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K-pop, short for Korean pop music, has become a global phenomenon over the past decade. Known for its catchy melodies, flashy visuals, and tight choreography, K-pop has gained immense popularity worldwide thanks to acts like BTS, BLACKPINK, and TWICE. However, a recent licensing dispute between Spotify and Kakao M, a major K-pop music distributor, has threatened K-pop’s availability on the platform. As the world’s most popular music streaming service with over 381 million users, Spotify’s removal of Kakao M’s music library has angered fans who rely on the platform for their K-pop fix.
What is the Spotify-Kakao M dispute?
In February 2021, Spotify removed all music distributed by Kakao M after the two companies failed to agree on licensing terms for 2021. Kakao M is South Korea’s largest music distributor and home to prominent K-pop artists from labels like SM Entertainment, JYP Entertainment, and YG Entertainment. When the February 28, 2021 deadline passed without a deal, Spotify blocked Kakao M’s entire music catalog on its platform globally. This meant that K-pop fans worldwide lost access to songs from popular groups like EXO, Girls’ Generation, IU, and BIGBANG on Spotify.
Why did this dispute happen?
The core of the disagreement stems from different views on how streaming royalties should be calculated. Spotify employs a pro-rata model, which calculates royalties based on the overall percentage of streams on its platform. Kakao M wanted a user-centric payment model instead, which distributes royalties solely based on what each individual user listened to.
Kakao M argues that the user-centric model is fairer, especially for smaller artists and companies. However, Spotify refused to budge on its standard pro-rata structure, leading Kakao M to pull its catalog once their old contract ended. Both sides have expressed regret about the situation but remain committed to their preferred royalty models.
Pro-rata model:
- Calculates royalties based on overall percentage of streams
- Benefits platforms and major labels
- Spotify’s standard royalty model
User-centric model:
- Distributes royalties based only on each user’s streams
- Benefits smaller artists and companies
- Preferred by Kakao M
What was the impact on K-pop streaming?
The removal of Kakao M’s catalog was a major blow to K-pop streaming worldwide. Some estimates suggest the licensing fallout eliminated over 20% of daily K-pop streams globally on Spotify.
| Streams before dispute | Streams after dispute |
|---|---|
| 1.5 million+ daily streams | Under 1.2 million daily streams |
In South Korea, the situation was even more dire, with some reports indicating daily K-pop streams plunged by nearly 50% domestically after the Kakao M removal. Fans expressed outrage over losing access to their favorite artists on the platform. The #SpotifyBackKpop hashtag even trended worldwide as fans demanded a resolution.
Have there been any updates since February 2021?
In April 2021, there was a partial resolution as Kakao M and Spotify negotiated a licensing deal specifically for IU, one of Korea’s most popular solo artists. This brought some of IU’s music back onto Spotify worldwide.
However, the broader dispute remained unresolved until March 2022. After over a year, Spotify and Kakao M finally reached a comprehensive multi-year licensing agreement to return Kakao M’s full catalog to the platform. Within just a few days, daily global K-pop streams on Spotify bounced back to over 1.5 million.
What changed to allow the dispute to be resolved?
A few key factors created pressure for both companies to come back to the negotiating table:
Fan demand
Sustained outcry from K-pop fans wanting their favorite artists back on Spotify ultimately pushed the companies to reach a deal. Social media gave fans a loud platform to voice their frustrations.
Business incentives
As K-pop continued growing, Spotify likely wanted full access to capitalize on new fans and revenue opportunities. Kakao M also stood to gain from licensing its music to Spotify’s huge user base.
Legal regulations
South Korea’s parliament introduced amendments in February 2022 to require fair contracts between music distributors and streamers. This regulatory shift improved Kakao M’s negotiating position.
What are the general sentiments around the new deal?
The reconciliation between Spotify and Kakao M has been met with enthusiasm and relief from K-pop listeners worldwide. Fans are celebrating the return of beloved artists to the platform. Streaming numbers have also rebounded sharply since March 2022.
However, some issues linger about the fairness of streaming royalty models, especially for smaller K-pop agencies. The user-centric model advocated by Kakao M still garners support from many industry figures. But Spotify maintains its standard pro-rata structure for now.
Overall, listeners are simply glad to have their K-pop back. But the debate over equitable streaming royalties will likely continue as the industry evolves.
What does the future look like for K-pop on Spotify?
Now that Kakao M’s catalog is restored, the future looks bright for K-pop on Spotify. Some trends to expect:
- Continued global streaming growth as K-pop expands its fanbase worldwide.
- Increased streaming revenue for top K-pop artists and companies.
- Potential for more K-pop exclusives and collaborations on Spotify.
- Further international expansion from Spotify to capitalize on K-pop’s popularity.
With the licensing dispute resolved, Spotify can focus on capitalizing on the meteoric rise of K-pop streaming. Global daily K-pop streams on Spotify already exceed those of key Western markets like the UK. As the genre gains fans across new regions, Spotify now has the full catalog needed to engage listeners and expand strategically.
Conclusion
The Spotify-Kakao M licensing dispute caused major shockwaves for K-pop streaming worldwide. But after prolonged negotiations, the companies reached a deal that restored full access to Kakao M’s catalog. Moving forward, Spotify is poised to benefit from the continued crossover appeal of K-pop globally. With fan demand stronger than ever, Spotify can now deliver the full breadth of K-pop to engaged listeners worldwide. Although issues around streaming royalties still need addressing, the restoration of Kakao M’s catalog secured the vibrant future of K-pop on Spotify.