KT, LG Uplus considering legal action over music copyright fee hike

By Kim Bo-eun

Telecom firms KT and LG Uplus are reviewing possible legal action against the Ministry of Culture, Sports and Tourism, which approved rules hiking fees for content involving music copyrights. KT operates the over-the-top (OTT) service Seezn, while LG Uplus runs U+Mobile tv.

This development comes after local OTT service providers launched a collective suit over the newly added rule outlining the fee hike, requested by the Korea Music Copyright Association and approved by the Ministry in December.

On Feb. 5, the group of OTT service providers, comprised of Wavve, Watcha and Tving, filed a suit with the Seoul Administrative Court against the Ministry. The suit seeks to cancel the Ministry's approval of the revisions of existing regulations on fees collected from content involving music copyrights.

Under the new rules, OTT service providers must pay 1.5 percent of their total sales in music copyright fees. The rate has been set to be gradually raised to nearly 2 percent by 2026. The rationale of the music copyright association is that separate fees should be collected when content involving their copyrights is streamed via a new platform.

The new fees were supposed to go into effect starting this year.

"We are also reviewing an administrative suit over the revised regulations," a KT official said.

KT's Seezn has a monthly average of 2.06 million subscribers, while U+Mobiletv averages 1.84 million subscribers per month. The two are not part of the group of local OTT service providers that has taken collective action against the fee, and are thus seeking to take separate action, possibly in the form of an administrative suit against the Ministry.

The group of OTT service providers held a press conference on Wednesday explaining the reasons behind the legal actions taken.

They said they were excluded from the process of revising the regulations on music copyright fees.

The OTT service providers state that the costs they will have to shoulder in terms of the new fees will likely lead to a hike in OTT subscription fees.

"Reviews may take place (over a hike in monthly subscription fees), in order to guarantee profitability," Watcha's head of public affairs, Heo Seung, said at the press conference.

An industry official said, "It is unfair for the fee rate to be calculated as a percentage of total sales, when you consider the fact that we also create our own original content.”

"We are also already paying for content streamed via IPTVs," the official said.