Competition between music streaming platforms gets stronger

From the top, logos of Melon, Apple Music and Spotify / Korea Times file

By Kim Jae-heun

A cutthroat competition between online music streaming platforms is taking place ahead of Spotify's entry into the local market.

The Swedish media service provider is set to launch its music streaming platform here within the year, and local platform businesses are preparing their defenses.

Spotify currently operates its streaming service in 79 countries including America, France and Japan and has nearly 271 million paying subscribers.

The service's strength lies in offering a vast amount of music unavailable on local music streaming platforms which are notoriously Korea-centric.

Knowing that they cannot hold a candle to Spotify in terms of its catalog, domestic music streamers are betting on offering differentiated services or cheaper membership to attract users.

The most notable change is by Melon, the country's No.1 online music streamer, which will stop offering its real-time music chart service soon.

After the controversy around Melon's chart system, which instigated fierce competition between artists and encouraged some musicians to fabricate chart rankings, the streaming service decided to abolish it. Instead it will update its chart ranking on a 24-hour basis like that of Flo, the No.3 player in the local market.

Genie, the No.2 player, and FLO are betting on their distinctive content by offering users new music recommendations and offering exclusive digital content including live concert performances and new album showcases.

The country's largest portal site operator Naver will promote a free membership service for six months for its music streaming platform, VIBE. It is also planning to adopt a new fee system where users only pay for the songs they listen to; not a monthly flat fee basis.

Naver's actions are being criticized by many rivals as they appear to go against music platforms' original function of music curating that ideally enhances content value.

However, the changes could spell good news for customers as they will be offered more options to choose from.

“The music platform business is heavily influenced by the lock-in effect meaning when people get used to a system, they are unlikely to move to another platform,” said Kim Hyun-yong, a researcher at eBest Investment & Securities. “In this sense, when Spotify enters the Korean market, it will encourage competition between players rather than changing the whole ecosystem.

“At the same time, the online music streaming business is something that you can't just give up on easily because it is linked to the artificial intelligence speaker market. Naver, Kakao and mobile carriers cannot lose this market and music streamers will compete fiercely to increase their market share,” Kim added.

Meanwhile, Melon, operated by Kakao, has been losing market share since last September when it recorded 36.8 percent. It is still the No.1 player but lost 4 percent of its market share in just six months.

Genie and FLO, operated by mobile carrier giants KT and SK Telecom, respectively, lost 0.9 percent and 0.4 percent to record 24.8 percent and 17.8 percent.

Conversely, No.4 players YouTube Music and VIBE, at 9 percent and 5.6 percent, respectively, saw increases of 2.7 percentage points and 0.7 percentage points recently.