Music Copyright Trading Faces 'Suspension Crisis'... Musicow Says "Not True"

[Asia Economy Reporter Seungjin Lee] Musicow has denied reports that financial authorities have tentatively concluded that its 'copyright royalty participation claim rights' transactions constitute securities transactions, stating that the reports are "not true."

On the 12th, Musicow stated, "Currently, financial authorities are reviewing whether Musicow falls under the Securities Act, and it has been confirmed that no decision has been made yet."

They continued, "To establish a sustainable market, we applied for innovative financial services in March last year to strengthen consumer rights protection. Separately, we are awaiting the results regarding the securities nature under review and will respect and follow the decisions of the review committee," they explained.

Musicow added, "We will prioritize user protection and focus all our corporate capabilities on leading the creation of a healthy music copyright market ecosystem, as well as practicing our corporate philosophy of contributing to the expansion of the K-POP cultural industry base."

The reason Musicow has been embroiled in the securities controversy is that the copyrights bought and sold by investors are not actual copyrights but 'copyright royalty participation claim rights' issued by Musicow. Investors do not own the actual copyrights but have a structure where they claim copyright revenues from Musicow proportional to their shareholding.

Regarding this, the Financial Services Commission recently held the 3rd meeting of the Securities Review Committee to gather opinions on Musicow's business structure. Subsequently, the Securities Review Committee, composed of industry, academia, and government officials, reportedly tentatively concluded that Musicow's service constitutes "securities." If the Securities and Futures Commission ultimately deems it illegal, the service must be discontinued.

Recently, services that divide shares for investment, such as in artworks, Korean beef (Hanwoo), and watches, have been increasing like Musicow, so the financial authorities' judgment on Musicow is expected to affect other investment services as well.