General Trends in Korean Media 2007
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  • 1. General Trends in the Korean Media in 2007/8 http://eng.kpf.or.kr/eng/html/general/2008.php Suring Internet newspaper The Act on Guarantee of Freedom and Functions of Newspapers (the Law on Newspaper) was signed into law in January 2005 and implemented from July 28, which gave legal standing to Internet newspapers as legitimate media. Three years after the Law on Newspaper was introduced, Internet newspapers emerged as the fastest-growing media in Korea. As of end-2005, there were 286 Internet newspapers. At the end of 2006, there were 626 registered Internet newspapers. According to the Culture Ministry’s publication registration data, the Law on Newspaper allowed a whopping 1,040 online newspapers to obtain the media company status as of April 30, 2008. In other words, more than 1,000 Internet newspapers popped up in a three-year span. Given that there are many unregistered Internet newspapers, the actual number of Internet media is estimated to be much higher than 1,040. Among 1,040 registered Internet newspapers, about half (48.5 percent, or 504 companies) are based in Seoulmetropolitan area, and 14.6 percent (152 companies) are based in Gyeonggi Province. In total, 63.1 percent of Internet newspapers are based in Seoul and surrounding areas. The Korea Press Foundation conducted a survey for publishing a yearly report and discovered that among 958 registered online newspapers as of February 14, 2008, the number of papers in operation stood at 764. Recently, the number of bloggers is sharply going up, and even professional bloggers with expertise in specific fields are reshaping the way people access information on the Internet. The production and distribution of user generated content, which is known as UCC (user created content) in Korea, is also diversifying Internet media sources. In addition, personal Internet broadcasting and online communities specializing in news production and public opinions are on the rise, suggesting that online media’s influence will continue to rise in the foreseeable future. Accordingly, the legal disputes about Internet newspapers and personalized online media are expected to continue for a while. Portal’s responsibility and legal status in dispute A growing number of people rely on major portals as the source of news. The influence of portals as a news provider, therefore, is on the rise. At the same time, portal sites are under fire for avoiding social responsibility even though they actively exercise influence by editing the news section and selecting top search words. In March 2007, theMinistry of Information and Communication unveiled a set of measures against pornographic materials on the Web, indicating the social responsibility of portal sites officially. Afterwards, in May, the National Assembly held a forum in which lawmakers weighed the bill dubbed "Portal Law,"opening a debate about the regulation of portal sites. There are mainly three directions concerning the regulation of portal sites. First, the government could include portal sites into the category of online newspaper, forcing them to take responsibility as media companies. Second, portals could be subject to the Press Arbitration Law, applying the existing press regulations to portals. Third, the government might attempt to regulate all the services provided by portals, while treating portals as traditional media firms. On May 8, 2008, the Fair Trade Commission announced a corrective measure against the fair trade law violations of Internet portal site operators. The FTC classified NHN, operator of the Naver.com, as a dominant player in the market. It struck a penalty of 227 million won on NHN, and dropped the charges against Daum Communications, Empas, KT Hitel, which runs Paran.com. The FTC said that NHN is a dominant player in the market in consideration of its revenue (48.5 percent share in the market as of 2006) and search queries (69.1 percent as of December 2006). NHN said it would file a suit against the FTC’s punitive measure, arguing that Internet portal business is a market of full competition where there is no entry barrier. There was a court ruling that placed a portal in the category of news media. On May 18, the Seoul District Court said in a ruling that portal Web sites should be held responsible for libel damages. The ruling said, "Internet portal site, Naver.com, provides news in partnership with various news media companies, and its role does not stop at delivering the filed news but plays the role of a news media, handling coverage, editing and distribution of news." Government regulations are expected to step up for portals and a legal control is also likely to be introduced in the near future as both ruling and opposition party lawmakers are proposing bills that would control portal