Music Sites Release Joint Statement On Melon's Royalty Embezzlement Suspicions

Following Melon’s recent suspicions of embezzling royalties from copyright holders, fellow music sites Bugs, FLO, Genie Music, and VIBE have released a joint statement.

On July 9, Dreamus Company released the statement, which reads as follows.

Hello.

This is Dreamus Company, operator of FLO.

Due to the recent suspicions of Melon embezzling royalties, music service platforms Bugs, FLO, genie music, and VIBE are going through a dire situation that is difficult to put into words.

In the music service industry, where there is a foundation of trust, the fact that there was illegal activity regarding the calculation of funds is unacceptable and inexcusable. It is also an act that severely damages and compromises the trust that other music service platforms have accumulated with hard work throughout the years.

Up until now, music service platforms Bugs, FLO, Genie Music, and VIBE, among others, have worked hard to protect royalties and develop a legal, paid streaming service between creators and consumers.

Using this situation as a reminder, these four sites will reflect on the seriousness as well as the importance of such actions and work as hard as we can to regain the trust for all music service platforms.

Along with the Ministry of Culture, Sports, and Tourism, these four sites will work together in establishing and implementing a plan to enhance the transparency of funds. We will actively cooperate with all necessary measures including an inspection of the calculation of funds in order to regain the [public’s] trust in our industry.

Thank you.

Melon was accused of embezzling royalties from copyright holders by creating a ghost music label called LS Music. LS Music was reportedly created sometime between 2009 and 2011, when Melon was operated by Loen Entertainment.

The original royalties distribution system in 2011 gave 46 percent of the total profits to Melon, with the remaining 54 percent going to copyright holders. However, Melon reportedly embezzled billions of won (approximately $845,300) of royalties from copyright holders by registering LS Music as part of the royalties distribution system, through which LS Music acquired about 10 percent of the total profits.

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