Paid music streaming services thrive in South Korea

By Yoon Sung-won

Korea has increasingly embraced paid streaming services as the main source of music content compared to other countries, according to the International Federation of Phonographic Industry (IFPI), Wednesday.

The IFPI said 41 per cent of internet users in Korea were subscribed to a paid music streaming service as of the end of 2016. This is the largest proportion among 13 countries, followed by Sweden’s 40 per cent, Mexico’s 39 per cent, Brazil’s 26 per cent and the United States’ 20 per cent. Japan’s seven per cent was the lowest figure among all nations surveyed.

The IFPI surveyed about 900 internet users aged between 16 and 64 in 13 countries.

The survey also revealed that 50 per cent of Korean internet users had used a paid or free music streaming service at least once in the previous six months. The average of 13 countries was 37 per cent. Mexico topped this list with 64 per cent, followed by Sweden’s 61 per cent, Spain’s 54 per cent and Brazil’s 52 per cent. Japan came at the bottom again with 11 per cent.

An industry source said the survey results reflect national differences in music consumption patterns.

“Korean internet users tend to listen to music while doing something else. For those who seek music as a tool, paying extra money to own the music permanently can be too much. Music streaming services are a perfect channel for them to instantly consume music,” a music production industry insider said.

“But in other countries, Japan in particular, there are more music listeners who are willing to spend time and money to listen to music.”

Globally, YouTube was the most-used music streaming service. Over 71 per cent of YouTube users answered that they use YouTube to stream music in all 13 countries, the survey showed.

The industry insider pointed out that Korea’s music streaming services, represented by dominant services such as MelOn have a different focal point compared to the YouTube-led visual streaming services.

“Led by rapid penetration of mobile devices, Korea’s music streaming services concentrate on portability and low prices whereas YouTube focuses on visual experiences of streaming,” he said.

In Korea, MelOn, provided by Kakao’s subsidiary Loen Entertainment, holds about half of the market here, followed by KT’s Genie with 20 per cent and NHN Entertainment’s Bugs with 15 per cent.

Kakao, KT and NHN Entertainment are stepping up the competition in the music streaming service market, with over 40 per cent of Korean internet users subscribing to a paid service.

According to the Korea Creative Content Agency (KOCCA), the domestic market for digital music services, including both streaming and downloading, has grown to reach an estimated 1.5 trillion won last year, compared to 91.1 billion won in 2001.

According to the Recording Industry Association of America (RIAA), over 23 million U.S. internet users are subscribed to paid music streaming services such as Spotify and Apple Music.

U.S. streaming services have generated US$3.9 billion last year, up 68 per cent from the previous year. On the other hand, digital download services have recorded US$1.8 billion, down 22 per cent year-on-year, according to the RIAA.

The industry insider also said the rise of paid music streaming services has led the growth of the music industry in the digital era.

“The markets for old sources of music such as CDs are collapsing around the globe. It is an inevitable flow as users are increasingly accustomed to consume music content in cheaper prices without purchasing it,” he said.

“But the streaming services have led the expansion of the digital music market as a whole. They have also benefited content creators as they have streamlined production and distribution processes.”

Paid music streaming services thrive in Korea