Photo courtesy of www.brandonmikulka.com
By
YOUKYUNG LEE and RYAN NAKASHIMA, The Associated Press
SEOUL,
South Korea ― As “Gangnam Style” gallops toward 1 billion views on
YouTube, the first Asian pop artist to capture a massive global audience has
gotten richer click by click. So too have his agent and his grandmother. But
the money from music sales isn’t flowing in from the rapper’s homeland South
Korea or elsewhere in Asia.
With
one song, 34-year-old Park Jae-sang — better known as PSY — is set to become a
millionaire from YouTube ads and iTunes downloads, underlining a shift in how
money is being made in the music business. An even bigger dollop of cash will
come from TV commercials.
From
just those sources, PSY and his camp will rake in at least $8.1 million this
year, according to an analysis by The Associated Press of publicly available
information and industry estimates. But for online music sales in South Korea,
he’ll earn less than $60,000.
Here’s how it works.
YouTube
“Gangnam
Style” with its catchy tune and much imitated horse-riding dance is the
most-watched video on YouTube ever.
The
viral video has clocked more than 880 million YouTube views since its July
release, beating Justin Bieber’s “Baby,” which racked up more than
808 million views since February 2010. PSY’s official channel on YouTube, which
curates his songs and videos of his concerts, has nearly 1.3 billion views.
TubeMogul,
a video ad buying platform, estimates that PSY and his agent YG Entertainment
have raked in about $870,000 as their share of the revenue from ads that appear
with YouTube videos. The Google Inc.-owned video service keeps approximately
half.
PSY
and YG Entertainment also earn money from views of videos that parody his
songs.
Google
detects videos that use copyrighted content. Artists can have the video removed
or allow it to stay online and share ad revenue with YouTube. In the last week
of September when “Gangnam Style” had around 300 million views, more
than 33,000 videos were identified by the content identification system as
using “Gangnam Style.”
But
since YouTube can be accessed from all over the world, wouldn’t Asia be
responsible for a significant chunk of the $870,000? The countries with the
second- and third-highest views of the video are Thailand and South Korea.
“Ads
rates vary depending on which country the video is played. Developed countries
have higher ad rates and developing countries lower,” said Brian Suh, head
of YouTube Partnership in Seoul.
And
the country with the most views of “Gangnam Style?” The United
States.
Legal downloads, CDs
“Gangnam
Style” has been downloaded 2.9 million times in the U.S. and has been the
No. 1 or No. 2 seller for most weeks since its debut, according to Nielsen
SoundScan.
The
song sells for $1.29 on Apple’s iTunes Store, the market leader in song
downloads. Apple generally keeps about 30 percent of all sales, so the PSY camp
could be due more than $2.6 million.
How
much PSY keeps and how much goes to his managers, staff and record label is
unclear. South Korean industry insiders said PSY likely gets 70 percent and YG
Entertainment 30 percent for U.S. downloads.
But
earnings from downloads in PSY’s homeland are far from an embarrassment of
riches.
South
Koreans pay less than $10 a month for a subscription to a music service that
allows them to download hundreds of songs or have unlimited access to a music
streaming service. That makes the cost of a downloaded song about 10 cents on
average. The average price for streaming a song is 0.2 cent.
PSY’s
cut for downloads is 14 percent. That falls to 7.5 percent for streamed songs.
Yes, 7.5 percent of 0.2 cent. And that’s before PSY’s “Gangnam Style”
co-composer take his share. The biggest cut goes to his agent and online
retailers.
According
to South Korea’s national Gaon Chart, “Gangnam Style” was downloaded
more than 3.6 million times and streamed around 40 million times as of
November. That adds up to a little more than $61,000.
It’s
likely the fast-fading music CD industry generated even smaller revenue. PSY’s
9 percent cut from sales of 102,000 CDs in South Korea would earn him $50,000
or more, according to an estimate by Kim Dong-hyun, a senior manager at Korea
Music Copyright Association.
As
for many other parts of Asia, illegal downloads and pirated CDS are so
pervasive that only a small minority are willing to pay up for the legal
versions.
TV
commercials
PSY
has been jetting around the world, performing on shows such as “The
X-Factor Australia” and NBC’s “Today,” but such programs usually
cover travel costs and not much else, said Gary Bongiovanni, editor-in-chief of
concert trade magazine Pollstar.
It
is television commercials that are the big money spinner for the most
successful of South Korea’s K-pop stars. PSY has been popping up in TV commercials
in South Korea for top brands such as Samsung Electronics and mobile carrier LG
Uplus.
Chung
Yu-seok, an analyst at Kyobo Securities, estimates PSY’s commercial deals would
amount to $4.6 million this year.
The
money is cool. The products not so much. PSY is now the face of a new Samsung
refrigerator and a major noodle company.
The
family
A
fact little known outside South Korea is that PSY’s father, uncle and
grandmother own a combined 30 percent of DI Corp., a company that makes
equipment that semiconductor companies use to make computer chips.
It’s a stretch to plausibly explain
how the success of “Gangnam Style” will boost DI’s profits but that
doesn’t matter to the South Korean stock market. Perhaps inspired by the pure
power of pop, DI shares surged eightfold from July after PSY’s hit reached No.
2 on the Billboard Hot 100 and No. 1 on the U.K. singles chart.
It
was time to cash in for PSY’s grandmother, who sold 5,378 shares for about
$65,000.
The
share price has fallen since then but is still about double what it was before
the release of “Gangnam Style.”
PSY’s
agent YG Entertainment also has done well. Its share price is up about 30
percent since mid-July. The value of CEO Yang Hyun-suk’s stake has swelled to
about $200 million, making him among the richest in South Korea’s entertainment
industry.
The
future
The
question now hanging over PSY is whether he will replicate the blockbuster
success of “Gangnam Style” or end up remembered as a one-hit wonder.
“When
this slows down, what comes next for PSY?” said Nielsen analytics vice
president David Bakula. “Is it the evolution of a new musical style,
something audiences are going to be craving en masse, or is it something that’s
just a passing fancy?”
Analysts
say “Gangnam Style” alone will not be enough to propel PSY into the
ranks of musicians such as Adele and may not even be enough to make him the
top-grossing K-pop star. That will depend largely on his upcoming album, which
PSY said will be released in March.
Associated Press Business Writer
Ryan Nakashima contributed to this report from Los Angeles.
