Risienne Shines After Two Years... Small Agencies Lack the Funds to Survive

Funding Gap in Content Industry Reaches Up to KRW 2.3407 Trillion
Production Cost Gap Between Large and Small Companies at 29 Times
45% of Idols Drop Out Within 3 Years of Debut
Government Expands Funds to Attract Private Capital
Copyrights and IP Cultural Finance Emerges as an Alternative

Lisene. Provided by The Muse Entertainment

While K-content is making remarkable strides in the global market, funding for nurturing the next stars and works is running dry. The annual funding gap for domestic content companies exceeds KRW 2 trillion. There is a growing call to expand the private investment market utilizing copyrights and intellectual property (IP), allowing creators and production companies to endure until they can prove their commercial potential.

According to the Korea Creative Content Agency and other sources on August 19, 2025 domestic music industry sales grew by 15.8% compared to the previous year, while exports surged by 32.4%. However, the investment gap between large agencies and small-to-medium producers continues to widen. In 2023, the average annual music production cost for large companies reached KRW 43.11 billion—about 29 times higher than the KRW 1.49 billion average for small-to-medium enterprises. International performances were also heavily skewed, with large companies hosting an average of 83.4 concerts per year, compared to just 4 for smaller firms.

The girl group Risienne is a case in point, illustrating the realities faced by small producers. Their song “Love Attack,” released in August 2024, climbed to the top of the Melon “Top 100” chart last month—nearly two years after its initial release. Their remake single “Pretty Girl” also achieved first place on music shows. Had investment been cut off based solely on early results, such a turnaround would have been unlikely. The agency, The Muse Entertainment, recorded operating losses of approximately KRW 5.6 billion last year, falling into capital impairment.

For rookie groups to become profitable, years of investment are required for trainee education, album and music video production, and marketing. At a Ministry of Culture, Sports and Tourism roundtable last month, Jinwoo Kim, CEO of RBW, commented, “If you spend KRW 1.5 billion per album and release one or two albums a year, approximately KRW 10 billion is needed over three years,” emphasizing the need for opportunities to spread out risks.

Large agencies can absorb the underperformance of some artists with revenue from other business segments, but small firms struggle to produce a follow-up album if early results fall short. In this structure, the capital strength of an agency, rather than an artist's potential, determines survival.

A study by Professor Jungsub Kim of Sungshin Women’s University, analyzing 1,182 K-pop idol groups that debuted between 1996 and 2025, found that only 55.03% remained active after three years. The dropout rate was roughly 63% within five years, reaching around 82% within ten years. For small- and medium-sized agencies, the so-called “seven-year curse” in reality arrives within just one to three years.

The funding shortage is not unique to K-pop. The Korea Culture & Tourism Institute estimated the 2024 funding gap for the domestic content industry at at least KRW 1.6348 trillion. If companies that secured only a portion of their needed funds are included, the gap rises to KRW 2.3407 trillion.

Content companies grow based on intangible assets such as copyrights, IP, creator capabilities, and fandom, but the financial sector assesses businesses mainly through collateral, credit ratings, and past performance. This is why even those with promising ideas encounter funding barriers before their ideas can materialize into works.

This year, the government is pursuing the creation of policy funds for content worth KRW 731.8 billion. The Ministry of Culture, Sports and Tourism and the Financial Services Commission also announced a KRW 150 billion “K-Culture Value-Up Fund” last month. While policy finance serves as a safety net to correct market failures, it faces limitations in supporting the entire industry relying solely on government capital.

Cultural finance—an alternative approach where the future revenues from copyrights and IP are converted into investment assets—has come under the spotlight. Production companies raise production costs through private investment and share content profits with investors. When recovered funds are reinvested into rookies and new works, this can create a virtuous cycle for the industry as a whole.

In Korea, Musicow has been linking music IP and the financial market by issuing and trading trust beneficiary certificates based on music royalty income as underlying assets. Investors receive royalty income in proportion to their share, while creators and rights holders can secure production funding by securitizing future royalty income.

The Korean Music Copyright Association’s collected royalties increased from KRW 406.5 billion in 2023 to KRW 445.3 billion last year. The Korea Intellectual Property Research Institute estimated the potential value of the domestic music earnings securities market to be up to KRW 22.6615 trillion. Reflecting recent growth trends, it is expected to reach up to KRW 25 trillion.

Musicow is expanding its investment scope beyond trading individual tracks toward the music production market. Last July, Shinhan Investment Corp. and Musicow Invest agreed to create the first “Music IP Fund” worth KRW 40 billion. Depending on results, additional follow-up funds worth more than KRW 100 billion are planned.

However, simply trading copyrights of existing tracks cannot fundamentally resolve funding shortages in production. It is crucial to supply capital from the planning and production stages of new IP, ensuring that box office revenue cycles back to rookies and future projects. There must also be objective IP valuation standards and investor protection mechanisms in place.

Professor Kim emphasized, “There are clear limitations to relying solely on government subsidies and small, short-term support. We must establish a cultural finance system that brings in private and foreign capital to fuel growth in the production market.”

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