Melon falls off cacao… Independent as’Melon Company’ in June

Kakao announced the division of melon on the 12th. [사진 멜론 캡처]

Korea’s No. 1 music platform, Melon, will be independent from Kakao. It is attracting attention whether it can create a synergy effect with Kakao Entertainment, which has built an entertainment business value chain (value chain).

Kakao announced on the 12th that it would establish a new Melon Company (tentative name) by dividing the melon business division (sound source service, musical, ticket). The dividing date is June 1. The CEO is Lee Jin-soo, the respective CEO of Kakao Entertainment. An official at Kakao said, “We decided to split the Melon business unit physically, considering it was time to actively expand the market based on Melon’s assets, expertise, and capabilities.”

Melon, made by SK Telecom in 2004, was sold to Steinvest, a Hong Kong private equity fund in 2013, and was acquired by Kakao for 1.87 trillion won in 2016. Since then, it is under Kakao M. In September 2018, Kakao merged with Kakao M and became a member of the headquarters. Melon has been an unrivaled music source market share platform in recent years, but the gap is gradually narrowing with the emergence of global platforms such as YouTube Music and Spotify. According to the ‘2020 Music Industry White Paper’ of the Korea Contents Agency, the music market share as of 2019 was 40.30% for Melon, 24.6% for Genie Music, and 18.5% for Flow.

Lee Jin-soo, CEO of Kakao Page, interviewing with JoongAng Ilbo last year. Reporter Kim Sang-sun

There are many analyzes that this spin-off of Melon is a paving stone for Kakao Entertainment’s value chain strategy, which ended the merger process on the 4th. Kakao Entertainment has most of the competencies necessary for the entertainment industry, including original story intellectual property (IP), global platform (Kakao Page), actors and K (K) pop artists, and video and sound production capabilities (Kakao M). The only thing that it didn’t have was the music platform, but Melon, which was a member of the headquarters, spun off this time, and it is evaluated that the governance structure for collaboration was well established. It is also interpreted for the same reason that Lee Jin-soo, who grew up Kakao Page, became the CEO of Melon Company. The possibility of a merger between the two companies in the future is also being discussed both inside and outside the industry.

The company said, “We will build a competitive business foundation that can dominate in the global market by combining the capabilities of various content businesses such as music, video, and stories possessed by the Kakao community.”

Reporter Park Min-je [email protected]