Artists underpaid for music downloads

Jang Gi-ha, right, the front man of Jang Gi-ha and the Faces, speaks about the band’s new songs at a press conference held by Hyundai Card Music in Yeouido on March 28. The band released a digital single through a download service in which listeners evaluate the price of songs they want to download with 80 percent of the profit going to artists. / Korea Times file

By Nam Hyun-woo

Koreans pay to download music files online to enjoy their favorite artists’ songs; but they don’t care about how much the artists are paid.

"I plan to release my first digital single in June, but not in Korea. Thus, the lyrics of all my songs are written in English,” said a hip-hop musician who usually performs at Hongdae, asking not to be named.

He attributed his decision to the expected scant revenue from mp3 downloading in Korea, regardless of a songs’ popularity.

This is not only his story, nor is it the excuse of an indie rock-star hopeful.

Last year, Psy’s global hit “Gangnam Style” recorded 2.9 million online downloads worth 2.8 billion won ($2.5 million) in the United States.

The song garnered more listeners in Korea with 3.6 million than in the U.S., but the singer only saw his download revenue amount to a relatively small 66 million won ($58,928).

In the U.S., listeners pay an average 1,500 won to download a newly released song from digital music services such as Apple’s iTunes. Koreans, on the other hand, pay about 600 won.

However, the difference comes not only from prices for the song in the two countries, but also from Korea’s abnormal structure for distributing profit generated from digital music services.

According to a report released by Prof. Lee Gyu-ho at ChungAng University Law School in 2010, artists who perform a song only take a mere 2.5 to 5 percent of the profit generated by downloading.

Songwriters and producers take 25 to 40 percent together while the remainder goes to service providers such as MelOn, the report showed.

Music industry insiders say the 2.5 to 5 percent share is too small compared to the cost of creating a song.

In 2011, a local entertainment company released a new girl group’s digital mini-album. The total cost to release the two-song album amounted to 69 million won, roughly equivalent to the amount Psy has earned from his global hit Gangnam Style locally.

In other words, artists in Korea need at least one mega hit, like Psy’s, out of two songs they release to break even.

A Korean Internet blogger lampooned such absurd an profit distribution structure, saying that “even Michel Jackson wouldn’t have been able to make ends meet.”

An indie rock band vocalist, Yeon Je-hong echoed the view that the share for artists is too small compared to the production cost.

“Many bands like mine expect profits from downloading or streaming to be zero since it is too insignificant on the first hand,” he said. “Generally, it takes 1.5 million won to record a four-man band set ― guitar, bass, drums and vocals. Mixing and mastering costs another 500,000 to 600,000 won on average. These are the most basic procedures of creating a recording.”

He said that when considering costs needed for instruments and other petty expenses, the total amount surges.

However, Koreans still think of mp3 files as free-of-charge, rather than intellectual property.

In 2012, the Ministry of Culture, Sports and Tourism conducted a survey on consumer awareness about the price of music files. In the survey, 60.9 percent of 800 consumers, who purchased online music services within the year, said they think the current cost of 600 won is expensive.

As artists expect almost no revenue from digital downloading and consumers still consider that 600 won per a song is expensive, the government took the initiative to give profits generated from downloading back to the performers.

The culture ministry announced on March 18 that it will change the service providers’ method of collecting fees from users. The revision will mandate service providers to collect fees per number of playbacks, from the method of collection per-subscriber.

The ministry hopes the new scheme will benefit artists.

However, experts point out that unless there is a massive improvement in the profit distribution structure, artists won’t be able to gain substantial benefits.

“Profit should be distributed according to how much one contributed to the success of a song. But it is difficult to calculate how much performers and composers contributed to the success,” said Song Soon-gi, chairman of Federation of Korean Music Performers.

He said that since producers, who invested the most financially, shoulder the risk of possible failure they take advantages in profit distribution.

“It is wrong that online music service providers, who take the lowest risks, take the biggest bite of the pie,” he said.

As an alternative to the distribution structure weighed in favor of service providers, Hyundai Card recently launched a music service to return greater profits to artists.

In the service, listeners evaluate the price of songs they want to download. For each download, 80 percent of the profit goes to artists and Hyundai Card only takes 6 percent, as a service operating fee.