Music executives say tax credits, new investment funds are needed to sustain industry growth
South Korea’s Culture Ministry plans to double its expansion support for small and mid-sized music agencies next year, as the government seeks to bolster the global competitiveness of the country’s thriving music industry, Culture Minister Chae Hwi-young announced Wednesday.
Minister Chae stated that the ministry is actively working to expand the “Global Leap Program for Small and Midsized Music Agencies.” This initiative, introduced this year, is designed to empower promising South Korean music companies to successfully enter and thrive in overseas markets.
“We launched this program this year, and we’re looking to roughly double its scale next year,” Chae confirmed during a crucial roundtable discussion in Seoul focused on strengthening the music industry’s vital ecosystem. He added, “We are also actively discussing the introduction of essential tax credits for music production costs with the fiscal authorities.”
Currently, the Global Leap Program annually selects 10 promising small and mid-sized music agencies, providing them with up to 300 million won ($199,534) in support for up to three years.
This year’s notable recipients include dynamic indie labels representing popular groups such as Rescene, whose song “Love Attack” recently made a surprise resurgence to top Melon’s Top 100 chart. Other beneficiaries include rising stars like Xikers, Big Ocean, and Can’t Be Blue.
Should the planned expansion be approved, the program’s overall budget is projected to increase significantly, from up to 9 billion won this year to as much as 18 billion won next year, demonstrating a substantial commitment to the K-pop and broader music sectors.
The roundtable meeting focused on three critical policy priorities for the South Korean music industry: enhancing global support for small and mid-sized K-pop agencies, implementing new tax incentives and innovative financing programs specifically for music production, and strengthening dedicated support for Korea’s vibrant indie music scene.
According to data released by the ministry, South Korea’s popular music industry continued to demonstrate robust growth last year. Revenue surged by 15.4 percent, and music exports saw an impressive increase of 32.4 percent compared to the previous year, highlighting K-pop’s expanding global footprint.
However, participants at the discussion issued a warning, noting that several challenges could impede the industry’s long-term growth. These include soaring production costs, a widening disparity between major and smaller entertainment companies, genre concentration, insufficient concert infrastructure, and regional imbalances within the industry.
Minister Chae also pointed out a concerning trend: the number of rookie artists debuting has been declining as the costs associated with launching new talent continue to escalate.
“The number of rookie artists appearing on the Circle Chart fell 40 percent last year compared with 2023,” Chae stated, emphasizing the stark reality. He further elaborated, “The gap in production costs between large entertainment companies and smaller agencies is also widening significantly. We must critically examine how long K-pop can effectively maintain its current global momentum under these conditions.”
The Circle Chart serves as South Korea’s official music standard, providing comprehensive rankings for songs and albums based on aggregate physical sales, digital downloads, and streaming data.
Woo Seung-hyun, chairman of the Korea Popmusic Industry Association, highlighted that establishing a single idol group now frequently demands an investment exceeding 10 billion won, even as overall album sales continue to decline.
“While large-scale infrastructure projects are undoubtedly important, we sincerely hope the government will prioritize direct, impactful support for music production itself,” Woo urged. “Just like books, films, and live performances, purchases of recorded music should also rightfully qualify for tax deductions to stimulate growth.”
Kim Jin-woo, CEO of RBW, a prominent K-pop agency, offered valuable insight, stating that it typically takes an artist around three years to begin generating meaningful profit for their agency.
“If an agency spends 1.5 billion won producing each album and releases one or two albums a year, it very quickly becomes a 10 billion won investment over three years,” Kim explained. “The industry is increasingly evolving into a high-stakes game where only artists backed by major companies, capable of investing 10 billion won on a single album, are likely to survive and succeed.”
Kim further implored the government to include K-pop projects in state-backed content investment funds. He stressed that music exports, particularly in the global K-pop market, necessitate significant upfront investment and inherently carry considerable financial risk for agencies.
In response to these concerns, the ministry confirmed its commitment to placing greater emphasis on fostering South Korea’s burgeoning indie music scene.
“Indie music forms the authentic foundation of Korean music, but I believe it has not received sufficient policy attention or support,” Minister Chae acknowledged. “Beginning next year, we plan to provide more focused and strategic support so that new genres and emerging artists can continue to grow, innovate, and perform on the global stage.”
Minister Chae also announced that the framework for “Fanomenon,” an eagerly anticipated K-pop festival organized by the Presidential Committee on Popular Culture Exchange (of which he serves as co-chair), has been finalized. Details will be unveiled later this month, with the grand festival scheduled to be held in December 2027.
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