When videos After Brave Girl’s performance of “Rollin'” took off in early 2021, Kim Seong-min saw an opportunity. He knew and loved the K-pop group while in the military, where the group performed regularly for the troops. So he logged on to Musicow, a platform launched in 2016 where users can buy a fraction of the rights to music royalties, and got the rights to the song for 670,000 won ($506) each. some shares. After a few months, they doubled in value. Encouraged, he bought more.
Young South Koreans are unusually keen to put their meager savings into work — perhaps because the country’s sluggish job market makes it difficult for them to buy property or support a family. A 2021 survey found that eight in 10 people in their 20s and 30s are invested in stocks, cryptocurrencies or other assets. They start at a young age; 7% of the shareholders of technology maker Samsung Electronics are teenagers.
Particularly popular are fractional investing platforms, which allow buyers to hold very small stakes in assets. Such investments can be found all over the world, with real estate being a particularly popular segment. But South Korea, always a quick adaptor, has been unusually adventurous with its products. Musicow’s 1.2 million subscribers trade rights for song royalties in hopes of picking the next chart-topper or noraebang (Karaoke room) Classic. Tessa is one of several platforms for trading fine art pieces, including works by Banksy and David Hockney. For as little as 1,000 won, investors can earn a modest return when they rent out paintings to galleries or auctions. On Bancow, users invest in calves; when their animal is sold, they share the profit with the farmer who raised it. “It’s the only way to get rich and make money honestly without breaking the law,” Mr King said.
Enthusiasts argue that some investments are safer than digital coins or traditional stocks. Starting with the debacle of South Korean coin Luna last May, cryptocurrencies have had a horrible run.this Cospi, The South Korean stock market company index fell by more than 20% in 2022. That makes Musicow’s near-9% return through 2022 look attractive.
But that perception is often wrong, says Hong Ki-hoon of Hongik University. Assets bought by some investors “are no safer than traditional assets in terms of financial risk.” Mr. Kim is learning this the hard way now; the “Rollin'” segment is currently worth 334,000 won.
Financial Services Commission (Forest Stewardship Council), South Korean regulators agree with Mr Hong. It has classified assets traded on Musicow as securities and may take similar steps to regulate some other investment platforms. It will be guided by the Howey test, the U.S. rating of financial instruments under which most fractional investments could theoretically be classified as securities.
However, the government wants to see the industry grow.this Forest Stewardship Council Also consider Musicow to be an innovative financial service. On Feb. 5, it announced plans to allow the issuance of security tokens, blockchain-based assets that facilitate fractional investments. The Treasury has ruled that profits from fractional shares are not subject to dividend or capital gains tax. Encouraged by these developments, securities firms are scrambling to strike deals with some investment platforms. Entry-level investors should be more cautious. ■