SEOUL, June 24 (Korea Bizwire) – After months of rumors and speculation, Apple’s music streaming service, Apple Music, has made a big step forward to introducing its services in Korea.
In contrast to the global popularity of music services like Spotify, Deezer, and Pandora, the Korean music market for music sales and streaming is dominated by domestic services like MelOn, Genie, and Mnet.
The Federation of Korea Music Performers (FKMP) said Thursday that it has signed a contract with Apple Music regarding the monthly fees for the streaming service, and agreed on how to compensate performers with royalties upon the service’s launch. The FKMP is an organization that manages the copyrights of Korea’s music performers.
“We’ve signed a contract with Apple Music,” said a FKMP official during a phone interview with Yonhap News Agency. “It’s one of many steps that Apple Music needs to take for the launch of its service in Korea. We can’t disclose any of the details of the contract, including the amount of royalties.”
So far, Apple Music has offered a three-month free trial period upon its launch in a new country. The royalties are usually paid to copyright holders by either a certain percentage of the service’s total revenue or a fixed amount per service subscriber (often the greater of the two).
The contract with FKMP, however, is just the beginning. Before it can officially launch its service in Korea, Apple Music will have to make copyright contracts with other copyright organizations, including KOMCA (Korea Music Copyright Association) and RIAK (Recording Industry Association of Korea), and with other music distributors like Loen Entertainment, KT Music, and CJ E&M.
But the process is not likely to take long, as Apple Music is already negotiating with the organizations, and industry watchers are paying close attention to the potential changes that the new service will bring to the music industry in Korea.
“Apple Music will have to compete with the popular domestic music services, but given its name value, it will have a much more significant impact,” said Choi Gwang-ho, an executive secretary at the Korea Music Content Industry Association. “It’s likely that there will be price competition among the services, which might help lower the overall price that consumers will have to pay.”
Some even anticipate that Apple Music will provide a platform for domestic artists to reach out to an international audience.
However, many domestic music services are voicing concerns.
“As far as I’m concerned, Apple Music is struggling with finalizing the contracts because it’s proposing terms that are different from conventional practices in the Korean music market,” said an official from a domestic music service provider. “It’s trying to employ an exceptional clause to the current regulations on royalty collection, and this could make competition unfair to existing service providers. Competing on price can also negatively affect music creators.”
“For example, when domestic services offer an 8,000-won streaming product at a discounted price of 5,000 won, they still pay the 60 percent share of 8,000 won to copyright holders,” said an official from another music service provider. “But Apple Music offers a wide variety of discounted products, and they calculate the shares based on discounted prices, which ultimately decreases the amount paid to copyright holders.”
By Joseph Shin (email@example.com)