[MZ Tech] ③ From Fandom to Investment... Music Copyright 'Deokjil Tech'

Favorite Artist Music Copyright Fractional Investment in Spotlight
Simultaneous Profit and Emotional Satisfaction... New Fandom Culture
Rollin, 327.4% Surge in One Week of Reverse Run

Editor's NoteFinancial technology for the MZ generation (Millennials + Generation Z) is both an investment and a culture. While the goal is to make money, when attention rises among peers, everyone rushes to 'prove' their involvement. This is why resell tech (securing scarce items and reselling them at a premium) and fractional investment (multiple people investing together in one asset and sharing the profits) have become popular. We explored the investment methods of the MZ generation, who approach financial technology with ingenious methods unimaginable to older generations.

EXO [Photo by SM Entertainment]

[Asia Economy Reporter Kim Heeyoon] It is truly the golden age of K-pop. News of Korean artists entering the US Billboard charts is no longer even considered newsworthy. The influence of active fandoms underpins the global K-pop craze, with groups like BTS, who have appeared on the stage of the three major US popular music awards, and NewJeans, who debuted in Asia and immediately entered the Billboard Hot 100 chart, becoming a culture loved worldwide beyond Korea. The MZ generation, leading fandoms of the contemporary era, consumes with a sense of ownership beyond mere acceptance of the industry and seeks to grow alongside artists in more areas. This movement has led to so-called 'deokjil tech' (deokjil + financial technology), where fans directly invest in artists' music copyrights.

The music copyright market, emerging as a new investment destination centered on the MZ generation, experienced remarkable growth during the COVID-19 period. Blackstone, the world's largest private equity fund (PEF) manager, invested $1 billion (approximately 1.3 trillion KRW) in the music copyright market, recognizing it as an investment asset alongside real estate and bonds.

Musicow, providing music IP copyright services.
[Photo by Musicow]

Musicow, which introduced domestic music IP (intellectual property) copyright services, adopted the concept of fractional investment to facilitate individual copyright investment. This service operates by the company purchasing music copyrights from original creators and then selling shares of these copyrights to members in portions.

Investors receive royalties generated when the purchased music copyright shares are used in broadcasts, streaming services, performances, and more. The more the music is played on applications like Spotify and YouTube Music, the higher the royalties distributed to investors. This structure is similar to receiving dividends based on stock ownership. Like stocks, investors can also sell their shares to other investors to realize capital gains if the price of the music copyright rises.

According to Musicow, users in their 20s, the core of the MZ generation, accounted for 20%, and those in their 30s made up 27%, nearly half of the user base. Following them were users in their 40s at 26% and those in their 50s at 13%, indicating rapid growth in the middle-aged and older demographics as well.

The MZ generation cited the potential for retroactive popularity depending on timing and artist activity as an attractive feature of music copyright investment. For example, the price of one share of the copyright for Brave Girls' "Rollin" on Musicow rose from 25,000 KRW at the end of February 2021 to 860,000 KRW by the end of October after a resurgence issue, increasing in value more than 34 times in eight months. A Musicow representative explained that the most searched song among registered tracks last year was IU's "Merry Christmas in Advance," which saw a surge in trading volume due to the year-end Christmas season, and the most traded song was EXO's "I'll Protect You" (about 5,200 transactions), demonstrating active fandom participation in fractional music investment.

Recently, past hit songs have gained renewed attention on short-form platforms like TikTok, leading to increased copyright values. "Rumors" by Fleetwood Mac, released in 1977, suddenly became a hot topic on TikTok in 2021, leading to a reevaluation of the song's value.

[Photo by Asia Economy DB]

As the music copyright market expanded due to COVID-19, the active sale of copyrights by global artists has also drawn attention. Folk rock legend Bob Dylan sold his catalog, including 600 songs, to Universal Music Publishing Group (UMPG), a global music publishing subsidiary of UMG, for about $300 million (approximately 390 billion KRW) in December 2020. The music copyrights of British pop star David Bowie, who passed away in 2016, were sold to Warner Chappell for $250 million (approximately 325 billion KRW) in January. This included rights to 26 existing albums and posthumous releases, making headlines.

The legalization of fractional investment, which was previously subject to sanctions, has also strengthened investment stability. In November last year, the Securities and Futures Commission (SFC) under the Financial Services Commission (FSC) finalized the exemption of sanctions against Musicow, opening the path to legalization. Recently, with financial authorities allowing the issuance of security tokens within the regulatory framework, the securities industry expects new types of securities to be launched, and fractional investment companies to be incorporated into the regulatory system. As intangible assets like music copyrights become legalized, it is anticipated that product supply and trading will become more active, centered on securities firms.

The global music market size was $21.6 billion (approximately 28.08 trillion KRW) in 2020, according to the International Federation of the Phonographic Industry (IFPI), marking a 6.9% increase from the previous year. Despite unstable economic conditions, the music copyright market recorded independent growth and is estimated to have grown even more after COVID-19.

A Musicow representative explained, "There is an increasing number of users, mainly from the MZ generation, who want to enjoy owning and sharing the music copyrights of their favorite artists like merchandise." They added, "We will do our best to contribute to the popularization of cultural finance, where culture becomes investment and investment becomes culture, and to the creation of a healthy music ecosystem."