[K-pop's New Revenue Source] Toward the Era of 1 Trillion Won in Royalties: Reshaping the Global, Digital, and Regulatory Landscape

Outlook for China, the US, Europe, and Southeast Asia
IP, Finance, and Fandom Drive Long-Term Revenue Models
AI, Data Integration, and International Cooperation Remain Key Challenges

Image to aid understanding of the article. Pixabay

Changes in overseas markets are considered major factors that significantly shake up the copyright revenue structure, with China being a prime example. Amid expectations of an easing of the Korean Wave ban, music distribution through platforms such as Tencent Music and NetEase Music is recovering, and streaming revenue is steadily increasing.

In China, streaming revenue is typically split 30% to the platform and 70% to rights holders, with a portion of the record label's share going to composers, lyricists, and singers. Since 2017, the Chinese government has gradually strengthened regulations by eliminating exclusive contracts for major platforms, restricting advance payments, and expanding fair use. In 2021, the State Administration for Market Regulation (SAMR) ordered Tencent Music to terminate exclusive licenses with major record labels. In 2022, the "Internet Information Service Algorithm Regulation" was implemented, introducing greater transparency in recommendation algorithms and establishing content responsibility standards. While risks such as copyright infringement and delayed settlements remain, it is assessed that as regulations are further refined, the proportion of legal streaming and the rate of revenue recovery are likely to increase together.

The United States, the world's largest music market, has a diverse range of copyright revenue streams beyond streaming, making it an especially important market for K-pop. The International Federation of the Phonographic Industry (IFPI) analyzed that the U.S. continued its moderate growth in 2024, driven by an increase in paid streaming and a recovery in video platform advertising revenue. A key feature is the "portfolio structure," in which a single hit song expands into radio, Shorts, podcasts, live performances, and brand collaborations, simultaneously generating copyright, performance, and publishing revenues. The American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI) are also working to enhance transparency by introducing online portals and dashboards that allow for more detailed verification of settlement details and usage data.

Southeast Asia is the region with the highest growth rate in K-pop consumption. In countries such as Indonesia, Thailand, and the Philippines, streaming revenue accounts for around 90% of the overall music market, with annual growth rates remaining in the double digits. In Indonesia, for example, streaming revenue in 2022 increased by more than 36% compared to the previous year. However, subscription fees are low-149 baht (about $4) per month for Spotify in Thailand, and $3-4 in Indonesia and the Philippines-so the per-stream rate is inevitably lower than in Korea or the United States, even with the same number of plays. Nevertheless, Southeast Asia holds significant strategic value as a hub for user-generated content (UGC) consumption and fandom expansion via YouTube and TikTok, as well as a gateway to secondary and tertiary revenues such as world tours, online concerts, and merchandise sales.

Europe is clearly moving to reform its settlement structure. Copyright organizations such as SACEM in France and PRS in the UK are advancing data-driven settlement systems and expanding services that allow members to check their music usage and settlement data in greater detail. The EU's Digital Single Market (DSM) Copyright Directive has strengthened transparency by requiring online platforms to provide specific usage and revenue information to rights holders and organizations. Some European streaming services are piloting user-centric and artist-centric settlement models to mitigate the concentration of revenue on top tracks, aiming to more accurately reflect actual listening behaviors. This trend is expected to have a long-term impact on K-pop, a genre with strong fandom-driven consumption.

In line with changes in the global market, companies are accelerating their strategies. Fandom subscription services, paid memberships, live concert VODs, artist documentaries, global brand collaborations, and IP expansion models such as webtoons, games, and dramas have already become core pillars of entertainment company performance. Major agencies like HYBE, SM, and JYP are building long-term revenue structures by bundling fan platforms, character merchandise, and live performance videos. The World Intellectual Property Organization (WIPO) stated, "Effective rights management and distribution systems, along with subscription models in the digital music environment, are key elements in creating a sustainable revenue base."

Image to aid understanding of the article. Pixabay

Funds and securitized products based on copyright royalty cash flows are also rapidly increasing. Global investment firms are acquiring the copyright catalogs of famous artists for billions of dollars, evaluating music copyrights as long-term assets. Hipgnosis, a music copyright investment company, is cited as a representative example of a dividend-based copyright investment model. In Korea as well, platforms for fractional investment in copyright revenue and music IP funds are being launched one after another.

The proliferation of artificial intelligence (AI) and user-generated content (UGC) presents the challenge of fundamentally redesigning the copyright system. As AI generates large volumes of cover songs, remixes, and fan-made content that mimic the vocal characteristics of specific artists, new regulations are needed throughout the learning, creation, and distribution stages. The Ministry of Culture, Sports and Tourism has identified the improvement of copyright systems related to generative AI as a key task and is operating a consultative body to discuss standards for the use of AI training data, compensation systems, and the criteria for recognizing AI-generated works as copyrightable.

Discussions are also ongoing in the private sector. The Pan-Creators Policy Council, which includes music, video, and webtoon organizations, opposes the introduction of text and data mining (TDM) exemption clauses and is calling for the disclosure of AI training data and the establishment of a fair compensation system. Lee Siha, a director at the Korea Music Copyright Association, stated, "Rather than getting bogged down in technical debates, a more realistic alternative is an AI compensation system that distributes a portion of generative AI companies' revenue to creators."

The integration of settlement data and international cooperation are cited as key variables in the era of 1 trillion won in copyright royalties. In Korea, copyright data is held separately by trust organizations, distributors, and platforms, resulting in a fragmented settlement process. Consequently, there have been ongoing concerns about omissions or delays in collecting overseas revenue and the difficulty of externally verifying settlement records.

European copyright organizations have built integrated IT infrastructure to manage broadcast, streaming, and performance data within a single system. Organizations such as SACEM and PRS systematically manage usage and settlement results through their own data hubs and online portals, while global record label organizations are improving metadata consistency through repertoire data platforms. In a recent report, the Asia-Pacific Economic Cooperation (APEC) Intellectual Property Rights Experts Group (IPEG) recommended, "To enhance compensation for creators in the digital environment, data standardization, cross-border information sharing, and transparency in settlement procedures are essential."

International cooperation is also an unavoidable task. Since a significant portion of K-pop copyright royalties are generated from overseas streaming, performances, and broadcasts, it is difficult to improve the recovery rate without mutual collection and distribution cooperation with copyright organizations in the United States, Europe, China, and Southeast Asia. Gadi Oron, Director General of the International Confederation of Societies of Authors and Composers (CISAC), emphasized, "Markets with transparent and predictable settlement systems will gain a competitive edge in the global music industry going forward," adding, "Interoperability of copyright data and joint settlement systems between countries will determine competitiveness over the next decade."