2007.10.17 14:10

Collapse of Traditional music industry

Music Industry shrank from $400 M market in 2000 to less than $100 M market in 2006, while Digital Music Industry grew to $340 M in 2006 from $91 M in 2001. It is mainly due to piracy music distribution through P2P. Korea's high penetration rate of broadband service helped prevailingness of P2P in some degree.

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Telco's Rock'N Roll

During crashing market, Telecom and internet companies aggressively acquired music lable companies. SK Telecom, Korea's #1 wireless carrier, acquired YBM Seoul Music in 2006. Bluecode acquired DoReMi media in 2005. Only 2 music lable company among top 5 music lable company in 2005 survived in 2006. (SM Entertainment, Yedang Entertainment are survivors.)

How did Telco and internet companies corrupted online music market? Let's see the composition of digital music market in Korea.

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In 2005, ringtone and ring back tone market took 80% of digital music market. There is no "music" market in digital world in Korea. There are only ringtones, ring back tones, and BGM's.

(There is still a hope, though. Download / streaming music is growing.)

Online piracy is still a problem

Piracy music is still counts $400 M market, which is about the size of all digital music market, or 5x times larger than traditional music market in Korea. Key to the digital music industry toward growth is how to turn illegal music listners to legal users, eventually paying listners.

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