Taiwan's largest online music sharing site offered to start paying royalties to the music industry yesterday. Three-year old kuro.com.tw (飛行網), which claims an online community of half a million users, offered yesterday to levy a monthly NT$50 royalty fee on top of its standard NT$99 charge and pass the money directly on to copyright holders.
One of Kuro's sister Web site's, music.com.tw (飛行網), sells CDs and downloadable music and already pays royalties to music companies. The Chinese-language name of both Web sites is the same.
The music industry and music-sharing community have been locked in legal battles since US courts ordered Napster to remove copyrighted songs from its web site in 2001. In Taiwan, recent amendments to laws relating to copyright and intellectual property permit individuals to reproduce copyrighted material providing they do not intend to profit from the copies, or in the case of music, providing they make no more than five copies.
"Our service is legal according to Taiwan law," Kuro's CEO James Chen (
Chen predicted that Kuro's users will swell to three million by the end of 2005. If each user is paying NT$50 per month, Kuro can collect NT$1.8 billion for the music industry, Chen said, which compares to NT$5.4 billion in predicted CD sales in the same year.
But a manager at a leading record label rejected the payment offer yesterday.
"We will not accept this," said Andrea Chen (陳妍君) of EMI Taiwan Ltd. "Basically they're offering a platform with legal content provided by the labels and a service where users can download free music from A, B, or C person. How can the user know that a song is from a label or not? People will still go on downloading free versions."
Kuro has also not offered to pay the music industry any compensation for the three years it has operated to date without paying royalties, Chen said.
"If they're serious, they'll show sincerity by cutting the site," Chen said. "There's no reason why Kuro cannot support a viable business model where they respect [intellectual property] rights from the beginning, as well as going to the trouble of talking to all the publishers, the recording labels and the artists."
Increasing competition from other Web sites may have prompted yesterday's offer, Chen suggested. Yahoo, Microsoft Corp and Apple Computer Inc are all considering setting up music download sites that have music industry authorization in Taiwan.
Kuro may also be trying to fend off looming legal action. Last Wednesday, the Recording Industry Association of America announced it would sue individuals who share music over the Internet without the copyright holder's permission. Local groups may follow suit, buoyed by an amendment to the Copyright Law (著作法) passed at the beginning of June.
"We [the music industry] got a new right in the recent amendments -- public transmission rights -- which now include the Internet, allowing us to collect royalties from music distributed online," said Robin Lee (
But smaller companies may be more willing to accept the Kuro model.