Trade Mission Engages Key Korean Music Professionals
(Recording Academy Trustee Ruby Marchand is among the delegates participating in A2IM's Trade Mission to Asia. The mission originated from an A2IM/Recording Academy Indie Day on Capitol Hill in 2010 that resulted in a government grant for the trade initiative. Her blog will document her experiences representing The Recording Academy as the mission travels from Seoul to Hong Kong in an effort to increase exports by small- and medium-sized independent music businesses based in New York and Tennessee.)
Friday, Sept. 7:
It takes about 21 hours to fly from New York to Seoul, with a two-hour stopover in San Francisco. We arrived mid-afternoon to a glorious, dry summer day. With a 13-hour difference, Seoul's afternoon is N.Y.'s middle of the night.
After checking into the Seoul Plaza — an awesome, state-of-the-art hotel near the architectural wonder of Seoul's City Hall, which is shaped like a giant, undulating glass wave — the team had a welcome dinner and started to get to know each other. It's already clear that our group has great chemistry and is focused on the exciting mission ahead.
Our first day of meetings was seamlessly coordinated by Catherine Spillman and Alex Choi of the U.S. Department of Commerce team, based at the U.S. Embassy in Seoul. Altogether, 90 key music professionals from the local Korean market participated, including music importers, indie labels and associations, digital music portal sites and aggregators, government agencies, lawyers, publishers, PROs, concert sponsors, festival and concert promoters, media outlets, and journalists.
We began the day with a session prepared exclusively for the A2IM delegates by Jim Sullivan, senior commercial officer at the U.S. Embassy. Jim opened with a fascinating metaphor: he compared Seoul today to a reflective, shimmering drop of water. He spoke about the purity of intent that is inherent in Korean society and how balanced and homogeneous the population is. He emphasized how extraordinary Korea's transformation has been — that in less than two generations, the nation has leapt from being an isolated, unsophisticated country into a cutting-edge, ultra-modern bastion of technology and commerce, always striving for excellence. Jim closed by cautioning us that while Korea is a land that fully respects the law, there is a fundamentally different understanding of contracts here than we have in the States. Contracts in Korea are considered a reflection of the exact conditions during the period in which they're negotiated and signed; but once the state of things changes, it is perceived that the contract may no longer address the new conditions and can be reinterpreted. All documents are "fluid" in this fashion. Anyone doing business in Korea should be prepared to re-engage in discussions many times over to keep their contracts up-to-date with the times.
Once the Korean music professionals joined us, the presentations began. The historic importance of the trade mission was emphasized by all parties. In addition to thanking the U.S. Department of Commerce for their on-the-ground expertise, Rich Bengloff acknowledged the pivotal financial support of the state of New York, represented on our mission by Lennox Ruiz, director of the international division of the New York State Department of Economic Development, as well as the generous assistance provided by the state of Tennessee. Rich closed by offering a gracious thank you to Daryl Friedman and The Recording Academy for being a dedicated partner and advocate throughout the process.
We turned to the American independent music scene. Sire Records co-founder Seymour Stein, our guest of honor, gave a fascinating keynote address comparing the paradigm shift in Korea to the cultural explosion of indie music in the States in the 1950s. Rich Bengloff followed with a comprehensive overview of our robust, ever-evolving indie culture. He stressed how essential it is for independent labels to cultivate business opportunities worldwide and gave several examples of the breadth, visibility and influence of our independent artists. I followed with remarks about the essence and purpose of The Recording Academy. I described our large, diverse membership as music creators and I urged the Korean community to consider our members as potential partners for all kinds of creative enterprises, including recordings and tours. I congratulated our Korean counterparts on the phenomenal success of "Hallyu" — the Korean Wave — which is energizing millions of music fans worldwide. I closed by inviting our hosts to consider joining the Academy and lending their voices, talent and expertise to our community.
The program shifted to two Korean experts. The first was Bernie Cho, president of the Seoul-based creative agency DFSB Kollective, who has a vast knowledge of the local music scene. Bernie was followed by esteemed attorney Chung Hwan Choi of the law firm Lee & Ko. Choi is an expert in IP and entertainment law and has had extensive experience representing U.S. and European firms in Korea, as well as local artists and organizations. Each speaker gave us a clear snapshot of the challenges and opportunities within the Korean market.
