Domestic OTT "Music Copyright Rate 1.5% Excessive... Considering Legal Response"

[Asia Economy Reporter Kim Heung-soon] The government has mandated that online video service (OTT) providers pay 1.5 million KRW in music copyright fees per 100 million KRW in sales starting next year. Domestic OTT companies such as Wavve, Watcha, and TVING have expressed concerns that this could increase user costs through price hikes. Citing issues in the process of setting music copyright fees, they have stated they will not hesitate to pursue legal actions such as administrative lawsuits, indicating that the controversy, which has lasted for several months, is unlikely to subside.

A representative from the domestic OTT industry said on the 11th, following the Ministry of Culture, Sports and Tourism’s approval of the revised music copyright fee collection regulations, "Despite raising legal and procedural concerns, the Ministry of Culture, Sports and Tourism revised the music copyright fee collection standards at an excessively high rate," adding, "This could hinder the growth of new digital media such as OTT and increase consumer burdens through price hikes."

Music Copyright Fee of 1.5 Million KRW per 100 Million KRW in Sales
Gradual Rate Increase Until 2026

On the same day, the Ministry of Culture, Sports and Tourism approved a revision to the music copyright fee rate that OTT providers must pay, based on the amendment proposal submitted in July by the Korea Music Copyright Association (KOMCA), the music copyright collective management organization.

The approved revision introduced a new clause for "video transmission services" applicable to OTT. The music copyright fee rate for OTT videos, where music works are used incidentally, will start at 1.5% in 2021 and gradually increase each year to reach a final rate of 1.9995% in 2026. Additionally, considering the existence of multiple music copyright collective management organizations, a music copyright management ratio was added, reflecting the proportion of music works managed by KOMCA among the total music works used by the user.

Starting next year, OTT providers with sales of 100 million KRW must pay music copyright fees calculated by multiplying 1.5 million KRW by the annual coefficient and the music copyright management ratio. For content primarily using music works such as music entertainment and live performances, the music copyright fee is set at 3.0% of sales. In this case, providers must pay copyright fees calculated by multiplying 3 million KRW per 100 million KRW in sales by the annual coefficient and the music copyright management ratio.

Source: Provided by the Ministry of Culture, Sports and Tourism

OTT Industry: "Decision-Making Process Biased, Initiating Administrative Lawsuits and Other Responses"
Ministry of Culture, Sports and Tourism: "Copyright is Private Property, Creator’s Share Must Not Be Denied"

Previously, KOMCA submitted a revision proposal setting the music copyright fee rate at 2.5% of sales, citing reports published by the International Confederation of Societies of Authors and Composers (CISAC) and contracts with global OTT Netflix. On the other hand, major domestic OTT providers such as Wavve, TVING, and Watcha argued that approximately 0.625% of sales is appropriate, based on the existing "broadcast retransmission service" regulations applied to broadcasters’ internet catch-up services. With the rates proposed by both sides differing by about four times, the Ministry of Culture, Sports and Tourism approved a rate closer to KOMCA’s demand.

An OTT industry representative said, "The media industry including OTT, as well as the Ministry of Science and ICT and the Korea Communications Commission, repeatedly conveyed concerns to the Ministry of Culture, Sports and Tourism that this could hinder industry development, but all were ignored," adding, "The government, which should consider copyright protection, rights, and media industry revitalization together, accepted a significant portion of KOMCA’s claims without thorough review."

They further stated, "Going forward, the OTT industry will conduct legal reviews and initiate response procedures such as administrative lawsuits based on issues including the bias toward rights holders in the decision-making process and the discriminatory application of rates compared to similar services like pay TV."

The Ministry of Culture, Sports and Tourism explained, "The level of music copyright fee rates was decided by referencing existing domestic contract cases and overseas examples, while considering the domestic market situation and the conditions of providers." Furthermore, it asserted, "Copyright is private property as economic compensation for creators’ creative activities. If copyright fees are set too low, it denies the individual share that should go to creators and could constitute an infringement of private property."

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