Music Copyright Rate Raised to 1.5%, Gradual Increase Until 2026... Domestic OTT Platforms "Considering Legal Action" (Comprehensive)

Ministry of Culture, Sports and Tourism Approves Revision of Music Copyright Fee Collection Regulations

[Asia Economy Reporter Kim Heung-soon] Domestic online video service (OTT) providers will be required to pay 1.5% of their total sales as usage fees for music copyrights included in video content starting next year. For an OTT provider with sales of 100 million KRW, 1.5 million KRW will be set as the music copyright usage fee. Following the government's regulation of music copyright usage fees, domestic OTT companies such as Wavve, Watcha, and Tving have expressed concerns that user burdens may increase due to 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, so the controversy that has lasted for several months is expected to continue.

The Ministry of Culture, Sports and Tourism announced on the 11th that it has revised and approved the music copyright usage rate that OTT providers must pay, based on the amendment proposal for music copyright usage fee collection regulations submitted by the Korea Music Copyright Association (KOMCA), a music copyright trust management organization, last July.

Music Copyright Usage Fee of 1.5 Million KRW per 100 Million KRW Sales
Increase to 1,999,500 KRW in 2026

According to the approved amendment, a new clause for "video transmission services" applicable to OTT was established. The music copyright usage rate for OTT videos where music copyrights are used as a subsidiary purpose will start at 1.5% in 2021 and will be gradually increased annually to a final rate of 1.9995% in 2026. Additionally, considering the existence of multiple music copyright trust management organizations, a music copyright management ratio was added, representing the proportion of music copyrights managed by KOMCA among the total music copyrights used by the user.

Based on 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 (1.0) and the music copyright management ratio. The annual coefficient will also be gradually increased to 1.333 by 2026, similar to the music copyright usage fee.

For content primarily using music copyrights, such as music entertainment or live performances, the music copyright usage fee is set at 3.0% for sales of 100 million KRW. In this case, the copyright fee is calculated by multiplying 3 million KRW by the annual coefficient and the music copyright management ratio.

A representative from the domestic OTT industry commented on the Ministry of Culture, Sports and Tourism's approval of the amendment, stating, "Despite raising legal and procedural issues, the Ministry revised the music copyright collection standards at an excessively high rate," and added, "This could hinder the growth of new digital media such as OTT and increase consumer burdens through price hikes."

Previously, KOMCA submitted an amendment proposal setting the music copyright usage 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 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 claimed by both sides differing by about four times, the Ministry approved a rate closer to KOMCA's demand.

The Ministry explained, "The level of music copyright usage rates was decided by referring to existing domestic contract cases and overseas examples, while considering the domestic market situation and the conditions of providers."

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"

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," and added, "The government, which should consider copyright protection, rights, and media industry revitalization together, accepted a significant part of KOMCA's claims without thorough review."

They further stated, "In the future, the OTT industry will initiate response procedures such as administrative lawsuits after legal review, based on issues such as the decision-making process being biased toward rights holders and the differential application of rates compared to similar services like paid broadcasting."

According to legal advice sought by domestic OTT providers, some in the legal community view the amendment as maximizing the interests of copyright holders without considering the public interest, such as users' perspectives, universal use of works, and contributions to cultural and industrial development.

They also pointed out that domestic OTT providers are being unreasonably discriminated against compared to cable TV, Internet Protocol TV (IPTV), and terrestrial broadcasters providing the same content, violating the "principle of equality," and that this could threaten the survival of domestic OTT providers due to business burdens, violating the "principle of proportionality." According to current music copyright usage fee collection regulations, terrestrial broadcasters are subject to a 1.2% music copyright usage rate, cable TV 0.5%, satellite broadcasting 1.0%, and IPTV 1.2%.

On the other hand, the Ministry of Culture, Sports and Tourism holds the position that copyright is private property as economic compensation for creators' creative activities and is not a regulation. They argued, "If copyright fees are set too low, the individual share that should go to creators will be denied, which could infringe on private property," and added, "Proper payment for domestic content leads to the development of our content industry and also helps the development of the domestic OTT industry, which gains competitiveness based on domestic content."

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