Hanwha, Musicow to launch JV in US for copyright trading abroad

Musicow Inc., a music copyright trading platform and one of the hottest startups in South Korea, will set up a joint venture in the US with Korean conglomerate Hanwha Group in the first half of 2022 to launch its arts copyright trading business abroad.

The startup and Hanwha Group are discussing details of the new JV, such as size, location and employment. The details will be announced once determined, a Musicow official said.

Hanwha Group affiliates have been investing in many global tech startups. Hanwha Asset Management Co., the most active Hanwha subsidiary in venture investment, has injected 7 billion won ($5.9 million) in Musicow.

The asset manager also led a $310 million Series A funding for Grab Financial Group, fintech affiliate of the largest Southeast Asian ride-hailing company Grab, in January of this year. In 2018, it invested $400 million in Vietnam’s technology-focused conglomerate Vingroup JSC and $30 million in US biotech Zymergen Inc.

Hanwha Life Insurance Co. has invested 28.5 billion won in K Bank, the digital banking unit of Korea’s telecom giant KT Corp. since the bank's foundation in 2017 and also injected 64.5 billion won in fintech startup Payco last year. Earlier this year, Hanwha Investment Securities Co. committed 24.7 billion won and 58.3 billion won to Korean mobile financial platform Toss Bank and Korea’s top cryptocurrency exchange Upbit’s operator Dunamu Inc., respectively. 

Founded in 2016, Musicow started its service two years later. Its cumulative transactions soared from 1 billion won in 2018 to 282.4 billion won as of end-October 2021. Annual sales recorded 12.8 billion last year and are expected to jump to 45 billion won this year. Through its 17 billion won Series C funding in June, the startup has attracted an aggregate of 34 billion won since its inception. 

The startup pays a lump sum to the original creator of a song for its claims to part of the copyright fees. Then it divides the claims into small fractions as one would do with financial shares and put the fractions for auction. Anyone can buy the fractions of the shares, receive copyright royalties each month and even sell the fractions to other investors.

Musicow currently trades copyrights of around 10,000 songs and puts five to seven songs up for auction every week. The unicorn is valued at up to 1 trillion won in the Korean investment banking industry. It plans to go public in 2023. 

Industry watchers say Korea’s state-run bank Korea Development Bank (KDB) may participate in the JV's establishment as the bank led the Series C funding for Musicow, with participation from Korea’s LB Investment Inc., visual effect development company Wysiwyg Studios and government-backed fund of funds manager Korea Growth Investment Corp. The state-run bank started venture capital operations in California’s Silicon Valley in November to aid Korean startups in their entry to the US.

Hanwha sees huge potential in Musicow as the startup attracts young investors who may not have a big budget for investing in the arts, an IB industry source said.

Write to Ji-hye Min at spop@hankyung.com
Jihyun Kim edited this article.