On February 28, hundreds of Korean artists—ranging from glitzy girl-groups like GFRIEND to rap superstars like ZICO—discovered that their back catalogs had been yanked from Spotify without warning. The songs were rendered unlistenable on the streaming service in all international markets, including the United States. Within a day, it was revealed that the mass exodus was the result of an expired licensing agreement between Spotify and the Korean label/distributor Kakao Entertainment.
Angry and confused fans around the world woke up to empty playlists and pointed the blame wherever they saw fit: Some called for Spotify boycotts, while others decried the perceived “greed” of Kakao. On March 10, the companies finally resolved the dispute, announcing that Kakao’s catalog would return to Spotify and come to Spotify Korea for the first time. But the licensing dispute highlights key issues with the streaming economy, how important streaming has become to global music consumption, and how difficult it will be to put this metaphorical genie back in the bottle.
When the songs were first pulled, both Spotify and Kakao Entertainment put out statements to explain their sides of the story. “Despite our best efforts, the existing licensing deal we had with Kakao M (which covered all countries other than South Korea) has come to an end,” read Spotify’s statement. Kakao Entertainment—at that point known as Kakao M—painted a different picture, asserting that Spotify’s insistence on simultaneous renewals for global and South Korean contracts caused the rift. “As Kakao M’s global licensing agreement with Spotify neared expiration on February 28 2021, Kakao M has asked Spotify to separate the two agreements so the global agreement can be renewed,” read the company’s statement. “However, Spotify currently requests a licensing agreement which included both global and domestic markets and this has extended our discussions.”
Industry observers were quick to point out that Kakao’s myriad business interests as an entertainment conglomerate offered a possible reason for their bullishness towards Spotify. In addition to serving as a label and distributor, Kakao’s majority-stakeholding parent company owns and operates Melon, the predominant music streaming service in South Korea. The contractual clash with Spotify overshadowed the Swedish streaming giant’s long-heralded Korean debut on February 1, which launched without any Kakao material. Keeping this substantive catalog off the platform would obviously incentivize fans within South Korea to use services where they can listen to their faves.
Professor Chang Hoon Oh, who teaches international business at the University of Kansas, compares Kakao withholding its catalog from Spotify to the way Disney ceased licensing many of its films to sites like Netflix ahead of launching their competitor, Disney+. His perspective is that Kakao’s intention with this business dispute was less about preventing Western streaming hegemony—something that seems unlikely to happen in Korea, where music streaming has been in place for longer than in the U.S.—and more about landing the best possible terms for its artists. “Disney is a movie-maker that created a platform; Netflix was a platform that got into making movies,” Oh says. “This isn’t really a competition between platforms so much as a competition between supply chains.”
It should be noted that Kakao is a literal megacorporation that operates South Korea’s most popular messaging app in addition to E-banking services, transportation programs, and more. It’s a classic example of a vertically integrated company; with Kakao Entertainment, it’s able to supply its own music streaming services with songs that it owns and distributes. Oh says he wouldn’t be surprised to see Kakao make international moves with Melon in the future, catering to a niche, K-pop loving audience abroad. (To give you a sense of the landscape, another Korean power player, BTS label Big Hit—soon to be rebranded HYBE Corp.—is reportedly also looking into expansions into sectors like communications and travel.) As K-pop’s popularity balloons, the ability of Korean companies to leverage that success is primed to grow as well.
A long-standing adage in the record industry is that catalog is king, and in this situation with Spotify, the most powerful leverage Kakao held was its catalog. In a way, this illustrates the same mechanism that ensures Spotify will likely be beholden to the American major labels for years to come; control of a powerful catalog is a large part of how the majors are allowed to negotiate specialized royalty rates. When Kakao announced that an agreement had been reached and that its catalog would come to Spotify on March 10, the label framed it as a win, asserting that it was “committed to the Korean music ecosystem and its growth and will continue protecting the rights of artists, labels and local rights holders going forward.”
Still, artists were placed in a particularly awkward position. Renowned hip-hop trio Epik High, who released Epik High Is Here in January, scrambled to re-distribute the album for their international fanbase after it was pulled in late February. They got it done within a day, but the new upload came at the cost of the stream counts and playlist adds they’d already accrued with the original. Frontman Tablo’s frustration was palpable in a tweet acknowledging the removal: “Regardless of who is at fault, why is it always the artists and the fans that suffer when businesses place greed over art?”
A spokesperson for Korean artist collective DPR, which includes artists who were affected by the dispute, shared a similar sentiment. “We had no idea our catalogue would be disrupted in this way,” they told Pitchfork. “It really felt like we were powerless, as the cause of this issue is something beyond our control but at the same time directly affects us. If anything, international fans/streaming affect us more so, because we consider ourselves an international team.” The spokesperson added that the removal underscored the need for a separate global distributor on new projects, like DPR IAN’s Moodswings in This Order EP.
K-pop listeners also had to adapt. In the two weeks Kakao’s music was unavailable on Spotify, fan communities worked diligently to keep track of the affected songs and flocked to platforms like YouTube to listen to their favorite music. It’s where the vast majority of music is most easily available—but ironically, it’s also the streaming service that pays the least. This conundrum highlights just how the decimation of downloads and entrenchment of streaming have altered music consumption worldwide. You can still buy music of course, but it’s impossible to ignore how critical playlists have become to how audiences listen, and how segmented individual artists’ songs can become in your personal library if you decide to buy them rather than stream them. If there’s any silver lining, it’s that some K-pop fans have started to reconsider their current consumption habits in light of the debacle.
For now, some of the affected artists are seeing spikes in their Spotify play counts, thanks to fans celebrating their return to the platform and the newfound availability on Spotify Korea. Singer DPR Live, the collective’s most-streamed artist, went from 300,000 Spotify plays per day before February 28, to around 107,000/day during the dispute, when his back catalog was unavailable, to upwards of 350,000 just after restoration; his daily streams now sit around 318,000. But these kinds of temporary wins don’t diminish what’s at stake in the larger sense: the struggle for fans to connect to artists instead of platforms, and the struggle for artists to retain control of their work, even when it’s being leveraged as an asset.
