Melon is one of the oldest music-streaming services in the world, but the South Korean service is now facing an investigation into its handling of music royalties between 2009 and 2011. The Korea Times reported that the investigation centres on “suspicion it siphoned off about 5 billion won ($4.23 million) between 2009 and 2011 by establishing a ‘ghost company’ handling royalty distribution” – adding that Melon’s headquarters was raided by the authorities in late May in connection with the allegation.
The case focuses on so-called “brokerage fees” which are alleged to have been charged by a company called LS Music, created by Melon and “arbitrarily inserted” into the distribution process.
Nowadays, Melon is part of Korean social-networking company Kakao. “While the alleged incident took place prior to Kakao’s acquisition (of Melon), as the service’s current operator, it will be fully committed to cooperating with the authorities,” Kakao’s spokesperson Bang Ji-yeon told the Korea Herald.