Joseph Hwang
* This article is based on the "2023 Music Industry White Paper" published by the Korea Creative Content Agency, part of the Ministry of Culture, Sports and Tourism of the Republic of Korea.
In the past, music records were sold in containers such as disks or tapes, but in the digital era, the only data that can be sold is what is contained on the CD or cassette. This single fact has changed everything.
Music is an art made of sound. Sound is the vibration of air, a volatile medium that dissipates once it's struck, so physically delivering recorded music to someone requires fixing the vibration data on the recordable container. This is called "fixation" in copyright law.
In the analog music era, this fixation was determined and provided by the seller, but in the networked digital music era, it is determined by the buyer. Moreover, since a mobile phone is almost like a container assigned to each individual, the costs of fixation are not borne by the seller. Instead, the costs are borne by music portals that connect sellers and buyers. This means that all you have to do to start a business is provide the data, minus the fixation. In the K-pop market, this data is called "sound source". Music producers now only need to sell sound sources to do business.
In the era of album sales, record store sales were an indicator of an artist's popularity and influence. In the age of digital music, where almost all sound sources are sold, music sales charts are replaced by download and streaming charts on music portal sites. In other words, music portal charts are both power and media. When music is ranked on these charts, it is recognized as a commodity called a sound source, and its quality is trusted. It is also an advertising board, like a billboard on the street. While a sound source is on this chart, it's like an advertisement and stimulates sales. That is why everyone covets this chart.
While music should be on this chart for its own sake, we've found that the opposite can also be a good sales driver. Someone's idea made someone start treating computer techniques to rank certain music on this chart. Instead of entering the charts caused by natural market demand, someone intentionally clicks "like" and downloads for profit, regardless of the market. When this behavior reaches a certain threshold, a miracle happens: music that was at the bottom of the charts suddenly rises to the top. Most consumers, unaware of this situation, trust the charts and consume. This is how false stars are born.
South Korean law makes this illegal, but finding a case where anyone has been punished under this law is challenging. In the market, this illicit behavior is called "sound source hoarding". Since it is a behavior of deceiving consumers by creating false data to generate false demand to gain profit without justifiable cause, it can result in civil unjust enrichment and criminal obstruction of business. In addition, the Music Industry Promotion Act, a special law in South Korea, not only prohibits this behavior but also punishes those who commit this crime according to 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 serious offense that distorts the marketplace, deceives consumers, and discredits artists. While collective bulk purchases by fans are normal and voluntary, sound source hoarding is an illegal activity done solely to create false popularity, fame, and financial gain for the artist, including the management company. When consumers do not trust the marketplace, the market damage is done to all society. Management companies do some occasions without the artist's awareness and by specialized agencies. But it's only a matter of time until it's discovered, and the artist's reputation and popularity are severely damaged.
As digital music download services have changed the recording industry's revenue model, the temptation to distort and manipulate has become greater and the technology more accessible. The networked delivery of music has brought efficiency and convenience, but it has also increased the temptation for evil. Unless this problem is prevented or addressed, the music industry will not be able 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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