Will the OTT Music Copyright Fee Conflict Be Mediated? ... Minister of Science and ICT Hints at Meeting with Ministry of Culture, Sports and Tourism

Minister Choi Ki-young of the Ministry of Science and ICT is giving a greeting at a meeting on the development of domestic online video services (OTT) and content held on the afternoon of the 29th at Dalgaebi in Jung-gu, Seoul. Representatives from domestic OTT companies such as Watcha, Kakao M, Content Wave, Coupang, and TVING attended the meeting. January 29, 2021. [Image source=Yonhap News]

[Asia Economy Reporter Seulgina Cho] "If the need arises, we will do so."

Choi Ki-young, Minister of Science and ICT, hinted at the possibility of directly meeting with the Ministry of Culture, Sports and Tourism (MCST) to mediate the dispute over music copyright rates that the online video service (OTT) industry is opposing. Domestic OTT companies such as Wavve, TVING, and Watcha are preparing for administrative litigation, judging that the OTT music copyright rates publicly announced by the MCST are excessively high and involve discrimination against identical services and double charging.

According to the industry on the 30th, Minister Choi made these remarks after holding a meeting with OTT companies near Gwanghwamun the previous afternoon. When asked if he could meet directly with the MCST, he replied, "If the need arises," adding, "I will do so later." He also emphasized the need for inter-ministerial cooperation, saying, "The MCST has the position of representing copyright holders," and "The Ministry of Science and ICT has the position of promoting OTT."

As the Ministry of Science and ICT is tasked with promoting OTT platforms, it cannot help but worry about the adverse effects of excessive OTT music copyright rates on the market. Considering OTT revenue and cost structures, the current rates inevitably lead to fee increases of several thousand won. This not only results in consumer disadvantages but also weakens the competitiveness of native OTTs, potentially handing over platforms to global operators like Netflix. This contradicts the government's 'Digital Media Ecosystem Development Plan,' which aims to create at least five global OTT companies in Korea.

Earlier, Han Sang-hyuk, Chairman of the Korea Communications Commission, expressed his intention to consider support measures related to OTT administrative litigation in the same context. During last year's discussions on revising music copyright rates, the Ministry of Science and ICT and the Korea Communications Commission consistently requested that practical aspects such as user interests and OTT industry development be considered, but these requests were not reflected.

◆ OTT Facing Administrative Litigation - MCST

The OTT Music Copyright Countermeasure Council, composed of domestic OTT operators, plans to submit an administrative litigation complaint as early as next week after selecting a law firm. It is highly unusual for the newly established OTT industry to file administrative litigation against the MCST, which holds the leadership in the content industry.

This is largely due to the judgment that the 'Amendment to the Music Copyright Usage Fee Collection Regulations' publicly announced by the MCST is unclear and unreasonable. According to the amendment, OTT operators must pay 1.5% of their total sales this year as music copyright fees, with the rate increasing to 1.9995% by 2026.

However, legal experts point out concerns about discrimination against identical services and double charging. For example, the rate differs when watching the same terrestrial drama on cable TV (0.5%), IPTV (1.2%), and OTT (1.5%). Additionally, cable TV and IPTV rates drop to about 0.27% and 0.564%, respectively, when adjustment factors are applied, but OTTs have no such provisions. This has led to criticism that OTTs, which are in their early growth stages, are being held hostage.

The MCST cites overseas cases as the basis for these rates, but this too has been criticized as unclear. Even within the MCST's Music Industry Development Committee, which conducted related discussions, it was admitted that there is no global standard to follow due to differences in copyright trust structures, rights acquisition procedures, and settlement methods.

◆ Reaffirming "Minimal Regulation" for OTT... Industry Requests "Content Investment Support Next Month"

The meeting was held to confirm the growth of the OTT market since the government's 'Digital Media Ecosystem Development Plan' announcement in June last year and to expand support for native OTTs in the future global competition.

Minister Choi said, "I believe OTT is one of the most important topics in the global media market recently. The domestic OTT market will become more competitive with Netflix's increased investment in domestic content production and Disney Plus's launch in Korea," calling this year a golden time. He also confirmed, "Under the principle of 'minimal regulation,' we will strive to create a foundation where companies can innovate and introduce policies needed by the industry, such as tax credits."

The Ministry of Science and ICT plans to specifically ▲ implement tax credits and a voluntary rating system to revitalize original content production, and ▲ discover new OTT-specialized projects such as AI-based automatic translation systems. ▲ For overseas expansion support, it will also assist with device-platform collaborative entry.

Domestic OTT companies revealed their investment plans for this year and expressed confidence in securing competitiveness in the global market. They also requested effective government support during content production and overseas expansion. Along with current issues such as music copyright rates, they repeatedly emphasized that the government's previously promised 'minimal regulation' principle must be upheld.

Attendees at the meeting included Lee Tae-hyun, CEO of Wavve, Yang Ji-eul, CEO of TVING, Park Tae-hoon, CEO of Watcha, Park Dae-jun, CEO of Coupang, and Shin Jong-su, Head of Kakao M Digital Content Business Division.

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