National Assembly: "OTT Should Compensate Directors and Writers Each Time Content Is Watched, Like Music"

Director Compensation Necessity Agreed by Law Intent
But OTT Industry Opposes: "Investment Loss Risk Is Natural
Even If Losing Money, Paying Copyright Fees Is Unreasonable"

The Netflix series "Squid Game," which is estimated to have generated over 1 trillion won in global sales with a production cost of 20 billion won, has raised compensation issues. Since the intellectual property (IP) rights belong to Netflix, it is reported that director Hwang Dong-hyuk and the production company did not receive adequate compensation.

[Asia Economy Reporter Cha Min-young] Just as copyright holders receive royalties whenever music is played, a bill has been proposed that would require online video services (OTT), IPTV, and broadcasters to provide compensation to directors and writers each time they screen movies or dramas, sparking controversy. Renowned domestic directors such as Park Chan-wook, Hwang Dong-hyuk, and Yoon Je-kyun have publicly expressed support, stating, "We want to reclaim our position as copyright holders as directors." However, platform companies and the broadcasting industry have expressed concerns, arguing that "since payments have already been made to production companies holding the content's copyright property rights, requiring additional royalties every time the content is played constitutes double payment."

Culture, Sports and Tourism Committee Pushes for Revenue Sharing with Directors and Screenwriters

According to industry sources on the 27th, Assemblyman Yoo Jung-joo of the Democratic Party and Policy Committee Chair Sung Il-jong of the People Power Party, both members of the National Assembly's Culture, Sports and Tourism Committee, each introduced partial amendments to the Copyright Act in August and September, respectively. Yoo Jung-joo's bill was co-sponsored by 37 members, while Sung Il-jong's bill had 10 co-sponsors.

The amendment primarily allows the chief director and screenwriter, as authors of audiovisual works, to exercise the right to claim compensation proportional to revenue from IPTV, cable TV, general broadcasters, theaters, and OTT industries that provide the content to the public. It also stipulates that compensation must be paid even if the copyright has been transferred or inherited, and the copyright property rights have been assigned to production companies or others. Since compensation is proportional to sales, payment is required even if losses occur after broadcasting. According to the assembly members' offices, similar provisions exist in Europe, France, Chile, and Colombia, which specify the right of authors to receive fair compensation. Europe reportedly has regulations under the 'European Union Digital Single Market Copyright Directive' that require digital platforms like Google and Facebook to distribute revenues earned from reusing press publications to authors. The amendment also includes provisions that the scope, form, criteria for determining compensation, and payment methods will be stipulated by presidential decree.

Supporters: "Copyright royalties collected in Europe cannot be received here due to insufficient domestic laws"

Claims were also made that due to deficiencies in domestic copyright law, royalties cannot be received from overseas. Assemblyman Yoo Young-joo stated, "In 2020, approximately 625 million euros (about 826.1 billion KRW) were collected as audiovisual copyright royalties by the International Confederation of Societies of Authors and Composers (CISAC)," adding, "Since Korea lacks relevant laws, we cannot receive our share from this amount."

However, the share of Korean authors in the collected audiovisual copyright royalties is not confirmed. It is also known that royalties collected in Europe for Korean directors and screenwriters have not been distributed to domestic authors. A Ministry of Culture, Sports and Tourism official said, "The government cannot verify this figure," but added, "However, regardless of the current legislative amendments, under the Berne Convention and other agreements, there are provisions for national treatment regarding copyright, so it is understood that royalties can be received." Article 5 of the Berne Convention states that "authors shall enjoy in countries of the Union other than the country of origin the rights which their respective laws do now or hereafter grant to their nationals, as well as the rights specially granted by this Convention."

Film director Yoon Je-kyun (representative of the Korean Film Directors Association) is speaking at the policy debate titled "Directors of Ten Million Viewer Films Finally to the National Assembly: Discussing Fair Compensation," held on the morning of August 31 in the main conference room of the National Assembly Members' Office Building.
[Image source=Yonhap News]

The Directors Guild of Korea (DGK) and others have also expressed that directors have a low status in front of large production companies demanding full transfer of intellectual property (IP) rights, making it difficult to assert sufficient rights. Since additional compensation can only be obtained by including special contract clauses, there is dissatisfaction among directors that negotiation power is significantly lower unless they are star directors. Yoon Je-kyun, DGK representative, said, "There are over 500 DGK members, and an investigation into average annual salaries showed less than 20 million KRW," adding, "For the sake of our struggling juniors, we want to receive at least enough support to make a living, which is why the Directors Guild has taken the lead in urging amendments to the Copyright Act."

OTT Industry: "Bearing investment risks and suffering losses, yet asked to pay royalties"

On the other hand, the OTT, paid broadcasting, and theater industries agree on the need for compensation for directors but express concerns about the impact of the amendment. A paid broadcasting industry official said, "Unlike the music industry, which holds copyrights through self-production, audiovisual works involve dozens of personnel and billions of KRW in capital during production, with production companies bearing investment risks and securing copyrights," adding, "We purchase licenses for amounts ranging from a few million to several hundred million KRW, so being asked to pay separate royalties to directors and writers is harsh for our industry."

A bigger concern is that the entire domestic film industry could shrink. An OTT industry official said, "When broadcasters negotiate purchases with content providers (CPs), considering additional costs due to compensation rights makes them want to lower purchase costs, which complicates supply negotiations and hinders the activation of audiovisual distribution," adding, "Currently, drama series are more profitable than films, and there is a growing tendency to avoid independent films and other movies that seem unlikely to generate revenue." According to statistics from the Korean Film Council, as of 2022, half (16 out of 30) of the top-grossing films were Korean works. As an alternative, a system for additional incentives for directors, similar to the Hollywood model in the U.S., has also been suggested.

Issues of fairness were also raised regarding actors, music directors, art directors, cinematographers, and others excluded from the authors specified in the amendment. Another OTT industry official argued, "Audiovisual works are joint works, making it impossible to calculate each participant's creative contribution," adding, "If additional compensation is recognized only for specific roles, it would discriminate against other rights holders involved in production and be unfair." They predicted that if all rights holders wanted to exercise the right to claim compensation, audiovisual distribution itself would become difficult.

Academia Points Out Lack of Understanding of Intellectual Property Laws

In academia, while there is agreement with the legislative intent of "fair compensation," it is pointed out that the bill was drafted without sufficient understanding of intellectual property laws, and that instead of rushing legislation, academia and industry should come together to discuss the matter. Intellectual property expert Professor Park Sung-ho of Hanyang University Law School said, "Since films are joint works, even French law, which domestic law refers to, uses the term 'presumed' rather than explicitly naming the director as the author," adding, "Also, this amendment applies fair compensation only to audiovisual works, but it is necessary to establish a broader principle that can apply to other works such as music and art, and to include audiovisual works within that scope for a more meaningful discussion."

This content was produced with the assistance of AI translation services.