[K-pop's New Revenue Stream] Even Sweeping the World Through Streaming, Only '7 KRW per Song'

65:35 Revenue Split... Creators Receive Only 0.7 KRW
Pro-Rata Model Deepens Revenue Concentration at the Top
Settlement Disputes Amid Wide Gaps in Broadcast and OTT Usage Fees

While copyright royalties have increased, creators' shares have barely grown. Now that streaming is at the center of the music industry, there is a growing outcry that the system allowing works, painstakingly created by artists, to be consumed without fair compensation can no longer be ignored. If the rights of Korean creators are not protected in negotiations with global platforms, the competitiveness of the music industry over the next decade will inevitably be at risk.

◆Music Sells, But Creators Get Little = According to the Ministry of Culture, Sports and Tourism and industry sources on December 15, when a song is played using a monthly streaming subscription, about 7 KRW is generated per play. Of this, about 2.5 KRW is taken as a platform fee, and about 4.5 KRW is distributed to rights holders.

The settlement structure for domestic online music services follows the Ministry's "Regulations on the Collection of Music Transmission Usage Fees." It stipulates that 35% of streaming revenue goes to the platform, and 65% to rights holders. The 65% share for rights holders is further divided: 10.5% to copyright holders (composers and lyricists), 6.25% to performers (singers and musicians), and 48.25% to record producers and distributors. Simply calculated, out of the 7 KRW per play, composers and lyricists receive about 0.7 KRW, and singers and musicians receive just over 0.4 KRW. The remaining 3.5 KRW goes to record producers and distributors. With additional deductions such as payment processing fees, in-app payment fees, and distribution fees, the actual share for platforms and distributors often increases, while the net amount received by rights holders decreases further.

Composer Yoon Ilsang said, "Compared to major overseas markets, the share for creators in Korea's streaming revenue distribution is smaller," adding, "In the long term, both the per-song rate and the distribution structure need to be revised together."

Most domestic streaming settlements use the "pro-rata" method, where the total payments from all users and total play counts are pooled, and revenue is divided according to each song's share of total plays. As a result, the more popular songs account for a larger portion of plays, reducing the share for mid- and lower-ranked songs and entrenching the concentration of revenue among top artists.

According to the International Federation of the Phonographic Industry (IFPI), streaming accounted for about 69% of global recorded music revenue last year. The UK Guardian reported that the top 1% of tracks account for more than 80% of all streaming. In Korea, it is widely recognized in the industry that top chart positions on major platforms such as Melon and Genie account for a significant portion of overall streaming.

◆Need for Creator-Centric Settlement Methods = As an alternative to address these issues, a "user-centric" settlement method is being discussed. Instead of pooling all user fees, each user's subscription fee is distributed only to the artists they actually listen to. French streaming service Deezer officially adopted this in 2023, with major labels such as Universal Music and Warner Music participating.

In Korea, Naver Vibe introduced the "My Money, My Listening" method in 2020, designed so that if a user repeatedly plays a single song, most of the fee goes to that artist. However, this approach has not spread throughout the industry.

A representative from the Korea Music Performers' Association said, "Diversifying settlement methods is desirable, but unless an industry-wide standard is established, there are limitations to its application."

Experts also caution against simple comparisons with overseas cases. In the United States and Europe, rights holders typically receive around 70% of streaming revenue, higher than Korea's 65%, but this is based on relatively high monthly subscription and advertising rates. In contrast, emerging markets have lower subscription fees and paid membership rates, resulting in a smaller overall revenue pool and thus lower absolute rates per play. This is why creator groups argue that, in addition to distribution ratios, the overall market revenue should also be considered.

There are also significant differences in the structure of broadcasting music usage fees. According to the Korea Music Copyright Association, in the United States, ASCAP allocates 57% of total collections to broadcast usage fees, France's SACEM allocates 35%, and Japan's JASRAC allocates 26%, whereas in Korea, the figure is only about 15%. Broadcasters argue that it is difficult to raise rates due to stagnation in the broadcasting industry and a sluggish advertising market, but copyright organizations counter that "even though music is an essential element of broadcast programs, usage fees have been frozen for over a decade" and are demanding improvements.

Settlement disputes are particularly pronounced in the broadcasting and online video service (OTT) sectors. According to the Korea Music Copyright Association, when a song is used once on terrestrial or cable TV, the copyright holder receives only about 0.0007 KRW. The same song used in video-on-demand (VOD) streaming pays 1.4 KRW, and on OTT platforms, 0.051 KRW. Thus, the broadcast rate is more than 70 times lower than VOD and over 2,000 times lower than streaming.

◆The Challenge of Resolving 'Platform Conflicts' at Home and Abroad = In December 2020, the Ministry of Culture, Sports and Tourism approved a revised "Music Copyright Usage Fee Collection Regulation" submitted by the Korea Music Copyright Association, establishing a new rate for music usage in OTT video transmission services. In response, platforms such as Wavve, Tving, and Watcha filed administrative lawsuits, but the courts sided with the government and the association through 2024.

Conflicts between domestic copyright management organizations and platforms are increasingly turning into lawsuits. In 2023, the Fair Trade Commission imposed corrective orders and fines on the Korea Music Copyright Association, finding that it abused its market dominance by overcharging broadcasters for music usage fees, making it difficult for competing organizations to collect fees. Recently, a controversy has erupted over "residual usage fees" worth about 100 billion KRW generated on YouTube, with the Korea Music Copyright Association and the Korea Music Copyright Association for All Music launching criminal complaints, civil lawsuits, and reports to the Fair Trade Commission in succession.

Negotiations with global platforms also remain a major challenge. A representative from a major label said, "With large platforms holding the upper hand in fees and distribution ratios, individual labels and creators are effectively forced to comply." In response, platform operators argue, "Given the massive investments in infrastructure and marketing, as well as the costs of preventing piracy and operating services, the current structure is not excessive."

A representative from the Korea Music Copyright Association emphasized, "We can no longer tolerate the reality in which works painstakingly created by artists are used without fair compensation," adding, "It is our duty as an association to protect the rights of Korean creators in negotiations with global platforms." Experts agree, saying, "Transparency in settlement data and standards, as well as cross-verification between organizations and platforms, are essential to restoring trust."

A representative from a performers' association commented, "An increase in copyright royalties is a positive sign for the industry as a whole, but unless the actual distribution structure is improved, it will not lead to greater financial stability for most creators." The representative added, "Who benefits from the fruits of growth will determine the competitiveness of the music industry over the next decade."