Cashing in on Gangnam Style

The 34-year-old Park Jae-sang – better known as Psy – is set to become a millionaire from YouTube ads and iTunes downloads, underlining a shift in how money is being made in the music business. An even bigger dollop of cash will come from TV commercials. From just those sources, Psy and his camp will rake in at least US$7.9 million (Dh29m) this year, according to an analysis of publicly available information and industry estimates. But not from his home country – for online music sales in South Korea, he’ll earn less than $60,000.

YouTube

Gangnam Style, with its catchy tune and much-imitated horse-riding dance, is the most-watched video on YouTube ever at more than one billion YouTube views since its July release, beating Justin Bieber’s Baby, which racked up more than 800 million views since February 2010. Psy’s official channel on YouTube, which curates his songs and videos of his concerts, has nearly 1.3 billion views. TubeMogul, a video ad-buying platform, estimates that Psy and his agent YG Entertainment have raked in about $870,000 as their share of the revenue from ads that appear with YouTube videos. The Google Inc-owned video service keeps approximately half. Psy and YG Entertainment also earn money from views of videos that parody his songs. Google detects videos that use copyrighted content, offering artists the choice to have the video removed or allow it to stay online and share ad revenue. In the last week of September when Gangnam Style had around 300 million views, more than 33,000 videos were identified to be borrowing from the original.

Legal downloads
and CD sales

Gangnam Style has been the No 1 or No 2 seller for most weeks since its debut, according to Nielsen SoundScan. The song sells for $1.29 on Apple’s iTunes Store, the market leader in song downloads. Apple generally keeps about 30 per cent of all sales, so with downloads approaching three million, the Psy camp could be due more than $2.4m. South Korean industry insiders said Psy likely gets 70 per cent and YG Entertainment gets 30 per cent for US downloads. South Koreans pay less than $10 a month for a subscription to a music service, making the cost of a downloaded song about 10 cents on average and Psy’s homeland haul much more modest – estimated at just a little more than $61,000. Psy’s 9 per cent cut from sales of 102,000 CDs in South Korea would earn him $50,000 or more, according to an estimate by Kim Dong-hyun, a senior manager at the Korea Music Copyright Association.

TV commercials

Psy has been jetting around the world, performing on programmes such as The X Factor Australia and NBC’s Today Show, which usually cover travel costs and not much else, says Gary Bongiovanni, the editor-in-chief of the concert trade magazine Pollstar. Television commercials are the big money spinners for South Korea’s K-Pop stars, and Psy has been popping up in ads for top brands such as Samsung Electronics and the mobile carrier LG Uplus. Analysts estimate Psy’s commercial deals could amount to 5 billion won (Dh16.9m) this year.

The family

A fact little known outside South Korea is that Psy’s father, uncle and grandmother own a combined 30 per cent of a company that makes equipment which semiconductor companies use to make computer chips. Perhaps inspired by the pure power of pop, DI Corp shares surged eight-fold from July after Psy’s hit reached No 2 on the Billboard Hot 100 and No 1 on the UK singles chart. It was time to cash in for Psy’s grandmother, who sold 5,378 shares for about $65,000. The share price has fallen since then but is still about double what it was before the release of Gangnam Style.

The future

The question now hanging over Psy is whether he will replicate the blockbuster success of Gangnam Style or end up remembered as a one-hit wonder.

Analysts say Gangnam Style alone will not be enough to propel Psy into the ranks of musicians such as Adele and may not even be enough to make him the top-grossing K-Pop star. That will depend largely on his forthcoming album, which Psy said will be released in March.