OTT then Broadcasters... Endless Music Royalty Conflicts [Cha Minyoung's PostIT]

Conflict Continues Between PP Association and Eumjeo Association Over Music's Contribution to Broadcasting
Individual PP Negotiations After Collective Bargaining Breakdown
Controversy Over Legality of Standard Contract

[Asia Economy Reporter Cha Min-young] #. Following online video service (OTT) companies, individual small and medium-sized broadcasters, known as broadcasting channel usage business operators (PP), continue to have conflicts with the Korea Music Copyright Association (KOMCA), a music copyright trust management organization, over music copyright usage fees. Meanwhile, the Ministry of Culture, Sports and Tourism, the competent authority, remains a bystander, increasing the concerns of small and medium-sized PPs.

The PP Council under the Korea Cable TV Broadcasting Association and KOMCA had settled music usage fees through collective negotiations until 2017, but since then, they have faced difficulties reaching agreements and have continued their conflicts. After the expiration of the existing contract, a new contract was supposed to be signed from 2018, but both sides are at a stalemate. After the collective negotiation broke down in October last year, KOMCA issued notices to individual PPs demanding individual negotiations.

Accordingly, KOMCA has proposed a 'standard contract' and is attempting negotiations with each broadcaster individually. In August, they even sent an official letter threatening to file lawsuits if broadcasters did not accept the contract, citing non-payment of music usage fees since 2018.

Joo Ji-won, a lawyer at the Korea Cable TV Broadcasting Association, points out concerns regarding double charging and violations of copyright law and collection regulations in the standard contract proposed by KOMCA.

According to the provisions of the standard contract presented by KOMCA, the scope of programs subject to copyright fee payments is expanded beyond broadcaster-produced content to include broadcasting programs purchased from third parties. Lawyer Joo explains, "This implies an intention of double charging. While copyright fees are already collected based on broadcasting program sales revenue, additional charges may be imposed on the recipients."

He added, "In cases of copyright fee arrears, KOMCA notifies termination and includes civil and criminal liability clauses for copyright law violations to pressure broadcasters. However, this is an excessive clause because KOMCA's collection of copyright fees is based on collection regulations under copyright law, and simply because the usage contract ends, it does not mean the status becomes illegal."

The most controversial part of the standard contract proposed by KOMCA is the introduction of the term 'trust ratio' for musical works. Instead of the previously officially used 'management ratio' in the collection regulations, the trust ratio was included. According to the contract, the trust ratio is the proportion of musical works managed by the association among the domestic music copyright trust rights holders used by the PP.

Lawyer Joo criticized, "The musical works trust ratio does not exist in the collection regulations and is a concept not agreed upon with broadcasters," adding, "The method of calculating the musical works trust ratio excludes the rights of creators who are not entrusted." Hwang Kyung-il, chairman of the PP Copyright Practical Committee, also said, "It should be evaluated based on the extent to which music contributed to the production of broadcasting programs, but all songs are included as the base." The calculation method is a sensitive issue as it becomes a key indicator dividing the total copyright fee scale.

The complacent attitude of the Ministry of Culture, Sports and Tourism, the competent authority, is also cited as a problem. The ministry told the PP Council, "It is natural to collect fees only for songs managed by trust organizations," while also requesting broadcasters to actively express their opinions. They have also asked for proposals on solutions related to the management ratio.

However, from the perspective of small and medium-sized PPs struggling with poor sales, waiting only for collective negotiations between the PP Council and KOMCA deepens their concerns. Due to confidentiality clauses related to contracts amid pressure to use copyrighted works, small and medium-sized PPs lacking legal personnel find it difficult to respond proactively to copyright issues. The PP Council plans to file a complaint with the Fair Trade Commission against KOMCA if the problem remains unresolved.