Does Playing Background Music in Your Store Infringe Copyright in South Korea?
Table of Contents
- 1. What is a “performance right” under South Korean copyright law?
- 2. When does the “commercially released phonogram” exception apply?
- 3. What did the South Korea Supreme Court decide in January 2025?
- 4. How did the 2016 amendment change the legal landscape?
- 5. Which businesses must pay royalties under Article 11 of the Enforcement Decree?
- 6. What should store operators and music service providers do now?
- 7. FAQ
A real scenario: A consumer electronics retailer in Incheon had used a licensed background music service for years, paying monthly fees and never charging customers to listen. Then came a demand letter from South Korea’s music copyright collecting society — claiming tens of millions of won in unpaid performance royalties. “We had a proper contract,” the operator said. “How can we still be infringing?” In January 2025, South Korea’s Supreme Court provided a clear and consequential answer.
Why does a service contract not automatically cover performance rights?
※ The scenario described above is based on actual litigation and has been adapted for illustrative purposes. Client-identifying information has been protected.
Under South Korean copyright law, the rights attached to a musical work are not a single bundle — they are a collection of distinct entitlements, including reproduction rights, transmission rights, distribution rights, and performance rights. A background music service provider may lawfully hold licenses to copy music onto its servers and stream it to subscribers. But the act of playing that music aloud through speakers in a physical space — so that customers can hear it — is a separate exercise of the copyright holder’s performance right. The 2025 Supreme Court ruling drew a sharp distinction between these two layers of rights, making clear that a transmission license does not carry performance rights along with it. For any business playing music in South Korea, both layers must be independently licensed.
1. What is a “performance right” under South Korean copyright law?
A performance right is the exclusive right of a copyright holder to publicly perform — or authorize the public performance of — a protected work. Playing music aloud to an audience is a textbook exercise of this right, and it requires authorization regardless of whether the audience pays to listen.
How does Korean copyright law define “performance”?
Article 2, Item 3 of the Korean Copyright Act defines “performance” broadly as the public presentation of a work through staging, playing, singing, recitation, reading, screening, playing back a sound recording, or any other method. The definition explicitly includes “playing back a sound recording,” which means that any time a store operator activates a speaker to play music for customers, that act constitutes a performance under Korean law.
Article 17 of the Copyright Act provides that the author of a work has the exclusive right to publicly perform that work. Performing a protected work without authorization is an infringement of this right, subject to both civil liability (damages or disgorgement of unjust enrichment) and potential criminal penalties under Article 136.
Does it matter that customers are not charged to listen?
The absence of an admission fee does not eliminate the performance right. However, it is a relevant factor under Article 29(2) of the Copyright Act, which creates a conditional exception for certain non-commercial performances. The scope and limits of that exception are precisely what the 2025 Supreme Court ruling addressed.
| Right | Definition | Relevance to Store Music |
|---|---|---|
| Reproduction Right (Art. 16) | Right to fix or copy the work onto a tangible medium | Applies when the music service copies files onto its server |
| Transmission Right (Art. 18) | Right to transmit the work to the public on demand or in real time | Applies when the service streams files to the store’s device |
| Performance Right (Art. 17) | Right to publicly present the work through playback or live rendering | Applies when the store plays the music through speakers for customers |
2. When does the “commercially released phonogram” exception apply?
Article 29(2) of the prior Copyright Act (before the September 2016 amendment) provided that playing back a “phonogram for sale” (판매용 음반) did not infringe the performance right, provided that no admission fee was charged for the performance. The current law uses the term “commercially released phonogram” (상업용 음반) with similar effect. Understanding the precise boundaries of this exception is central to the 2025 ruling.
The Supreme Court’s longstanding restrictive interpretation
Long before the 2025 ruling, South Korea’s Supreme Court had interpreted “phonogram for sale” narrowly. In a 2012 decision (Supreme Court, May 10, 2012, Case No. 2010Da87474 — the “Starbucks” case) and a 2016 decision (Supreme Court, August 24, 2016, Case No. 2016Da204653 — the “Himart” case), the Court held that a “phonogram for sale” means only a sound recording that was produced with the intent to sell it commercially to the general public.
The rationale was rooted in the underlying policy of the exception. The law tolerates unrecompensed performance of commercially sold phonograms on the theory that in-store playback promotes awareness of the recording and can stimulate retail sales — thereby providing the copyright holder with an indirect benefit. Where the recording was never intended for retail sale, that indirect benefit does not arise, and the justification for the exception disappears.
The critical question: when is the “intent to sell” assessed?