sites amid a flurry of court rulings viewing portals as news media. Candle light vigil and portal’s role in shaping public opinion The candle light vigil concerning the import of American beef started from Daum’s online community, Agora. Netizens began to pay attention to the harmful effects of American beef, and expressed their concerns on Agora, which then spread to other communities and Internet cafes. Messages about American beef and candle light vigil were vigorously posted on Daum’s Agora and other online cafes, and Daum’s power as a major portal helped spread all the information far and wide, demonstrating the influence of a portal. Daum’s Agora quickly emerged as the hub of online debates about candle light vigil against the import of American beef, but it also got requests to remove messages encouraging people tounsubscribe to conservative newspapers and threatening advertisers not to carry ads in those papers. Daum asked the Korea Communications Standards Commission to deliberate on the issue. Chosun Ilbo, a major conservative newspaper, sent a formal document to Daum, asking the portal to delete messages that staged a campaign against advertisers affiliated with Chosun. The government and other newspapers also sent warnings to Daum, and the portal operator had to delete controversial messages and replies. The candle light vigil incident led to a dispute about the political standing of major portal sites. Some netizens claimed that Naver.com is conservative because it delivers chiefly news from Chosun, JoongAng and Dong-A newspapers, while Daum was regarded as a liberal media because its Agora allowed for free discussions. But portals are basically functioning as a place where news is delivered, and Naver.com’s news section and Daum’s Agora, where discussions are held, are fundamentally different. Daum, meanwhile, seems to push for a participatory discussion channel while Naver.com aims to become an information distribution channel. The candle light vigil sparked an intense dispute about portals’ political stance, and Daum’s Agora touched off a confrontation between portals and major newspapers. At Agora, there were campaigns against advertisers linked with Chosun Ilbo. In retaliation, Chosun, JoongAng and Dong-A decided to stop providing their news to Daum. Afterwards, other newspapers such as Maeil Business Newspaper halted providing their news to Daum. The Korea Communications Standards Commission ruled that it is illegal to put pressure on newspapers advertisers on the Internet. Amid concerns that the ruling would undermine the free of expression on the Internet, even prosecutors began to investigate the case. As a result, local online users began to move to foreign Web sites such as YouTube Korea, Google, and Yahoo! Korea because these foreign sites are relatively free from government regulations. The massive move to foreign sites, however, raised concerns that local Internet portals might lose their control on the market to foreign competitors. There was also a view that the current situation put local portals at a disadvantage compared with foreign operators. Online media and news copyright News is increasingly distributed through the Internet. But the side effect is that more illegal copying of news or links create social problems. The widespread misguided perception is that news content is free on the Web. Not only individuals but also corporations and organizations often violate news copyright. The Korea Online Newspaper Association sent a formal document to portals, calling for site operators to delete news that are sent seven days ago or earlier. In September 2007, 240 news content providers led by the Korea Online Newspaper Association, the Korea Internet Newspaper Association, the Korea Internet Contents United formed the News Content Copyright Holder Association in order to protect their intellectual rights against portal sites. As the conflict between portal sites and news media intensified, the Ministry of Culture and Tourism (whose name has since changed into the Ministry of Culture, Sports and Tourism) consulted with related organizations including the Korea Online Newspaper Association, the Korea Internet Newspaper Association, the Korea Internet Contents Unitedas well as portal operators before setting about to set up a news usage guideline in September 2007. The final version came out in November 2007. The agreement governs how news intellectual property should be protected in relation to news copyright expiration, limit on modification, direct links and prevention of abusing. It also include clauses aimed at ensuring editorial fairness by specifying technical issues such as the disclosure of editorial design and preferences at portal news sites, channels to seek damages for malicious reporting, prevention of illegal copying, standardization of classification and delivery.
