Online Music Market
Samsung Electronics, Kakao, and other large mobile enterprises have challenged Melon, leader of the domestic online music service industry. Also, global giant Google is targeting the domestic market as well. Big competition between large businesses is anticipated for the domestic music industry.
According to the industry on August 22, Samsung Electronics will work with Soribada and Kakao will work with Neowiz Internet’s Bugs to compete in the online music industry.
So far, Samsung Electronics has been negotiating with KT Music to expand its business into the music market, but since the negotiations broke down, it is now contacting Soribada. Unless a major issue arises, Samsung Electronics will most likely provide Soribada’s music service by installing it on the Galaxy series of smartphones.
Kakao has been expanding business into game platforms, its mobile content market Kakao Page, and music services since the huge success of KakaoTalk, with over a hundred million users.
An industry associate said, “Kakao’s board of directors have great passion toward the content business, enough to push KakaoPage until it starts showing some results,” and added, “With that said, their entrance into the music market will bring a tremendous amount of impact, and must be watched carefully.”
Melon of SK affiliate LOEN Entertainment is installed as the default music provider on all SK Telecom telephones, and dominated the online music service industry with a share of over 59% in 2012. Mnet.com has a share of 18%, ranking second.
Kakao, the largest domestic mobile platform, has cooperated with Bugs (with a share of 10%, ranking 3rd) to compete against them. The partnership between Kakao and Bugs has been spoken of since the latter half of last year. The two will finally make some results as soon as possible and start providing domestic services for both Android and iOS.
A Kakao representative said, “With the expertise behind the KakaoTalk service, we will provide a distinguished music service best fit for the mobile environment,” and added, “We’re thinking of ways like making a music app or sending music to friends, etc.”
Samsung Electronics has been ahead in the Q2 and Q4 global smartphone sales share by 31.7% (71,380K devices), which is twice the share of second-place Apple. However, it has a weak spot of not being able to build a “content-platform-network-device” (CPND) information communication technology (ICT) environment.
An industry associate said, “Google and Apple both have a C and P environment with content and the operating system (OS) as platforms, but Samsung lacks this,” and added, “Samsung’s effort to release the TIZEN OS and sell music and other content can be interpreted as its attempt to build an independent environment.”
Samsung Electronics is expected to concentrate on providing music and other content services on its mobile devices for now.
An industry associate said, “Samsung will most likely focus on making things convenient for its mobile device users by providing content in a stable manner,” and mentioned, “Since Samsung and Kakao are large enterprises when compared to other businesses that have jumped into the industry, we are expecting huge impacts.”
The current music providers are cautious about the large enterprises entering the market and enforcing their partnerships with Melon-SK Telecom, KT Music-KT, and Mnet.com-LG U+.
However, SK’s affiliate LOEN Entertainment is selling off, according to the Monopoly Regulation and Fair Trade Act, which means it is difficult to expect Melon to make any changes. Melon has no aggressive plans this year, other than increasing its utility by providing some new services on the website by the end of this year.
Foreign businesses trying to enter the domestic market are also noteworthy. In May, global giant Google started providing its “Google Play Music All Access” service which allows unlimited music streaming at US$9.99 per month. The market has been expanded to some markets, including the US, Australia, and New Zealand. Google is so interested in the Korean market that at the Seoul Google Mobile Summit last month, Google Play Director of Google Engineering Chris Yerga spoke directly of expanding music services to South Korea. Also, there have been rumors for years that Apple’s music service iTunes will enter the domestic market.
The industry estimated the online music market size to be 697 billion won (US$623 million) in 2011, 800 billion won (US$714 million) this year and over a trillion won by 2015.