The 2025 ruling answered this question definitively. The Court held that the relevant moment is not when the original master recording was created or commercially released, but when the specific copy of the phonogram actually used in the performance was fixed — that is, when it was reproduced. This point distinguished the 2025 case from the prior rulings, because the files at issue were not the commercially sold originals: they were re-encoded, encrypted copies created specifically for webcasting to store devices.
| Factor | Lower Court’s View | Supreme Court’s View (2025) |
|---|---|---|
| Which phonogram is assessed? | The original source file (commercially released) | The copy actually used in the performance |
| When is intent assessed? | At the time the original was published | At the time the copy was fixed (reproduced) |
| Does a copy of a commercial release become a “phonogram for sale”? | Yes, if derived from a commercially released source | No, if the copy was made for performance-delivery purposes |
| Result for background music service files | Exception applies; no infringement | Exception does not apply; performance right infringed |
3. What did the South Korea Supreme Court decide in January 2025?
The Supreme Court of South Korea issued its ruling on January 23, 2025, in Case No. 2023Da290386 (Claim for Return of Unjust Enrichment, etc.), reversing the Seoul High Court and remanding for further proceedings. The decision is the first Supreme Court ruling to directly address the copyright status of background music delivered via webcasting services, and it carries significant practical consequences for businesses operating in South Korea.
Background of the case
The plaintiff was the Korea Music Copyright Association (KMCA), the statutory collective management organization for musical works in South Korea. The defendant was a large consumer electronics company that supplied goods to a network of retail stores operating under its brand. The stores played background music provided by a third-party music service (the “Service Provider”) through a webcasting system.
The KMCA had authorized the Service Provider to transmit music via webcasting for background music services — but this license covered only transmission rights, not performance rights. The Service Provider obtained commercially available digital audio files from a music distributor, stored them on its own servers, re-encoded and encrypted them so they could only play on authorized store devices, and streamed them to the stores’ playback systems. Store managers then played the music through in-store speakers for customers, without charging any separate listening fee.
The three legal propositions established by the Court
The Supreme Court’s reasoning rests on three interlocking propositions, each of which has independent significance for future cases.
First, the “phonogram for sale” exception under Article 29(2) must be interpreted strictly, because its effect is to extinguish the copyright holder’s performance right without any compensation. An expansive reading would unjustifiably harm copyright holders and undermine the incentive structure of copyright law.
Second, the assessment of whether a phonogram qualifies as a “phonogram for sale” must be made by reference to the specific copy used in the performance — not the commercially sold original from which it was derived — and the intent must be assessed at the time that copy was fixed.
Third, where a copy of a sound recording is made not for retail sale but for the purpose of delivering it to persons who will perform it (for example, by webcasting it to store devices for in-store playback), that copy is not a “phonogram for sale,” regardless of whether the source from which it was copied was commercially released.
Practical effect of the ruling
Because the audio files streamed to the defendant’s stores were fixed — that is, stored on the Service Provider’s servers — for the purpose of delivering them for in-store performance, not for retail sale, they were not “phonograms for sale.” The performance right exception therefore did not apply, and the store operators’ playback of those files infringed the KMCA’s performance right. The Supreme Court reversed the High Court’s dismissal of the KMCA’s claims and remanded the case.
4. How did the 2016 amendment change the legal landscape?
The 2025 Supreme Court ruling was decided under the prior Copyright Act — the version in force before the amendment that took effect on September 22, 2016. Understanding what changed, and what remained the same, is essential for assessing current legal exposure.
From “phonogram for sale” to “commercially released phonogram”
The 2016 amendment replaced “phonogram for sale” (판매용 음반) with “commercially released phonogram” (상업용 음반) in Article 29(2). Article 2(6-2) of the current Copyright Act defines a commercially released phonogram as “a phonogram produced for the purpose of commercial distribution.” The drafting history indicates that the amendment was intended to bring the statute into closer alignment with digital distribution realities.
Whether the new term covers background music service files more broadly than the old term did is a question that no Supreme Court ruling has yet resolved under the current statute. Some commentators have argued that files delivered pursuant to a commercial services contract could satisfy the “commercial distribution” purpose requirement. However, given the Supreme Court’s consistent emphasis on the strict interpretation of performance right limitations, it would be premature to assume that background music service files are automatically exempt under the current law.
The expanded scope of the Enforcement Decree exception
The 2016 amendment also substantially expanded Article 11 of the Enforcement Decree of the Copyright Act. Under the current framework, even if a phonogram qualifies as a “commercially released phonogram,” businesses in the categories listed in Article 11 must still pay royalties to use it for in-store performance. This royalty obligation runs to collective management organizations such as the KMCA. The Enforcement Decree was most recently amended on August 26, 2025 and October 1, 2025.
5. Which businesses must pay royalties under Article 11 of the Enforcement Decree?
Article 11 of the Enforcement Decree of the Copyright Act specifies the business categories for which in-store music performance requires royalty payment, even where a commercially released phonogram is used and no admission fee is charged. Businesses in these categories cannot rely on the Article 29(2) exception. The current version of Article 11 reflects amendments through October 1, 2025.
