Five music organizations called for equitable institutional support for small and medium-sized record production companies through a statement.
On the 11th, the five music organizations actively welcomed and supported the policy direction of the Lee Jae-myung government, which has made the K-Initiative a core national policy, stating, "K-pop is already a key driving force in realizing national competitiveness and cultural sovereignty," and emphasized that "substantial support for small and medium-sized record production companies will lead to co-prosperity and sustainable development across the entire industry."
Currently, while some content areas such as video and webtoons receive tax benefits for production costs, the music industry is excluded from this support. They noted, "Despite the global success of BTS's 'Dynamite' music video, it is not eligible for tax benefits, which contradicts fairness among content genres," and stated, "The music industry should also be included in the comprehensive national content support policy."
They also suggested that creating a fund to alleviate the financial limitations of small and medium-sized record production companies is necessary. Currently, policy finance support, such as the fund of funds, is operated primarily for video and webtoons, and there is no dedicated account for the music industry. The organizations added, "If a dedicated fund is established, small and medium-sized record production companies will be able to produce creative and competitive content more stably."
Finally, the five music organizations emphasized, "K-pop is not only a future industry of Korea but also a strategic asset that drives diplomacy and the economy," stating that "the establishment of tax support and financial and guarantee systems for record production companies would contribute to sustainable growth of the industry ecosystem and the globalization of K-culture."
The music organizations that participated in the statement include the Korea Management Federation, the Korean Entertainment Producers Association, the Korea Music Label Industry Association, the Recording Industry Association of Korea, and the Korea Music Content Association.
The following is the full statement.
Statement
"The realization of the K-Initiative and equitable institutional support for the music industry must go hand in hand."
Aug. 25.
Korea Management Federation, Korean Entertainment Producers Association,
Korea Music Label Industry Association, Recording Industry Association of Korea, Korea Music Content Association
The five music organizations, including the Korea Management Federation, the Korean Entertainment Producers Association, the Korea Music Label Industry Association, the Recording Industry Association of Korea, and the Korea Music Content Association, actively welcome the Lee Jae-myung government's leap towards becoming a cultural powerhouse and the K-Initiative policy. They emphasize that substantial institutional support measures, such as tax support and fund creation for record production companies, are urgently needed for the sustainable development of K-pop and request the National Assembly and government to take an active interest and respond.
Leap to become a cultural powerhouse and enthusiastic support for the K-Initiative policy
The K-pop industry expresses its enthusiastic welcome and support for the policy direction of the Lee Jae-myung government, which takes the leap towards becoming a cultural powerhouse and makes the K-Initiative a core national policy.
I am confident that the K-pop industry, which has played a central role in the global spread of K-culture, will continue to be a key driving force in enhancing Korea's national competitiveness and realizing cultural sovereignty.
Recently, the globally popular Netflix content "K-POP Demon Hunters" reaffirms the practical potential and strategic value of strengthening national competitiveness using K-pop. This shows that K-pop is the most natural and effective means of introducing Korea to the world.
- The global success of K-pop is the result of the willingness to take risks and the planning of record producers. However, there is a lack of substantial institutional support for record production companies.
- Record production companies are facing dual hardships due to high risks and various regulations.
The global success of K-pop is not merely by chance; it results from the bold investments and creative planning capabilities of numerous record production companies, as well as their continuous willingness to take risks. However, until now, government policies related to popular music have mostly been planned focusing on individual creators, and there is virtually no institutional support for record production companies that are actually competing in the fierce global market.
Rather, as some incidents become generalized, the perception that record production companies hold a superior position compared to artists or creators has become ingrained, depriving them of even a rightful assessment as industry players.
Recently, record production companies have suffered from lawsuits related to unauthorized termination of contracts with several artists who recorded global hits and their unilateral activities. Even if record production companies succeed, the lack of institutional mechanisms means they must continually confront risks. In particular, small and medium-sized record production companies are enduring dual hardships, failing to receive substantial support despite various regulations.
It is now time for the National Assembly and the government to redefine their perspective on record production companies and recognize K-pop as a global industry, thereby promoting appropriate policy support.
In particular, systematic support for small and medium-sized record production companies will create a co-prosperous structure for the entire relevant industry, including artists and creators.
Therefore, we propose the following suggestions for the promotion of the K-pop industry.
Suggestion 1: Introduce a tax support system for the music industry, which is excluded from tax benefits.
Above all, a tax support system for the music industry must be established when considering policy equity and its contribution to national development.
"Squid Game" achieved great success overseas, leading to increased interest in K-content investment support. With this momentum, starting in 2023, the video content sector can receive tax credit benefits of up to 30% of production expenses.
On the other hand, despite BTS's "Dynamite" music video being as globally popular as Squid Game, it is not eligible for tax support. This contradiction undermines fairness among content fields and may lead to long-term stagnation in the entire industry.
Due to the nature of K-pop, a lucrative industry, the production costs of small and medium-sized record production companies are on par with those of large firms, with substantial investments reaching billions of won required to debut new idol groups. Despite bearing the high investment risks, there remains a lack of corresponding policy protection measures.
The recent tax support from the Ministry of Economy and Finance is limited to certain content genres such as video or webtoons.
However, according to the 'Research on the Improvement of Tax Support Systems for the Music Industry' disclosed by Korea Creative Content Agency (KOCCA) earlier this year, tax support for music content production can relieve the financial burden of small record production companies and contribute to forming a virtuous cycle leading to reinvestment in new content.
I sincerely hope that the music industry will also be included in the realm of balanced national content support policies.
Suggestion 2: Creation of a fund for small and medium-sized record production companies.
While small and medium-sized record production companies possess creativity and planning capabilities, they are constrained in their investments in content production due to limited financial resources. Thus, the government should actively consider establishing dedicated funds for small and medium-sized record production companies.
Currently, the Ministry of Culture, Sports and Tourism and Korea Creative Content Agency (KOCCA) operate various support projects connecting policy finance and fund of funds centered around the video and webtoon sectors, but access for the music industry remains very limited.
For example, in February of this year, the K-content fund established by the Ministry of Culture, Sports and Tourism did not have a separate account for music, resulting in inadequate support. There is a need to create a dedicated account for small and medium-sized record production companies to establish a stable investment foundation.
If such institutional foundations are established, small and medium-sized record production companies will be able to produce more creative and competitive content through stable funding, ultimately securing the diversity and sustainability of the K-pop industry.
K-pop is not just a popular music genre; it is Korea's future industry and a strategic asset driving diplomacy and the economy. Now is the time to place the music industry at the center of national content industry development policies.
Establishing tax support and financial and guarantee systems for record production companies is a very important policy that contributes to the sustainable growth of the industry ecosystem and the globalization of K-culture. We five music organizations earnestly request the National Assembly and government to positively review and implement these policies.
[Photo provided by the Music Industry Association.]
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