"OTT Facing Collapse, Unclear Collection Standards" Wavve Files Information Disclosure Request to Ministry of Culture, Sports and Tourism

[Asia Economy Reporter Seulgina Jo] "At this rate, domestic online video services (OTT) in Korea are all doomed."

Korea's leading OTT, Wavve, has filed an information disclosure request against the Ministry of Culture, Sports and Tourism (MCST). This comes from the judgment that the OTT music copyright royalty rates announced earlier by MCST are excessively high and that the collection criteria are unclear. The OTT Music Copyright Countermeasure Council, composed of OTT companies, is currently also considering administrative litigation.

According to the industry on the 15th, Wavve requested MCST yesterday to disclose information related to the OTT music copyright royalty rate decision, including the final report, the Copyright Commission review report, and the status report of review committee members. A Wavve official confirmed, "It is true that we filed an information disclosure request."

The OTT Music Copyright Council (OTT Eumdae-hyeop), which includes Wavve, TVING, and Watcha, will hold a related meeting on the 16th. After legal review regarding the bias toward rights holders in the royalty rate determination process and the differential rates compared to similar services, they plan to initiate administrative litigation. It is very unusual for the OTT industry, composed of newly established companies only a few years old, to confront MCST, which holds the leadership in the content industry. This is interpreted as reflecting the judgment that the OTT music copyright royalty rates disclosed by MCST are excessive and fail to maintain even minimal mechanical neutrality among stakeholders.

Controversy over OTT music copyright royalty rates is intensifying inside and outside the industry. The core of the issue is that the rate starts at 1.5% next year and increases to nearly 2% by 2026. This effectively sides entirely with the Korea Music Copyright Association (KMCA), which acts as a collective management organization.

However, legal experts point out that this violates copyright law and raises concerns about discrimination against identical services and double collection. Legally, the same rate should apply to identical services, but the structure differs as the drama Penthouse has a rate of 0.635% or less on IPTV but 1.5% on OTT.

Criticism is also inevitable that KMCA collects additional copyright fees for content whose rights have already been collectively managed through production companies. An industry insider pointed out, "This content maximizes the interests of copyright holders without considering the users' perspective, the universal use of works, or the public interest in contributing to cultural and industrial development."

Currently, MCST cites overseas cases as the background for this rate decision, but this is also unclear. Even within the MCST Music Industry Development Committee, which conducted related discussions, it was lamented that there is no global standard to refer to because the copyright trust structure, rights acquisition procedures, and settlement methods vary widely.

The industry fears that MCST's decision will ultimately lead to increased OTT usage fees and hinder the growth of domestic OTTs. Considering OTT revenue and cost structures, it is explained that acceptance is impossible without unreasonable fee hikes.

Another official said, "While fighting against Netflix, which pays no network usage fees or taxes and is not subject to regulations, this decision shows a lack of understanding of the market," adding, "MCST's decision contradicts the government's 'Digital Media Ecosystem Development Plan,' which aims to create at least five global OTT companies in Korea."

It is reported that related ministries such as the Ministry of Science and ICT and the Korea Communications Commission have expressed concerns about MCST's actions, which go against the government's minimum regulation principle to foster the OTT industry. A KCC official who attended a related seminar on the 9th mentioned, "We visited MCST to ask them to consider OTT industry development, but instead, we were told, 'This is our ministry's work, and if you keep talking, it interferes with our duties.'" Criticism is inevitable that MCST is acting as a lone wolf in a government-wide development plan that requires coordinated efforts among related ministries.

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