  • 2. Newspaper companies also set out to ensure their intellectual property protection for their news content. The Korea Press Foundation took over the onlinenews copyright management from the Ministry of Culture, Sports and Tourism, and launched News Korea (www.newskorea.or.kr), an all-in-one news content distribution site. New Korea is now joined by 56 media companies including national dailies, regional newspapers, weeklies, media newspapers and online newspapers as of end-June 2008. Ten news media led by Chosun Ilbo set up News Bank (bbs.newsbank.co.kr), a news content copyright management site aimed at increasing members’ad revenues. The site is designed to handle news advertisement implementation, which is currently operated by portals, in order to boost ad revenues and enhance ad effects for advertisers. In addition, News Bank has adopted an open-type copyright platform in a bid to resolve the illegal circulation of news on the Internet. News Bank has signed up 29 media firms as of end-June 2008. One-person media and civic journalism The year 2008 will be remembered as the watershed moment for one-person media. With the candle light vigil held against the import of American beef, Internet broadcasting and blogs provided a key venue for sharing opinions and latest developments in real time. One-person media, or otherwise known as "street journalism," took off thanks largelyto the public’s disillusionment of the existing mainstream media. The surging popularity of one-person media prompted mainstream media to introduce live blogs and reporters also rushed to establish their online brands. Some reporters attracted more audiences through their personal blogs. Internet personal broadcasts played a central role as the venue for civic journalism. Africa TV, a personal broadcast site, covered the candle light vigils 24 hours a day, and more than 8 million visitors hit the sites to watch the candle light vigils, setting a new record. This type of personal media differed dramatically fromexisting media channels by offering UCC (user created content), real-time replies, text messaging. Viewers left their views while watching the related videos on the Web. As the live coverage by one-person media gained momentum and began to exercise real influence, existing media companies followed suit. Hankyoreh, KyungHyang, NoCut News tried to cover the events in real time. Outdoor studioswere set up in a bid to offer a different angle to the developments with urgency and vividness. Discussions and interviews of citizens at the demonstration sites were introduced on the spot. Some newspapers attempted to differentiate themselves by assigning well-known figures to host the live coverage. The broadcast of the candle light vigils by existing media firms were transported to popular Internet video sites such as Africa and Pandora TV. Newspaper and broadcasting industry in 2007 The total revenue of newspaper and broadcast networks in 2007 reached 22.7 trillion won. This breaks down to 3.3 trillion won in newspaper revenues and 19.4 trillion won in broadcast revenues. The figure for newspapers excludes those from IT newspapers and other specialized magazines. When these and other specialized magazines are combined, the total revenue of newspapers is estimated to be around 4 trillion won. Meanwhile, newspapers accounted for 14.6 percent of the total media revenue, while broadcast networks’ portion was 85.4 percent. [table] Newspaper and Broadcast Revenue in 2007 (Unit: 1 million won) No. of firms Revenue Percentage in total industry Average revenue Newspaper 442 3,318,621 14.6 7,508 Broadcast 342 19,385,973 85.4 56,684 Newspaper & Broadcast 784 22,704,594 100.0 28,960 The total revenue figures are based on the data of 39 newspapers (11 national dailies, 14 local dailies, 6 economic dailies, 2 IT newspapers, 3 sports dailies, 3 free dailies) submitted to the Financial Supervisory Service. The figures for other companies are based on the "2008 Korea Media Yearbook."In total, 69 newspapers were considered for the calculation, including 24 dailies whose revenues were unavailable for this report. As for the newspapers whose revenues were not revealed, the coefficientbetween their employee figures and their revenues was identified (Pearson coefficient= .807,P<.01), and then three groups were formed based on the number of employees (1-50, 51-100, 101 or higher). Among the groups in question, the companies which submittedtheir financial data to the Financial Supervisory Service were excluded. The highest and lowest figures were then removed before computing for average revenue. This is intended to minimize the errors in estimatesinvolved in the inclusion of newspaper companies whose assets are more than 7 billion won and required to submit their financial data to the Financial Supervisory Service. Among newspapers covered by the Korea Media Yearbook, those which were established after January 2007 and did not announce their annual revenues yet were excluded from the estimate. A total of 295 regional weeklies were included in the estimate figures. Of them, 88 companies were covered by the Korea Media Yearbook, while estimated revenues were complied for 207 magazines. When it comes to the data for the 207 magazines whose revenues were unavailable for this report, the method employed for newspapers was adopted, with the extreme end of the revenue spectrum removed before computing to produce an average. The revenue of broadcasting companies was based on the "2007 Broadcasting Company Financial Statement Release," which was put out in June 2008. The revenues of 39 newspaper companies listed on the Financial Supervisory Service were about 2.78 trillion won, accounting for an83.7 percent in the total revenue of all newspapers. Unregistered newspapers generated a combined revenue of 540 billion won, which was 16.3 percent of the total.
