Overview Of Market Opportunities

1. K-Pop Market Growth & the Market Validity of Music

Thanks to steady increase in digital music sales, the music industry has enjoyed a handsome growth in recent years. According to the International Federation of the Phonographic Industry (IFPI), the international music market was estimated to be approximately USD 21.6 billion in 2020. Korean music albums and digital music showed the fastest growth rate in the world with a staggering 44.8% increase. Such growth was mainly due to an increase in physical album sales driven by the expansion of global K-pop fandoms.

On the other hand, the music copy & distribution business in Korea has very rigid market structures and regulations. According to 2019 Contents Industry Research by the Ministry of Culture, Sports and Tourism in Korea, there are only 95 companies registered in the music copy & distribution business sector and they own the entire music copy & distribution rights in Korea. In 2019, they generated a domestic revenue of approximately 222 billion KRW from music copy & distribution fees alone (12.6% yoy). However, taking the international consumption market into account, the actual market size is ten times the above reported figure, and is growing each year at a healthy rate.

Music IP in general, has a long protection period. Music copyrights are protected for 70 years after the death of original authors and so are their neighboring rights for 70 years after the 1st release.

MetaBeat’s FANomance Index is based the social buzz that music content creates. Music IPs held by MetaBeat creates a foundation to back-up the community and it is worthwhile to note that the music IPs have all the key attributes of stable assets.

2. Digital Content Platforms of the Entertainment Industry

The Korean digital content industry has quickly grown and now prides itself as the fifth largest market in the world. With growing popularity of K-culture content on giant platforms such as Youtube and Netflix, the largest entertainment companies, such as SM Entertainment and Hybe Corp leaped to form digital content platform businesses as their next generation business model.

Going beyond the existing models of communication platforms between fans and artists, they have announced plans to build comprehensive platforms to hold metaverse concerts, consume digital contents and goods, and trade NFT assets.

3. Dynamism of Fandom Culture

K-pop fans are referred to as “Fosterer fandom”. They proactively participate in the viral marketing of k-pop stars, even from their training period, and become direct consumers in fostering the growth and success of k-pop stars. They are very dedicated and persevering and are the main source of income for entertainment and production companies.

Through their social media, fans actively update, promote, and celebrate their artists, and show their affection in various ways. This content then circulates through personal networks which have been proven to be very powerful in creating online viral marketing, advertising the artists, and cultivating the fandom community. Because of this precise fandom effect, many production & management companies operate in a three-entity system; company, artists and fandom.

Fandoms dedicate much energy, money and time into building their artist’s image and social influence. They develop communication networks and share communal conception, empathy, and values. Most fandoms behave like an established foundation with their own management and accounting teams to collect support funds for artist gifts, organize events, etc. The support is not for any type of rewards, but rather for the notion that their artists feel loved, and to cherish the intention, so much that many fandoms often donate these funds to good causes under their artists’ name.

According to the <2019 Global K-pop Map> of Fandom Research by Blip in 2019, 90% of K-pop digital contents are consumed outside of Korea and K-pop fandoms are instituted globally. In fact, this international fandom culture fueled the K-pop music becoming an international phenomenon. However, as K-pop music businesses grew and fandom cultures expanded, giant social media platforms exploited the affection of the fans and supporters. These giant platforms became the medium of communications between the artists and followers, and profited the most without sharing any of the benefits with the users, who put much time and energy in building the communities.

4. NFT Applicability

Until now, it was not easy for end-consumers to get access to the music IP copy & distribution “rights”. But, with blockchain technology, fans may claim ownership to digitized NFT assets which have immense flexibility in terms of the rights accorded to them (for example, giving them exposure to the rights to hold the underlying NFT from the original issuer, who owns the relevant IP associated with the NFT, or to give fans exclusive access to other opportunities to interact with their favorite artists).

NFTs can also resolve infringement issues. Using blockchain technology, transparency in trades protects the related parties from infringement of music IP copyrights. The same applies to an artists’ portrait rights and IP copyrights. Until now, much of the fan art (i.e. drawings, characters, figures, goods, fancam content, etc.) was in fact discouraged by the entertainment companies because of infringement of the artists’ portrait rights and IP copyrights. However, fan art plays a big role in vitalizing the fandom culture and are commonly shared within the community. Now, fan arts can be officialized and can benefit both artists and fans. By using blockchain technology with a legitimate validation process, we can resolve the related issues and establish a mature environment.