Item 1: Food and beverage establishments under the Food Sanitation Act
This is the category most frequently encountered in practice. The relevant establishments under Article 21(8) of the Enforcement Decree of the Food Sanitation Act are divided as follows.
| Sub-item | Type of Establishment | Practical Examples |
|---|---|---|
| Item 1(a) | Snack bars (휴게음식점) classified as coffee shops or other non-alcoholic beverage businesses under the Korean Standard Industrial Classification (KSIC) | All coffee chains and independent cafes, bubble tea shops, smoothie bars |
| Item 1(b) | General restaurants (일반음식점) classified as draft beer specialty restaurants or other drinking establishments under KSIC | Beer bars, pub-style restaurants, izakayas |
| Item 1(c)–(d) | Adult entertainment venues: dan-ran jujeom (단란주점) and entertainment bars (유흥주점) | Nightclubs, room salons, hostess bars |
| Item 1(e) [라목] | Other food service establishments not covered above, where providing music or video content for customers to enjoy forms a principal part of the business | Music listening bars, venues where music appreciation is a core part of the customer offering |
Item 1(a) uses the KSIC classification, not the name of the establishment. A coffee-serving business classified under a different KSIC code (for example, a bakery or fast-food restaurant that incidentally serves coffee) may fall outside Item 1(a). Conversely, general restaurants serving ordinary meals — Korean, Chinese, and other cuisines — that are not classified as beer specialty restaurants or drinking establishments are generally not covered by Item 1(b). Item 1(e) requires that music appreciation form a “principal part” of the business; merely playing background music does not satisfy this threshold.
Items 2 through 5: Sports, transport, and tourism venues
| Item | Category | Key Notes |
|---|---|---|
| Item 2 | Horse racing tracks (under the Korea Racing Authority Act), cycling tracks and boat racing tracks (under the Cycling and Boat Racing Act) | Applies only to facilities designated under the relevant statutes |
| Item 3(a) | Professional sports facilities designated by Ministry of Culture, Sports and Tourism ordinance under the Sports Facilities Act | Covers major professional stadiums; specific facilities listed in ministry ordinance |
| Item 3(b) | Golf courses, dance academies, dance halls, ski resorts, aerobics studios, and fitness centers (체력단련장) under Annex 1 of the Enforcement Decree of the Sports Facilities Act | Health clubs, gyms and fitness centers are included as “fitness centers” |
| Item 4 | Passenger aircraft (Aviation Business Act), passenger vessels (Maritime Transport Act), and passenger trains (Railway Business Act) | Applies only to commercial passenger transport services |
| Item 5 | Hotels, resort condominiums, casinos, and theme parks under the Tourism Promotion Act | Applies to Tourism Promotion Act-registered facilities; ordinary motels and guesthouses may not qualify |
Item 6: Large-scale retail stores under the Distribution Industry Development Act
Item 6 covers large-scale retail stores listed in the Annex to the Distribution Industry Development Act, with traditional markets excluded. The Annex defines six categories of large-scale retail store. All six share a common threshold: the aggregate retail floor area, excluding areas designated for service provision (용역의 제공장소), must be at least 3,000 m².
| Type | Statutory Definition | Examples |
|---|---|---|
| Large-format general merchandise store (대형마트) | Aggregate net retail floor area ≥ 3,000 m²; sells food, electronics, and household goods primarily on a self-service basis | E-Mart, Lotte Mart, HomePlus |
| Specialty store (전문점) | Aggregate net retail floor area ≥ 3,000 m²; specializes in a particular product category such as apparel, electronics, or home goods | Large-format electronics stores, major furniture chains, large apparel chains |
| Department store (백화점) | Aggregate net retail floor area ≥ 3,000 m²; modern retail and customer amenity facilities; at least 30% directly operated by the owner | Lotte, Shinsegae, Hyundai department stores |
| Shopping center (쇼핑센터) | Aggregate net retail floor area ≥ 3,000 m²; multiple retail stores and amenities integrated in a single complex, operated on a direct or lease basis | IParc Mall, certain Starfield locations |
| Complex shopping mall (복합쇼핑몰) | Aggregate net retail floor area ≥ 3,000 m²; integrates shopping, entertainment and business functions, serves as a cultural/tourism destination, developed and managed by a single entity | Starfield Hanam, IFC Mall, COEX Mall |
| Other large-scale retail stores | (a) Aggregate net retail floor area ≥ 3,000 m²; or (b) Total floor area (including service areas) ≥ 3,000 m² and net retail floor area ≥ 50% of total (adjustable by up to 10% by local government authority) | Large retail clusters not fitting the categories above |
A key practical point: the “specialty store” category covers retailers specializing in electronics, apparel, or home goods with an aggregate net retail floor area of at least 3,000 m². An individual franchise outlet of a consumer electronics brand — such as those operated by the defendant in the 2025 case — will generally not meet this threshold on its own. The analysis must focus on whether the relevant group of stores is registered and operated as a large-scale retail store under the Distribution Industry Development Act, and whether the aggregate floor area threshold is satisfied.