  • 3. By category, national dailies carved out the biggest share of 55.4 percent. The top three players -- Chosun Ilbo, Dong-A Ilbo and JoongAng Ilbo -- accounted for 30.9 percent. In the total revenues of broadcast networks, the three major networks accounted for 14.0 percent. In particular, the average revenue of the three heavyweights was near 900 billion won. Newspaper industry According to the revenue figures compiled by the Financial Supervisory Service, the revenue of newspapers edged up 3.4 percent in 2007, up from a year earlier. This figure is lower than a growth of 11.6 percent in 2006, but the statistics shows that newspapers’ revenue continued to rise at a steady pace. The yearly growth was minus 10.9 percent in 2003 and minus 8.0 percent in 2004, fueling worries about the shaky profitability of newspapers. The upward trend in revenue in the past two years, meanwhile, is due to the rise in revenues of national dailies and economic dailies. National daily newspapers, which play a central role in the entire newspaper market, witnessed a revenue growth for three years in a row, which was in line with the broader market trend. But the figure stopped short of surpassing 1.9 trillion won set in 2002 (the revenue in 2007 was about 1.8 trillion won). Regional dailies maintained 260-270 billion won in revenue until 2006, but saw the figure slide to 250 billion won in 2007. Economic dailies pulled off a rise in revenue from 2004 and the figure for 2007 was 450 billion won. The major factor that boosted the revenues in newspaper companies was the diversification strategy and the growth of advertising income. [Graphic] Total Newspaper Revenue Trend for Newspapers Listed on FSS (Unit : %) [Graphic] Revenue Trend in Newspaper Subcategory Listed on FSS (2002-2007) (Unit: 1 million won)
  • 4. The rise in revenue of economic dailies was helped by the public interest in investment and an increase of advertisements for insurance and real estate. The differentiated content, in other words, boosted the revenues higher than other subcategory of newspapers. The revenue of economic dailies accounted for 13.1 percent in total newspaperslisted on the Financial Supervisory Service in 2002 but climbed to 16.2 percent in 2007, the second biggest after national dailies. Along with the rise of economic dailies, also notable was the growth of free newspapers. Meanwhile, sports dailies staged a turnaround in revenuein 2007 after suffering a steady decrease since 2002. IT newspapers maintained a similar level in 2007 after witnessing a slight decrease in 2002. Broadcasting industry The revenue of the Korean broadcasting industry is estimated to reach 19.4 trillion won in 2007 (Korea Communications Commission, "2007 Broadcast Financial Statement Release, 2008 June). This is compiled from the financial statements and related data submitted by 342 broadcasting companies in accordance with the Broadcasting Law, Section 98, Article 2 (44 terrestrial networks, 103 cable operators, 185 PPs, 1 multi satellite operator, 8 terrestrial mobile multimedia operators, 1 satellite operator). The survey results show that 185 PPs accounted for 66.1 percent, the highest figure among the broadcasters, followed by 44 terrestrial networks (20.2 percent), 103 cable operators (11.0 percent). The reason for the bigger share of PPs is that additional non-broadcast revenues, such as home shopping and telecom operator’s business income, were added to their figures. The market conditions for the broadcasting industry faced a fast and turbulent change, thanks largely to the advent of variousbroadcasting platforms. For advertisers, there are now more tools for marketing their products through different media. But the changes are pushing broadcasting firms to wean off from the longstanding source of income: advertisement. The total advertising market expanded 4.7 percent in 2007, compared with a year earlier. The newspaper’s advertising segment rose 4.6 percent, radios managed to hold the growth rate at 0.3 percent, magazines saw a 5.4 percent increase, and Internet sprinted ahead with a whopping 30.9 percent growth rate. However, advertisements for broadcasters slipped by 3.5 percent. In 2002, the broadcasting industrypulled off a
  • 5. respectable 24.9 percent growth rate. But since then, its growth rate has been in a negative territory, except for 2006. Meanwhile, the details of advertisements allocated for different media showed that traditional media firms such as TV, newspaper, radio are suffering a steady decrease, while cable TV and online companies are staging a continued growth. [Graphic] Broadcasting advertising growth trend (2002-2007) (Unit: %) [table] Proportion of Advertising for Different Media (2002-2007) (Unit: %) 2002 2003 2004 2005 2006 2007 TV 35.6 34.8 32.7 30.5 28.6 26.4 Radio 4.1 4.0 3.9 3.8 3.7 3.5 Newspaper 29.5 27.8 25.5 23.7 22.3 22.3 Magazine 8.0 7.5 6.2 6.2 6.0 6.1 Cable TV 3.4 4.4 5.8 6.9 8.8 10.4 Online 2.7 4.0 5.7 8.0 10.2 12.8 Against this backdrop, the three terrestrial networks (KBS, MBC, SBS) posted a revenue of about 2.7 trillion won in 2007, little changed from 2006. Regional MBC stations have posted 430-440 billion won since 2002. The revenue growth of the three terrestrial networks was negative in 2003 and 2004, before switching to positive in 2005 and 2006. But the rate was in negative territory in 2007. Regional broadcasters also witnessed a negative growth of 0.6 percent in 2007, after witnessing a whopping 58.5 percent increase in 2006. Media Research & Analysis Team, KoreaPress Foundation