KOREA FOUNDATION

Kim Heon-sik, Popular Culture Critic
PhD in Digital Contents & Culture

Shocking news about the distribution of profits in the K-pop industry hit Korea in 2011. At the center of attention was the girl group KARA, whose members Han Seungyeon, Nicole, and Kang Jiyoung brought the issue of unfair distribution of profits to the public eye, stating that they were not paid properly for their work. At that time, KARA was enjoying great popularity in Japan along with the boy group TVXQ (Dong Bang Shin Ki in Korean). The girl group members questioned their company management about how their earnings were calculated and settled, eventually demanding the termination of their exclusive contracts with the company. When it came to the distribution of profits from albums, 84 percent would be taken by the local distributor and the remaining 16 percent evenly shared by the group’s Korean company and partnering Japanese label. How much, then, did the singers receive? For rookie singers, the rate was between 0.5 and 1 percent. If a singer made KRW 10 billion in Japan, he or she could receive between KRW 50 and 100 million. This was the result of an old system of music distribution. If a new music distribution system that utilizes online social media is established, what different results could be achieved? Let’s take a look at Google, whose subsidiary YouTube Music is a main operator among music streaming services. In the case of PSY’s “Gangnam Style,” whose music video was viewed 1.23 billion times on YouTube in 2012, Google paid half of the USD 8 million in revenue to the artist. This sum of USD 4 million equaled approximately KRW 4.2 billion—solely from YouTube. If “Gangnam Style” had been streamed on Spotify, the world’s largest music streaming service provider, as many times as it had been on YouTube, PSY could have made around KRW 12.6 billion, or more than three times the amount he had earned on YouTube. This is based on Spotify’s rate of 0.4 cents per stream, or USD 4 per 1,000 streams, to the artist. Some bands made 0.97 cents per stream, or USD 9.70 per 1,000 streams. In March 2021, the “Gangnam Style” video surpassed four billion views on YouTube, and PSY is presumed to have made between KRW 8 and 12 billion from the video. If the same thing had happened on Spotify, he would have made more than three times of what he earned on YouTube. These outcomes were possible because the way these services distributed profits differed from the aforementioned system of giving the lion’s share of the profit to local distributors.

Still, as all these online digital platforms are operated by overseas firms, Korean artists have to give much of their earnings to them. Recently, however, Korean “global fandom platforms” such as Weverse, Universe, and DearU bubble have come into business, and their users mostly live outside of Korea. In one of those platforms, the number of subscribers who pay a monthly fee of KRW 4,500 won has already surpassed one million. Apart from paid subscribers, every month, the platform sees three to five million users. Why are there so many? This is because users can directly communicate with artists through paid subscriptions to individual apps. DearU bubble, a platform that facilitated one-on-one communication between artists and fans through chat messages, drew the keenest attention. Such communication is impossible in reality, but fans can now talk to their favorite artists through online platforms that offer unique content and services. The exclusive photographs, videos, and messages on these platforms easily engage fans and draw their focus and enthusiasm. Additionally, not just albums but also merchandise and entertainment content tailored for each artist are available. On these platforms, fans can expand their interest in their favorite artists by consuming entertainment content in addition to songs and performances. The platforms also draw upon a psychological mechanism that turns the feeling of achievement into something tangible. For instance, fans who accomplish certain missions may have their goods changed into coupons or subscriptions that they can use for on- and offline fan meetings, signing events, and concerts where they can meet the artists in person. Some artists like BTS earn over KRW 80 billion from just one online concert. The ultimate aim of these global fandom platforms is to make Korea become the center of the world’s attention. When non-Korean singers are featured on these online platforms, their role may become the “one who sows,” indicating that behind the latest metaverse craze is the drive to break the cycle of “one sows, another reaps.”

Korea is a rather small country, but it is rich in creativity. It failed to build an independent distribution system, and thus had little opportunity to show off its content to people around the world. Even when its artists gained international exposure, they were not recognized with proper shares of profit. Korean artists may fully demonstrate their visions of the world only when they have platforms that they can control themselves. There are limits in the music distribution network based on the established physical environment. Television programs and movies are already being merged and fused into online video platforms like Netflix or Disney+. And despite the immense power of Billboard and Spotify, platforms that only consume and distribute music have their limits. They are highly likely to converge into fandom platforms with plenty of comprehensive and compound content. Chances are that YouTube and other closed-profit systems that do not share revenue with users will fall behind. This is the reason why the “play to earn” (P2E) model is emerging, albeit amid controversy, and blockchain technology is being referred to as an alternative system to YouTube. In any case, we must prepare our platforms to answer to the ever-changing nature of fan community culture.

The Grammy Award will become as fan-oriented as the American Music Awards, Billboard Music Awards, and MTV Music Awards. Fans will not simply “break their backs” to pay money to their artists, but emerge as partner-like companions who share in profits and achievements. K-pop platforms should remain oriented in this direction without fail.

K-Pop Kim Heon-sikdistribution of profitsOnline platform