Here’s Why The Global Streaming Powerhouse “Spotify” Is Actually Struggling In Korea
Spotify, the world’s largest music streaming platform, released a press release to mark one year of entering the Korean market. Taking a look at this, K-Pop music has been streamed around the world an average of 8 billion times a month. This is a 27% increase from the monthly average (6.3 billion plays) before Spotify entered Korea.
Despite these achievements of K-Pop, Spotify’s domestic market shares are insignificant. Although Spotify launched its service in Korea last February, becoming the 93rd country to use this platform, the domestic market share is currently only around 1%.
According to the market share data released by Mobile Index, an app analysis company, Melon (37.28%) ranked first in the domestic music streaming platform. Next was Genie Music (19.24%), YouTube Music (19.22%), and Flo (13.31%). It was then followed by Naver Vibe (4.08%), Kakao Music (3.05%), Bugs (2.37%), and Spotify (1.46%).
In fact, Spotify is the number one streaming powerhouse in the world. It has 180 million paid subscribers, more than double of Apple Music (80 million). It provides services in 184 countries and has a global market share of 35%. When Spotify started its domestic service last year, they expected that it would bring about a change in the domestic streaming market, but it looks like the the landing has failed for now.
There are several analyses regarding this issue. First, they pointed out that the there was a lack of securing domestic artists music when the service first started. At that time, Kakao Entertainment, Genie Music, Bugs, Danal Entertainment, and Dreamus Company stopped supplying music. The same problem with revenue distribution when Apple Music entered Korea in 2016 was being repeated. But now, the problem has been resolved.
The uncompetitive subscription plan is another possible reason for this. In Korea, only two types of rate plans (excluding VAT) can be selected: individual 10,900 KRW ($~9.10 USD) and duo 16,350 KRW ($~13.65 USD). In other countries, it is subdivided into students, individuals, duo, and families. Spotify also provides the ability to listen to music for free when viewing ads in other countries, which has contributed to the significant increase in its global share. However, this function is not provided in Korea. This is because the domestic streaming royalties are three to four times higher than the United States.
Here’s what Korean netizens had to say regarding the rate plan issues.
- “More than the expensive subscription, the platform is so difficult to use. It’s hard to even search a Korean song.”
- “They don’t have the family subscription plan like in other countries and it’s too expensive.”
- “I wish they could just lower the price.”
- “They have a free rate plan overseas but they don’t offer that option in Korea and it’s more expensive. It would be strange if they were doing well in Korea.”
The various discount benefits of domestic music platforms using telecommunication plans are also a high barrier for Spotify. KT and LG U+’s Genie Music and SK Telecom’s Flo are supported by their parent company to provide discounts. A manager at a telecommunication company stated, “When purchasing a smart phone, it is common to use an expensive plan of the first three to six months to receive public subsidies. At that time, there are many customers that use Genie Music or Flo, which are provided as free benefits, and continue to use it even after it changes back to being a paid option”.
YouTube Music is another competitor to Spotify. YouTube allows premium service users to use YouTube Music for free. Unlike online video services (OTT) such as Netflix and TVing, the combined use of music platforms is not high. YouTube Premium is popular among teens and young adults because they can watch videos without ads and use the music platform for free. In response, Spotify stated, “The first year is just the start for Spotify’s long journey. We will do our best to grow together with domestic and foreign artists in the Korean market by connecting Korean artists to the world”.