Korea's Musicow to lead fractional IP ownership globally

Musicow Inc., South Korea’s first music copyright trading platform, is set to gain momentum as fractional ownership in copyright claims has been approved as investment securities under the country’s Capital Market Act.

Last year, Korea’s Financial Services Commission (FSC) reviewed the legitimacy of the music copyright trading platform as the business hadn’t been regulated under the law. FSC has determined not to suspend Musicow’s services, citing that the copyright claims are equivalent to securities and that the platform can boost income for artists.

It is the world’s first case of fractional ownership in music copyright claims to be approved as securities, according to Musicow. 

Founded in 2017, Musicow boasts 1.2 million users and cumulative transactions worth 400 billion won ($308.6 million). The platform is looking to enter the US market later this year.

“Finance, platform and culture converge through our business,” Musicow CEO Jung Hyun-kyung said in an interview with The Korea Economic Daily on Feb. 17. “We aim to become an icon of financing in the culture industry,” Jung added.

The platform pays a lump sum to an artist of a piece of music for claims to request copyright fees. It splits the claim rights in small fractions and puts those up for auction – half of the gains from the auction deals go to the artists.

The investors, who acquired the claim rights, earn profits from the music copyrights just as they would receive dividends from shares. Individual investors can also trade the ownership of copyright claims via the platform.

Musicow achieved an 8.96% return on the copyright claims business over the past year until January, far outperforming the main bourse Kospi’s negative 30% during the same period.

The platform users seek long-term assets resilient to downturns while stock market investors normally target capital gains in the short term, the CEO said.

“We found that 35% of Musicow users chose the platform for stable income. Some 21% said they chose it for cultural reasons; only 28% aim for short-term capital gain,” Jung added. 

Global private equity giants are increasing investment in music copyrights. Blackstone and London-based Hipgnosis Song Management Ltd. teamed up in 2021 to invest $1 billion in music copyrights. Last October, Brookfield Asset Management injected $2 billion into independent publisher Primary Wave Music to acquire song catalog assets.

Write to Nan-Sae Bin at binthere@hankyung.com

Jihyun Kim edited this article.