Korean music platforms innovate against fast-growing YouTube Music

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South Korean music streaming platforms are finding innovative ways to compete with YouTube Music that is gaining popularity among local users.

To carve out a niche for themselves, one Korean music platform is set to offer revenue-sharing for cover songs, marking the first of its kind in the industry.

According to sources on Sunday, FLO, a music platform operated by SK square Co.’s subsidiary Dreamus Company, is planning to provide revenue-sharing for cover songs.

The move comes as a strategic response to the increasing dominance of YouTube Music in the Korean music streaming landscape.

Under FLO’s new approach, any FLO subscriber can upload their own cover songs, which will be displayed alongside the original tracks when users search for the song.

FLO will employ a Pay Per Stream (PPS) model to calculate revenue sharing for cover songs.

In contrast, YouTube Music’s PPS is reported to range from $0.0005 to $0.003 per stream and it does not compensate cover song performers.

Dreamus Company conducted an analysis of specific song listening data, which revealed that users who have listened to the original version of a song are six to eight times more likely to listen to cover versions.

This indicates a growing interest among users in exploring different interpretations of their favorite songs.

Meanwhile, Genie Music, a subsidiary of KT Corp., is working to create an ecosystem where anyone can earn money through AI-generated music arrangements.

Last month, the company introduced the AI-based digital sheet music arrangement service called genie.Re:La. The service allows users to upload audio files, which the AI system then transforms into sheet music that users can further edit.

Currently, genie.Re:La has generated over 18,000 new sheet music arrangements. The service plans to introduce a feature that allows users to instantly arrange songs in various styles, including classical, with just one click.

Genie.Re:La aims to establish a transparent revenue-sharing system by the end of the year, allowing users to release and profit from their arranged music while also compensating the original creators.

NHN Bugs, operated by NHN Entertainment, has also turned user-curated playlists into a new source of revenue.

The company’s “essential;” playlists, curated by users often referred to as Music PDs, have gained popularity for offering a selection of music tailored to specific moods, complete with stylish logos and background visuals.

Music PDs can earn points that can be converted into cash, music subscription vouchers, and other rewards based on their activity. Since its establishment in June 2019, “essential” has gathered over 1.2 million YouTube subscribers.

The race among Korean domestic platforms to discover new revenue streams is closely tied to the rapid growth of YouTube Music in the country.

According to data from big data platform MobileIndex, YouTube Music’s monthly active users (MAU) reached about 6.04 million in August, up 30 percent from a year ago.

During the same period, Melon’s user base decreased from about 7.33 million to 6.77 million, while Genie Music and FLO also saw declines, going from 3.57 million to 3.22 million and from 2.53 million to 2.1 million users, respectively.

However, Korean platforms still maintain a higher percentage of loyal users compared to YouTube Music. Among all application users in August, Melon had the highest proportion of users who had used the app at least once a month for the past year at 33.7 percent, followed by Bugs (33.1 percent), FLO (30 percent), and Genie Music (26.7 percent). YouTube Music ranked sixth at 20.9 percent.