13 music companies have filed a lawsuit against MelOn seeking ₩5 billion KRW ($4,253,983 USD) in unpaid royalties during their time under SKT.
According to an exclusive report from Edaily, 13 companies involved in the music distribution industry have filed a civil lawsuit with the Seoul Central District Court on December 31 against Kakao, which currently operates MelOn, and LOEN Entertainment‘s CEO “Shin”, who was the head at the time of the incident. They are seeking ₩4.927 billion KRW ($4,191,838.88 USD) in music royalties that were unpaid.
9 out of the 13 companies who have joined the lawsuit were revealed, and these include:
- Sony Music Entertainment Korea
- Warner Music Korea
- Danal Entertainment
- Digital Record
- NHN Bugs
- Yejeon Media
- YG Entertainment
- YG Plus
- Universal Music
Lawyer Lee Dong Geun, a legal representative of the companies who are suing MelOn, explained the need for a lawsuit.
The defendant (MelOn) arbitrarily changed the settlement methods or created virtual companies to obtain royalties that were originally meant to be distributed to Sony Music and other music related companies.
— Lee Dong Geun
An unnamed company in the lawsuit also explained why they are filing against MelOn.
MelOn’s side has said they will compensate for the damages, but there must be grounds for the compensation, We filed a lawsuit to clarify the case, in order to make our demands more specific.
— Unnamed company
Kakao, which is currently Melon’s parent company, stated that they have already begun internal investigations regarding the compensation of the companies affected, and will continue to consult with the affected companies to confirm the details before moving forward. Back in June, accusations were made against MelOn for not distributing royalties to artists and companies, instead siphoning off profits to a shell-company, LS Entertainment.