Guidelines for Calculating Content Royalties Taking Shape... Opinions Still Divided

The content compensation calculation guidelines are beginning to take shape after 1 year and 7 months, but differences in positions among operators remain.

The Ministry of Science and ICT collected opinions on the guidelines from Internet TV (IPTV), System Operators (SO), and Program Providers (PP) on the 24th. It plans to consult with the Korea Communications Commission, the main regulatory body for terrestrial broadcasters and general programming PPs, thereafter.

[Image source=Pixabay]

The paid broadcasting market has long operated under the practice of "supply first, contract later," where PPs provided content to paid broadcasters. Every year, PPs and paid broadcasters engaged in intense negotiations over content compensation that often extended beyond the year-end. This practice, especially among major PPs, has repeatedly raised concerns about not receiving appropriate compensation. In response, the Ministry of Science and ICT established a win-win consultative body in December 2021 and specified the principle of "contract first, supply later." To implement this principle, a guideline for calculating program compensation, which would serve as a contract standard, is necessary. However, stark differences in opinions among the various business entities have caused the guideline to remain stalled. The first draft was released last December but was scrapped after strong opposition and boycott by PP operators.

Since May, the Ministry of Science and ICT has reactivated the consultative body, and the second draft has taken shape. However, at the meeting on the 24th, it reportedly faced opposition from the PP industry again. The draft set relatively higher payment rates to protect small and medium-sized PPs, which caused dissatisfaction among large PPs that invest heavily in content. Additionally, IPTV and SO were allowed to independently determine the total amount they could pay PPs for content compensation, which also drew opposition from PPs. They argue that payment amounts should be subject to negotiations between companies.

After gathering opinions from operators, the Ministry of Science and ICT plans to enter consultations with the Korea Communications Commission. Since the government has expressed its intention to reach a conclusion quickly, the industry expects the guidelines to be released as early as next month. However, the meeting confirmed stark differences in operators' positions, and with the Korea Communications Commission busy preparing for hearings, there are voices suggesting that including terrestrial and general programming PPs under the commission’s jurisdiction will make it difficult to announce the guidelines as soon as next month. A paid broadcasting industry official said, "This was the last face-to-face meeting with operators, and the Ministry of Science and ICT and the Korea Communications Commission will consult thereafter," adding, "Although we initially thought the guidelines could be released as early as next month, conflicts between IPTV and PPs and the absence of terrestrial and general programming PPs mean that the differences in positions have not yet been narrowed."

Meanwhile, Minister Lee Jong-ho of the Ministry of Science and ICT stated at the National Assembly Science, Technology, Information and Broadcasting and Communications Committee plenary session on the 26th that he agrees with lawmakers’ concerns that content revenue is not being properly distributed to PPs. He said, "Although this is a private contract area, we will examine whether there are aspects that can be considered during (paid broadcasting) license renewals." He also said, "It is necessary to establish guidelines to clarify whether contract procedures are properly conducted. We will prepare and promote the guidelines within this year," adding, "Cooperation with the Korea Communications Commission is necessary, and we will work to coordinate so that terrestrial broadcasters can also participate."

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