Joseph Hwang
* This article references the “2023 Music Industry White Paper,” released by the Korea Creative Content Agency, which operates under the Ministry of Culture, Sports, and Tourism of the Republic of Korea.
Historically, music was sold in physical containers like discs or tapes. However, in the digital age, data on CDs or cassettes is no longer the only format that can be sold; this change has revolutionized the industry.
Music is an art form comprising sound. Sound consists of air vibrations, which are ephemeral and dissipate when struck. Therefore, to physically share recorded music, the vibration data must be captured onto a recordable medium. This process is referred to as “fixation” in copyright law.
In the analog music era, the fixation was dictated by the seller; however, in today’s digital music landscape, it is dictated by the buyer. Additionally, since mobile phones serve as personal containers for individuals, sellers do not incur the costs of fixation. Rather, these costs are shouldered by the music platforms that link sellers and buyers. Consequently, you only need to offer the data to start a business, excluding fixation. In the K-pop industry, this data is referred to as “sound sources.” Now, music producers merely need to sell sound sources to operate their businesses.
In the era dominated by album sales, record store transactions served as benchmarks for an artist’s popularity and influence. Now, in the digital age, where nearly all audio content is available for purchase, music sales charts have transitioned to download and streaming rankings on music platform websites. Essentially, these charts function as both a metric of power and a medium. When a song earns a position on these charts, it is treated as a product known as a sound source, with its quality being trusted. Furthermore, it also acts as a form of advertisement, similar to a street billboard. As long as a sound source remains on this chart, it functions like an ad, encouraging sales. This is why this chart is sought after by so many.
While music deserves a spot on this chart purely for its quality, we’ve discovered that the contrary can also spur sales. An individual devised a method to apply computer techniques to rank specific music on this chart. Rather than reflecting genuine market demand, individuals are clicking “like” and downloading for profit, irrespective of actual market conditions. When this behavior reaches a critical mass, something remarkable occurs: tracks that were once at the bottom of the charts surge to the top. Most consumers, oblivious to this phenomenon, trust the charts and continue consuming. Thus, false stars are created.
While South Korean law prohibits this practice, instances of punishment under this regulation are rare. This illegal activity is referred to as “sound source hoarding” in the market. It entails misleading consumers by fabricating false data, which creates an artificial demand that yields unjust profits. Consequently, this can lead to civil unjust enrichment and criminal interference with business operations. Furthermore, the Music Industry Promotion Act—a special law in South Korea—not only forbids such actions but also imposes penalties on those found guilty under the following provisions.
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MUSIC INDUSTRY PROMOTION ACT
Article 26 (Establishment of Order in Distribution of Music Records and Subsidization Therefor)
(1) No person who conducts a business referred to in subparagraphs 8 through 11 of Article 2 or an author or a holder of neighboring right under the Copyright Act of music records, etc. (hereinafter referred to as “business entities related to music records or music video products”) shall do any of the following acts:
1. Unfairly buying up of music records, etc. manufactured, imported, or distributed by business entities related to music records or music video products or coercion of persons concerned into buying them for the purpose of increasing their sales volumes;
2. Announcement of the sales volumes of music records, etc., despite being aware that business entities of such music records, etc. have been involved in any act referred to in subparagraph 1;
3. Other acts of hampering the sound order in distribution of music records, etc. prescribed by the Ordinance of the Ministry of Culture, Sports and Tourism.
Article 34 (Penalty Provisions)
(3) Any person who falls under any of the following subparagraphs shall be punished by imprisonment with labor for up to two years or by a fine not exceeding 20 million won: <Amended on Mar. 22, 2016>
2-2. Any person who has committed a prohibited act, in violation of Article 26 (1), or failed to comply with an order under 26 (3);
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Sound source hoarding is a grave offense that skews the marketplace, misleads consumers, and undermines artists. While bulk purchases by fans are common and voluntary, sound source hoarding is an unlawful act aimed solely at generating artificial popularity, fame, and profit for the artist and their management. When consumers lose faith in the marketplace, it negatively impacts society as a whole. Management companies sometimes engage in this practice without the artists’ awareness, often through specialized agencies. However, it is only a matter of time before these actions are uncovered, leading to severe damage to the artists’ reputation and popularity.
The shift in revenue models due to digital music download services has heightened the temptation for distortion and manipulation while making the technology more accessible. Although networked music delivery offers efficiency and convenience, it also amplifies the risk of misuse. If this issue isn’t addressed, the music industry will struggle to evolve.
* References and Quotations:
https://welcon.kocca.kr/ko/info/trend/1953646
https://www.koreaherald.com/view.php?ud=20151027001137
https://en.namu.wiki/w/%EC%9D%8C%EC%9B%90%20%EC%82%AC%EC%9E%AC%EA%B8%B0
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