The Peninsula

Spotify’s Entry Indicates How Seoul Shapes Competition

What Happened

• Music streaming giant Spotify will launch a localized service in South Korea in the first half of 2021.
• The share of users listening to K-pop has increased by more than 2,000% in the last six years and the company hopes to add more artists to their platform.
• Spotify will compete with local music streaming services such as Kakao’s Melon and KT’s Genie Music.

Implications: Korea remains a highly selective market for multinational technology companies to gain entry. Spotify’s upcoming launch in South Korea appears at first to suggest that the country has turned the corner since Seoul’s regulatory disputes with firms like Google and Uber. However, the terms of Spotify’s introduction in Korea suggest that the music streaming platform will be constrained from competing unreservedly with domestic competitors. For instance, Spotify users in Korea will not have access to free versions of the platform that are available in other markets. Meanwhile, Korean music studios will have the opportunity to partner with Spotify to increase consumption of K-pop music in the 92 markets where the platform’s 320 million users reside.

Context: South Korean courts ruled in 2014 that Uber was illegally using non-licensed private vehicles for commercial purposes. This precipitated increasing challenges for the ridesharing app’s operations in the country, culminating in the exit of its food delivery service UberEats in 2019. In addition to the company’s problematic early approach that focused on cultivating a user base before seeking regulatory approval, the company threatened two key constituents in the Korean marketplace: the nascent domestic technology firms and taxi drivers. While Seoul looks to balance the interests of these two groups, regulators will show little patience for technology firms that act like Uber.

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

Korea View was edited by Yong Kwon with the help of Melissa Cho and Alexandra Langford. Picture from flickr user Republic of Korea.