportional relationship between purpose and means.' The collection rate based on OTT sales (1.5%) is higher than IPTV (1.2%) and broadcaster TV (0.625%). It also imposes additional copyright fees on content whose rights have been collectively handled through producers, making double collection controversies inevitable. The Ministry’s interpretation that OTT and retransmission of broadcast content are different can also be seen as unfair discrimination between media.
Official discussions between the Korea Music Copyright Association and the OTT industry regarding sales standards and other issues are also underway under the Ministry’s leadership but are not progressing smoothly. After the OTT industry filed the administrative lawsuit, a win-win council was formed in May, but for three months they have only confirmed differences in positions. There are numerous issues to discuss, from the specific definitions of sales and subscriber numbers to the problem of double collection, but due to the passive attitude of the Ministry as mediator, no draft mediation proposal has been prepared. Industry expectations for the third working-level meeting scheduled for the 31st of this month are also low.
A Ministry of Culture, Sports and Tourism official from the Copyright Industry Division explained, "There are no procedural defects as opinions were collected from various directions before approving the collection regulations," and added, "Regarding the rates, considering domestic and international cases, it is difficult to set them equally due to the nature of transmission."
Ultimately, there are concerns that the litigation could be prolonged if things continue as they are. If the conflict escalates, it will inevitably become a draining battle for both sides. It is a regrettable situation for the OTT industry, which is facing uncertainty at a time when it should be accelerating its growth trajectory.
On the other hand, the government’s promotion policies for nurturing the OTT industry still have a long way to go. Even the most basic legal support foundation for OTT, the 'Telecommunications Business Act Amendment,' is still pending in the National Assembly’s Science, Technology, Information and Broadcasting Committee. The '2021 Tax Reform Plan' announced last month included adding OTT content production costs to the tax credit targets. Since TVING and Wave have announced trillion-won scale investments, benefits are expected. However, the tax credit can only be applied once the legal basis for OTT is established.
There are also concerns that competition for leadership among ministries could instead strengthen regulations. The Korea Communications Commission recently reorganized its 'OTT Policy Team' into the 'Audiovisual Media Service Team.' The plan is to integrate and regulate paid broadcasting and new media, including OTT, under the 'Audiovisual Media Service Act.' An industry insider said, "It seems like a signal to strengthen regulations," expressing concern.
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