Spotify, Kakao settle licensing dispute; K-pop returns to platform

Spotify Technology S.A., the world's largest music streaming service, has reached a licensing agreement with Kakao Entertainment Corp., to make music content owned by the South Korean music distributor available across the globe.

With the renewal of the deal, hundreds of K-pop songs that disappeared from Spotify on Mar. 1 will return to the global music streamlining service’s platform, both companies said on Thursday.

“We are pleased that Kakao Entertainment’s content and artists are back on Spotify, allowing our 345 million global listeners across 170 countries to once again enjoy the music they love,” a Spotify spokesperson said in a statement.

“We are delighted that our Korean listeners will now also be able to enjoy this local music alongside our 70 million songs and 4 billion playlists. We remain committed to making a positive impact on Korea’s music streaming ecosystem through our partnerships with artists, labels and local rights holders.”

Kakao Entertainment said it will “sequentially provide its music content to Spotify for service in and beyond Korea.”

“Through its (Kakao’s) diverse global partnerships including Spotify, Kakao Entertainment hopes that music lovers around the world can easily access its artists’ and music content to enjoy K-pop,” the Korean music distributor said in a statement.

IU, EPIK HIGH AMONG SPOTIFY DISAPPEARANCES 

The two companies had been in a dispute, prompting Kakao Entertainment, formerly known as Kakao M, to remove the rights to Korean songs by its artists from the Swedish music streaming company after a licensing deal between the two expired on Feb. 28 and they failed to narrow differences over new terms.

Spotify said earlier this month that its platform would no longer have access to the music of the artists represented by Kakao Entertainment.

The renewed agreement came after numerous K-pop songs disappeared from the streaming service with the lapse of the licensing deal, prompting some K-pop fans to cancel their Spotify memberships.

Acts affected by the dispute included renowned soloist IU, hip hop group Epik High, trot singer Lim Young-woong, Seventeen, GFriend, Nu’est, Mamamoo and Monsta X.

LATECOMER TO K-POP’S HOME TURF

Both Spotify and Kakao Entertainment came under fire after globally renowned Korean popular songs were unavailable from the streaming service, and this might have prompted the two companies to return to the negotiating table, according to industry officials.

Despite the popularity of K-pop worldwide, Spotify was a latecomer to the music streaming market in Korea, and it needed a business alliance with Kakao Entertainment, which controls about 40% of the domestic market.

The world’s top music streaming player’s performance in the Korean market has been lackluster since its official launch in Korea on Feb. 1.

Spotify’s daily active users (DAU) accounted for a mere 0.5% of Korean music listeners as of Feb. 28. In comparison, Korea’s top music streaming service Melon, owned by Kakao Entertainment’s parent company Kakao Corp., controls 33.8% of the local market, followed by telecom operator KT Corp.’s Genie Music (17%). Two other Korean players, Bugs and Kakao Music, command about 2% of the market each.

Some industry officials said the licensing dispute might have been due to the conflict of interest between Spotify and Melon, run by Kakao Entertainment’s parent company.

Analysts said Spotify has some catching up to do in the Korean market and may face an uphill battle as it charges a monthly service fee of 19,000 won, higher than the average rates of 8,000 won-9,000 won by its local rivals. Spotify’s free promotion service also ends in July.

However, Spotify’s presence in the Korean music streaming market is expected to offer users better choices, including improved service quality and lower fees, according to analysts.

Write to Soo-Young Seong at syoung@hankyung.com
In-Soo Nam edited this article.