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How Korean Musicians Earn From Music Royalty

Updated on February 03, 2017
Idols earn a lot from the sales of their songs but compared from what they earn from advertisements and appearances, song sales are but loose change. For non-idol musicians like Ji Jung Choo, the "loose change" is important.
Idols earn a lot from the sales of their songs but compared from what they earn from advertisements and appearances, song sales are but loose change. For non-idol musicians like Ji Jung Choo, the "loose change" is important.

Kang Gary, one half of LeeSsang, made some noise when he tweeted about the seeming delay in the remittance of songwriters' earnings from online music channels. Specifically, he voiced out his concern about two things:

  • songwriters not getting their royalty payments from online streaming channels
  • discrepancy between actual payments and estimates based on raw data
  • huge fall of earnings of songwriters since change in online streaming fee

For those who don't understand how songwriters and singers earn outside of the fee they get from appearances, Gary's tweet is hard to grasp. This article aims to explain how musicians earn and why they are getting less now because of changes in the law.

How Musicians Earn from Online Streaming Services

A streaming service allows people to pay a fix amount monthly in exchange of being able to play unlimited amount of music monthly. One of the most popular streaming sites is Melon. Here are the numbers given by Melon and other streaming sites.

According to estimates, the average number of songs a person plays a month is 1,000.

The monthly fee for unlimited songs is 3,000 won (roughly $3).

That means there are 1,000 songwriters and singers that will divide that 3,000 won monthly. You also have to consider that the label and the streaming service company take a cut too.

Below is the most common partition of payment:

  • 16% Lyricist/Composer
  • 8% Performer
  • 10% Streaming service company
  • 66% goes to the label

That means 480 won would be divided among 1,000 lyricists and composers. That totals to .48 won per lyricist/composer.

Let us assume a composer's song gets played 100,000 times in a month, he would then get paid 48,000 won (roughly USD45) a month per song. If there are more than one lyricist/composer, then they divide the USD45.

Now about half of that amount goes to the singer or performer.

Getting played 100,000 times a month is not that hard for songwriters like GDragon and other idols. They have a strong fanbase that spends for them but for non-idol musicians, 100,000 is jackpot.

Mad Clown has been an established underground rapper before making it to the mainstream. He echoed Kang Gary's sentiments about the confusion and delays of songwriter earnings from streaming services.

That is Just the Earnings from Streaming

Streaming services is not the only source of earnings of musicians and performers. In fact, for idols like DBSK and Big Bang, earnings from their song sales are loose change. They can get paid up to USD3 Million for an advertisement which they film for a week. A single TV drama can earn them USD500,000. To idols, their songs are just "promotional tools" to sell their image. It is their image that makes them earn more.

However, for musicians who are not idols and don't have the support of big labels, earnings from every source is important.

This is what prompted Korea to re-examine their digital streaming rates. The 3,000 unlimited streaming monthly is peanuts compared to the rates in America.

Kang Gary of LeeSsang and Mad Clown both expressed concern and dissatisfaction about the earnings discrepancy and delay that musicians are experiencing after Korea changed streaming cost.
Kang Gary of LeeSsang and Mad Clown both expressed concern and dissatisfaction about the earnings discrepancy and delay that musicians are experiencing after Korea changed streaming cost.

Mandatory Digital Rate Hike

Dwindling profits due to piracy being more convenient compared to buying original CDs is an issue even outside of Korea, and one of the ways that the South Korean music industry fought back was by offering streaming and downloads at drastically reduced prices compared to foreign services. The move banked on the principle that fans would prefer legitimate services over piracy if it’s cheap, on the grounds that they will be helping their idols without hurting their pockets.

However, back in January 2013, the Ministry of Culture, Sports, and Tourism stepped in an mandated a digital rate hike designed to bring South Korea’s download and streaming rates more in line with the rest of the world. The ordered provided a 3 month grace period that ended in April of the same year. The purpose of the forced price hike was reportedly to help the music industry to recover from massive losses due to declining CD sales.

Korean Music Streaming Vs US Music Streaming

STREAMING SERVICE
CATALOG
MONTHLY FEE
Beats
20 M
USD 10
Google Play
20 M
USD 10
Grooveshark
 
USD 10
iHeartRadio
15 M
USD 10
iTunes Radio
26 M
USD 10
Last.fm
 
USD 10
Sony Music
25 M
USD 10
Pandora
32 M
USD 10
Rhapsody
20 M
USD 10
Rdio
13 M
USD 10
Slacker
20 M
USD 10
Spotify
30 M
USD 10
Melon
10M
USD 4
MNET
10M
USD 4

Loss of Customers

Unfortunately, it seems like the digital rate hike had an adverse effect, as it seems like many regular subscribers of the many streaming and download services in Korea felt that the increased prices were too heavy and no longer worth it, especially when compared to illegal downloads.

A good example is MelOn, which is one of the leading online music services in the country. Their unlimited streaming plan used to cost 3,000 won per month, but the digital rate hike increased the prices by as much as 200%, bringing it to 6,000 won a month. Some of the smaller companies even scrapped specific plans altogether, as the digital rate hike increased the rates to levels that are no longer appealing to their subscribers. Some offered various discounts and promos just to keep people from leaving, but they were at best stopgap measures that will end up hurting their bottom line in the long run.

In the end, despite increased rates, the companies are seeing their profits dwindle due to loss of subscribers. The high prices make it worse because now, the loss of a single subscriber has an even bigger effect. However, there is an elephant in the room that needs to be addressed: royalties that go out to the artists.

Not everyone becomes an idol. Some musicians will make music and rely on people buying their songs to make a living and continue making music like Gonne Choi.
Not everyone becomes an idol. Some musicians will make music and rely on people buying their songs to make a living and continue making music like Gonne Choi.

Earnings from Royalties

It’s a common anecdote that the parents of girl group Rainbow were initially disappointed with the earnings of their daughters, as it has been said that the artists don’t really earn much because companies tend to use a large part of their budget for artists on training and lodging. However, royalties are an entirely different thing as it is specifically designed or the artists’ benefit. How much do artists earn from their music?

While it’s impossible to pin down specific numbers due to differences in how companies handle their talent, it is known that South Korean artists that become famous overseas end up earning more from royalties in other countries than back home. The best example right now is PSY, whose song Gangnam Style gained massive attention all over the world thanks to its viral music video and dance routine.

According to Saenuri Party Representative Nam Kyung-pil, who is criticizing the unfairness in South Korea’s online music royalties, Gangnam Style earned the equivalent of 2.8 billion won in royalties for 2.9 million downloads, while in Korea, 2.86 million downloads and 27.32 million streams only earned a relatively paltry 3.6 million won in online royalties. This boils down to the artist earning an average of 10.7 won per download of a song and a ridiculous 0.2 won per stream.

The revelation is surprising given that the digital rate hike is being pitched as a way to help musicians and songwriters earn more from their hard work, but it seems that the profits are not trickling down. What’s worse is that the service providers themselves end up shooting themselves in the foot, as their subscription rates are dropping.

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