Naver "Individual Settlement Method to Resolve Music Revenue Concentration Issue"

[Image source=Yonhap News]

[Asia Economy Reporter Buaeri] Naver announced on the 21st that by introducing VPS (VIBE Payment System), a new music payment method promoted in its music service 'VIBE,' the phenomenon of payment concentration caused by manipulation of play counts such as 'music streaming fraud' will be alleviated.

VPS is a 'per-user payment method' that pays money only to the copyright holders of the music listened to by the consumer. It calculates the unit price per song by dividing the individual user's expenditure by their monthly play count, and then determines the copyright fee by multiplying this unit price by the number of times the song was played. Currently, major domestic music sites such as Melon and Genie Music adopt a 'proportional distribution' payment method that distributes the total revenue, which combines users' monthly subscription fees for streaming services and advertising revenue, according to the streaming share each artist holds.

Lee Tae-hoon, Naver Music Business Leader, attended the seminar titled 'Improvement Plans for Music Payment Methods to Develop the Music Ecosystem' hosted by the Digital Economy Forum and revealed the results of a simulation of VIBE's music fees using the per-user payment method.

Lee stated that the VPS simulation results show that the payment concentration phenomenon caused by so-called 'streaming'?where a small number of users endlessly play songs by a specific artist?is resolved. He said, "Regardless of intent, if a small number of users stream a lot, it unintentionally causes significant harm due to payment concentration."

He added, "For artists suspected of abusing (inflating play counts), payments decreased when VPS was applied. Although this is not solely a problem of the payment method, changing the method can alleviate the concentration phenomenon."

In fact, for a famous artist A, payments decreased by as much as 66% compared to the proportional distribution system. Another artist saw a 94% reduction in payments when VPS was applied.

Lee said, "While preparing VPS, we are trying to approach users more transparently," and added, "I hope discussions will broaden not only on how to resolve the payment concentration phenomenon but also on how to secure payment transparency in South Korea's music industry."

This content was produced with the assistance of AI translation services.