For the “other large-scale retail stores” category (b), even if the total floor area including service areas reaches 3,000 m², the facility is not covered unless at least 50% of the total floor area is devoted to retail sales. This ratio may be adjusted by up to 10 percentage points by the competent local government authority.
Items 7 and 8: Audiovisual works in accommodations and public facilities
| Item | Category | Scope |
|---|---|---|
| Item 7 | Lodging establishments and bathhouses under the Public Health Control Act, equipped with video viewing facilities | Applies to audiovisual works only; covers motels, inns, and saunas with in-room video systems |
| Item 8 | Public facilities: government offices, performance halls, museums, libraries, local cultural centers, social welfare centers, women’s centers, youth training centers, and district community centers | Applies to audiovisual works only; limited to works released within the preceding 6 months |
Items 7 and 8 apply only to audiovisual works (such as films and television programs), not to music. Item 8 is further limited to works released within the six months immediately preceding the performance — works more than six months old fall outside its scope even in covered public facilities.
The critical two-step analysis
It is important to understand the relationship between Article 29(2) and Article 11 of the Enforcement Decree. They operate at different levels of the analysis. Article 29(2) asks: is the phonogram a “commercially released phonogram,” and is no admission fee charged? If the phonogram is not commercially released — as the Supreme Court held for background music service files — the inquiry ends there, and infringement is established without reaching Article 11. Article 11 only becomes relevant when the phonogram is commercially released: it then determines whether a royalty must still be paid despite the general exception. For background music service files under the 2025 ruling, Article 11 is therefore not the operative provision — the infringement arises one step earlier.
6. What should store operators and music service providers do now?
The 2025 Supreme Court ruling, taken together with the current statutory framework, points to a clear set of practical priorities for businesses operating stores in South Korea where music is played.
Three-step compliance check for store operators
Step 1: Determine whether your business falls under Article 11 of the Enforcement Decree. Review the categories described in Section 5 above. Cafes, drinking establishments, fitness centers, large retail stores, hotels, and similar venues are likely covered. If your business is covered, you are required to pay royalties to the relevant collective management organization for in-store music use, regardless of the source of the music.
Step 2: Review your background music service agreement. Check whether the contract with your service provider explicitly states that performance rights are included in the license granted. A contract that covers only “music service” or “audio streaming” without mentioning performance rights may leave you exposed. Request written confirmation from your service provider that it has obtained a performance rights license from the KMCA or other relevant collecting society on your behalf.
Step 3: Obtain a direct performance rights license if necessary. If your service provider cannot confirm that performance rights are covered, contact the Korea Music Copyright Association (KMCA) or the Korea Music Performers’ Association (KMPA) directly to obtain the necessary license and pay the applicable royalties. The KMCA administers performance royalties for musical compositions; the KMPA administers neighboring rights for performers and phonogram producers.
Obligations for background music service providers
The 2025 ruling imposes the greatest direct legal risk on background music service providers. Service providers should take the following steps: confirm that performance rights licenses have been obtained from relevant collecting societies; amend customer contracts to clearly state which rights are and are not covered; and ensure that royalty payments are properly structured to reflect performance rights obligations. Failure to address these issues exposes both the service provider and its client store operators to infringement liability.
If you have already received a royalty demand
Businesses that have received a demand for unpaid performance royalties from the KMCA or another collecting society should not simply accept or reject the demand without careful analysis. The applicable statute depends on when the alleged infringement occurred — before or after the September 2016 amendment. The calculation method for damages or unjust enrichment also warrants scrutiny. In prior similar cases handled by practitioners in this field, demands have sometimes included amounts for periods already barred by the statute of limitations, or have applied royalty rates that are not accurately calibrated to the specific circumstances. A thorough legal review before responding is strongly advisable.
7. FAQ
The January 2025 Supreme Court ruling represents a significant development in South Korean copyright law as it applies to businesses using music in physical spaces. Based on analysis of the decision and experience handling related disputes, store operators and retail businesses currently using background music services should treat a review of their service agreements and royalty compliance status as a priority. Unaddressed exposure in this area can result in substantial claims for unpaid royalties or unjust enrichment spanning multiple years.
※ The legal information in this article is provided for general informational purposes only. The applicable analysis may differ based on the specific facts of each case. For advice regarding a particular matter, please consult a qualified attorney.