July 2025
Taiwan’s IPO Determined that the Public Transmission Royalty Rates for OTT Audiovisual Streaming Established by MÜST Should Be Deleted
Over-the-Top (hereinafter “OTT”) streaming technology has introduced revolutionary business models to the audiovisual industry, while also giving rise to controversies over the appropriate royalty rates for the public transmission of music embedded in audiovisual works. In May 2025, Taiwan’s Intellectual Property Office (hereinafter “TIPO”) determined that the newly added royalty rates for the public transmission of music—established by the Music Copyright Society of Chinese Taipei (hereinafter “MÜST”), a collective management organization, and specifically targeting OTT service providers that produce and broadcast their own content—should be deleted. This determination is directly tied to the ongoing royalty rate controversies. The following provides a summary of the case, opinions from the stakeholders involved, and TIPO's determination:
1. Case Summary:
According to Taiwan’s Collective Management Organization Act (hereinafter the “Collective Management Act”), collective management organizations are authorized to set and collect royalties for musical works. However, users who object to the royalty rates may apply to TIPO for a review. If TIPO finds the objection justified, it may determine the appropriate royalty rates, subject to further administrative appeal or litigation.
On March 31, 2022, MÜST newly established the OTT audiovisual streaming music royalty rates (hereinafter, the “Rates”), in addition to the public transmission royalty rates previously determined by TIPO in 2012 (the “2012 Rates”). MÜST proposed charging 3.5% of the OTT service providers’ total revenue from the previous year, with total revenue encompassing all stages of public transmission. For freely available content, a royalty of NT$1.12 per stream or view was set.
The Taiwan OTT Association considered the Rates unreasonable and applied to TIPO for a review, arguing that, compared to the 2012 Rates, the Rates not only involved excessive increases and overly broad calculation bases, but also failed to reflect actual patterns of music usage [1] .
After TIPO accepted the application for review, OTT service providers including Netflix, Chunghwa Telecom, and Disney Taiwan (collectively referred to as the “Participating Service Providers”) applied to participate in the proceedings. The original applicant, however, subsequently withdrew its application. Before TIPO formally commenced its review, MÜST additionally introduced a set of conditional reduced royalty rates (hereinafter, the “Reduced Rates”).
Ultimately, based on the opinions submitted by MÜST and the participating service providers, TIPO rendered its determination in Zhi-Zhu-Zi-11460008741 Circular of May 29, 2025, addressing the disputes regarding both the original and the reduced rates.
2. Key Issues and the Reasoning Behind TIPO’s Determination:
(1) Ambiguity in the Scope of Application of the Rates:
MÜST argued that the Rates were specifically designed for the OTT industry, applicable to platforms where operators provide content without allowing user uploads. The Participating Service Providers did not express opinions on the applicable subjects of the Rates, but believed that the case should be calculated according to the 2012 Rates.
TIPO determined that the 2012 Rates already covered various forms of musical work utilization in different types of audiovisual programs transmitted over the internet, including the public transmission of music by service providers via OTT platforms. Accordingly, TIPO concluded that the Rates overlapped with the scope of the 2012 Rates, which could create uncertainty for service providers in determining which rates to apply. TIPO therefore determined that the Rates should be deleted.
(2) Unreasonable Calculation Basis for the Rates:
The Participating Service Providers argued that using "total revenue from the previous year" as the calculation basis for the Rates could easily result in the inclusion of revenue unrelated to music. One provider additionally argued that, with respect to freely available content, the Rates could result in double charging, as free episodes would first be charged based on the number of plays or views before subscription, and again based on annual total revenue after subscription.
MÜST responded that revenue unrelated to music, as listed in third-party audited financial statements, would be excluded from the calculation of “annual total revenue.” As for freely available content, MÜST explained that while the 2012 Rates were based on advertising revenue, not all OTT service providers offer advertising. Therefore, a distinction should be made: providers with advertising revenue should be charged based on annual total revenue, whereas those without advertising revenue should be charged NT$1.12 per click.
