Korean streaming services want musicians to pay for Google's higher fees

Streaming services want copyright owners — musicians and other creators — to take a hit to pay for higher fees being charged by Google. In a meeting held Thursday in Gwanghawmun, central Seoul, they said the intellectual property owners should ..

Panelists from the music streaming market take part in ″The open debate session to solve the in-app payment fee issue″ held on Thursday in Ganghwamun. The event was organized by the the Korea Music Content Association (KMCA) and attended by music services Melon and Genie Music, representatives from the Recording Industry Association of Korea (RIAK), the Federation of Korean Music Performers (FKMP), Seoul YMCA and the Ministry of Culture, Sports and Tourism. [KMCA]

Streaming services want copyright owners — musicians and other creators — to take a hit to pay for higher fees being charged by Google.

In a meeting held Thursday in Gwanghawmun, central Seoul, they said the intellectual property owners should accept the haircut in royalties for the sake of business.

During "The open debate session to solve the in-app payment fee issue," local music companies, copyright organizations and the government gathered to discuss how to maintain the streaming business with Google demanding a 15-percent in-app payment fee since June.

Google's policy has pushed streaming services to raise their subscription prices and led to decreasing number of users, and the only way that companies can survive is if related parties cooperate, music companies said.

The debate was organized by the the Korea Music Content Association (KMCA) and attended by music services Melon and Genie Music, representatives from the Recording Industry Association of Korea (RIAK), the Federation of Korean Music Performers (FKMP), Seoul YMCA and the Ministry of Culture, Sports and Tourism.

"The in-app payment fee increase by Google has left streaming services no choice but to raise our subscription prices," said Shin Ji-yeong, the leader of the music policy group at Kakao Entertainment. Kakao Entertainment owns Melon, Korea's largest streaming service Melon.

"Streaming services, copyright holders and government have formed a committee to discuss ways in which we can minimize the potential damage. We have come up with a tentative agreement but it can't be applied because one organization wouldn't give its consent."

The Korea Music Copyright Association (Komca) is the largest copyright trust organization and manages the rights to over 80 percent of the songs distributed in Korea. Music companies asked that the copyright holders take a step back and share some of the profit so that the music companies can survive the storm, during the committee meetings.

According to Shin, organizations trusted with copyrights, such as FKMP and RIAK, have agreed, but not Komca.

In June, Google started collecting 15 percent fees from music streaming services, and companies have raised their subscription prices by 6 to 15 percent.

Of the streaming revenue, copyright trust groups take 65 percent and distribute it to the copyright holders.

After seven meetings held this year from March to July, participating organizations in the committee agreed to letting streaming services pay the 15-percent fee to Google and giving 68.42 percent of the remaining amount, instead of 65 percent, to trust groups — except for Komca.

The decision of the committee has to be unanimous, which is why the companies are pushing for Komca's cooperation.

Komca insisted that the agreement would decrease the rightful income of creators by over 10 percent, in a statement issued on July 28. Komca did not take part in the debate despite getting an invitation, according to Steve Choi, secretary general at KMCA.

"We understand Komca's side to the story, and that it will be impossible for every single copyright holder to agree on a decision," Choi said. "But this is the chance for us to get together and speak in one voice to urge for fair play. We ask that they think about the fairness of the whole market, not about the benefit that will go to the individual stakeholders."

"Keeping the status quo may seem like copyright holders get more profit, but that will only be in the short term," said Han Seok-hyun, general manager at the Citizen's Mediation Center at Seoul YMCA. "If streaming services cannot cope with the unfair rules, then it may lead to people listening to music less and the disruption of the overall music market."

Streaming companies also asked that the same rules apply to both Korean streaming services and foreign services.

According to the KMCA, YouTube Music pays trust groups not the 65 percent from the revenue but 65 percent from the profit that's left after deducting all the promotion expenses, as opposed to local companies that have to pay for those from their pockets.

"This is mostly due to the different ways in which foreign and local music companies provide their services," said Kim Hyun-jun, director of the copyright industry division at the culture ministry. "But we are aware of the concerns that it may be unfair to Korean companies and we will be looking into the matter."

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]