Here's a quick overview:
• Korea is the most advanced wired and wireless country in the world. It has one of the highest broadband penetrations and speeds worldwide and is the leader in mobile technology.
• Korea is the eighth-largest digital music market in the world, larger than Sweden, China and India. It's also the first country where digital surpassed physical sales. Currently, physical is making a modest comeback as merchandise, thanks to elaborate packaging.
• Korea is a $3.36 billion music market. The K-pop boom has ensured double-digit local growth on average over the past few years. There's been a 41 percent increase since 2009 in the local market.
• 76 percent of local sales are of Korean music, while international music only accounts for 24 percent of sales. This ratio was reversed 20 years ago.
• The live music scene is thriving, especially for Western artists. Huge festivals are breaking attendance records. There was a 100 percent growth from 2010–2011 in the Korean concert industry.
• The Korean Wave for the export music market reached $177 million last year and reflects an astonishing growth rate of 472 percent between 2009–2011.
• Korea's an extremely social media-savvy society, with local sites like Me2Day and Naver as popular as YouTube, Twitter and Facebook.
• The biggest challenge in Korea is the price of a digital music download. It is 5 cents a song. The price is the same for streaming. Korean portals take a much higher percentage revenue share than U.S. iTunes, for example. The result is that artist revenue share is considerably lower than in other countries. This issue has impacted artists' decisions to prioritize their international careers because it's so difficult to financially sustain their careers in Korea alone. However, there is promising news: the government has allied with music organizations to institute specific pro-artist policies. As of January 2O13, streaming and download prices will begin to rise (up to 13 cents by 2016), rights-holders will get the majority of the revenue, and artists will be able to choose amongst a variety of new plans from the digital portals.
• Korea has had massive success in combating online piracy. A combination of a "three-strikes" local policy and an aggressive legal strategy against the 40 biggest K-pop piracy sites worldwide — called Operation Top 40 — resulted in these sites being shut down and in Korea receiving significant financial damages. Before this approach, online piracy was so pervasive that the logic at the time was to price downloads so low that they could compete with the illegal sites (hence the 5 cent price). This is no longer the case. When it came to shutting down illegal sites emanating from the U.S., Korea filed suit in California, where many servers for social networking sites are located. Interestingly, the fact that the Korean artwork had been registered with the copyright office became the 'smoking gun' to nail copyright infringement in the courts.
• Korea has three copyright societies and the protection of intellectual property rights is rigorously upheld by law.
The day abruptly shifted into high gear and our 15-minute "speed-dating" sessions with Korean companies began. We had three breathless hours bowing, exchanging business cards, and getting a crash course on how to flesh out potential opportunities for licensing, touring, mobile and synch for the indie labels in the room. It was a fascinating one-on-one that will lead to a lot of targeted follow-up once we're home.
How to top all of this off? Why not a personal invitation to join the United States Ambassador to the Republic of Korea, Mr. Sung Kim, for a dinner and reception at his personal residence? We practically skipped down the cobblestoned side-streets of Seoul in our excitement. We were even joined by multiple GRAMMY winner Larry Carlton, who happened to be in town. Ambassador Kim is known as a "foodie" in local Korean circles and the extraordinary spread did not disappoint! He was a gracious host and clearly enjoyed spending time with our group as much as we enjoyed the honor of being with him.
The evening wrapped with a mad dash to the university district, Hongdae, to see a promising Korean indie band perform at a famous local venue. Galaxy Express are the real deal!
My final take-away from our Korean visit was the message given us by the U.S. Embassy's cultural attaches. They want to work with American artists and musicians coming to Korea. They can help create performance opportunities and make local connections to enrich your trip. Academy members, if you are fortunate enough to visit the thriving and gracious city of Seoul, please don't hesitate to call the Embassy's Cultural Office at 82-2-397-4535 or email them at firstname.lastname@example.org. Tell them you're a member of The Recording Academy and are following up on the Trade Mission visit.