2.2 Challenges

We believe the following challenges exist against the backdrop of the structural changes and trends in the music industry mentioned above:

Changes in Artist Revenue Models and Tightening of Funding

As the "fixed-price sales" model is standard, artist revenue does not necessarily correlate with fan enthusiasm, limiting revenue from live events. The shortage of venues for popular artists' lives and concerts has led to widespread high-priced resales on secondary markets, preventing enthusiastic fans from participating in lives. Furthermore, the revenue from resales does not return to the artists, reducing the revenue that artists should rightfully receive.

The revenue structure for artists has also changed significantly due to the mainstream adoption of music distribution and streaming services. Artist compensation from streaming playback is minimal, and a large number of plays is required to generate sufficient revenue. The recent use of existing songs by music-generating AI, with AI-generated songs being streamed, poses a new challenge, relatively threatening artist revenue.

While streaming services and social media have allowed artists to reach fans worldwide, entering the global market requires promotion targeting multiple countries and regions, necessitating expertise, strategy, resource acquisition, and significant funding. The existing revenue model lacks sufficient scalability, making it difficult to secure stable funding, posing a major challenge for artists aiming to expand globally.

Lack of Venues for Co-creation between Artists and Fans

Despite the potential for fandoms to create new value with their dynamism and creativity, there is a lack of venues for their utilization. For example, some fandoms creatively rearrange artists' new songs or create artwork and upload it to social media. Fans also autonomously plan and celebrate artists' birthdays and debut anniversaries on social media. These activities reflect fans' strong affection and enthusiasm, creating new value and attention for artists.
However, fan activities rarely connect with the artists themselves or official projects, and there is no established venue or platform where artists and fans can participate in creative activities and share ideas. If there were places or projects to support the co-creation process, fans could engage more deeply with artists, and artists could be encouraged in their creative activities with fan support. The lack of such mechanisms poses a challenge to realizing new relationships and creative value between artists and fans.