Upon review, TIPO concurred with the Participating Service Providers and further found that the increase in subscriptions and advertising revenue resulting from freely available content had already been incorporated into the calculation basis of the 2012 Rates. Charging again based on the number of plays could thus raise concerns of double charging. Moreover, the Rates appeared to divide public transmission into separate stages, which was inconsistent with the definition of "public transmission" under Article 3, Paragraph 1, Subparagraph 10 of the Copyright Act.
(3) Differential Treatment from the Reduced Rates:
The Participating Service Providers argued that adopting conditions—such as non-cross-border service platforms, fewer than 2 million registered users in Taiwan, and a business scale in Taiwan of less than NT$800 million—as prerequisites for applying Reduced Rates was unreasonable and violated the equal treatment principle under Article 34, Paragraph 1 of the Collective Management Act. MÜST argued that the Reduced Rates were established considering the ongoing development of the OTT industry and different platforms' music usage volumes, without discriminatory treatment.
Upon review, TIPO concurred with the Participating Service Providers, determining that under the same rate structure, calculating royalty rates based on a certain percentage of revenue could already reflect that royalties naturally increase with an OTT service provider’s revenue. Therefore, the application requirements for the Reduced Rates created discriminatory treatment for users in the same situation of utilizing musical works, violating Article 34, Paragraph 1 of the Collective Management Act.
3. TIPO’s Decision and Future Developments:
TIPO ultimately determined that the Rates should be deleted and that users of musical works should instead apply the 2012 Rates, further noting that the Reduced Rates should likewise be adjusted in line with the above determination.
MÜST has filed an administrative appeal with the Ministry of Economic Affairs under the Administrative Appeal Act, and the case is currently under review by the Ministry’s Administrative Appeal Review Committee. If the appeal outcome is unfavorable to MÜST, it may file an action for revocation with the administrative court under the Administrative Litigation Act. How the Ministry of Economic Affairs—and potentially the administrative court—will examine this determination is crucial for both the streaming audiovisual and music industries and deserves continued attention.
[1] For the detailed grounds of the application, see the public notice of the Taiwan OTT Association’s application for review of the Music Copyright Society of Chinese Taipei (MÜST)’s blanket licensing royalty rates for public transmission of OTT (Over-the-Top) audiovisual streaming services, Taiwan Intellectual Property Office, Ministry of Economic Affairs (May 3, 2022), https://www.tipo.gov.tw/tw/copyright/721-8787.html.
1. Case Summary:
According to Taiwan’s Collective Management Organization Act (hereinafter the “Collective Management Act”), collective management organizations are authorized to set and collect royalties for musical works. However, users who object to the royalty rates may apply to TIPO for a review. If TIPO finds the objection justified, it may determine the appropriate royalty rates, subject to further administrative appeal or litigation.
On March 31, 2022, MÜST newly established the OTT audiovisual streaming music royalty rates (hereinafter, the “Rates”), in addition to the public transmission royalty rates previously determined by TIPO in 2012 (the “2012 Rates”). MÜST proposed charging 3.5% of the OTT service providers’ total revenue from the previous year, with total revenue encompassing all stages of public transmission. For freely available content, a royalty of NT$1.12 per stream or view was set.
The Taiwan OTT Association considered the Rates unreasonable and applied to TIPO for a review, arguing that, compared to the 2012 Rates, the Rates not only involved excessive increases and overly broad calculation bases, but also failed to reflect actual patterns of music usage [1] .
After TIPO accepted the application for review, OTT service providers including Netflix, Chunghwa Telecom, and Disney Taiwan (collectively referred to as the “Participating Service Providers”) applied to participate in the proceedings. The original applicant, however, subsequently withdrew its application. Before TIPO formally commenced its review, MÜST additionally introduced a set of conditional reduced royalty rates (hereinafter, the “Reduced Rates”).
Ultimately, based on the opinions submitted by MÜST and the participating service providers, TIPO rendered its determination in Zhi-Zhu-Zi-11460008741 Circular of May 29, 2025, addressing the disputes regarding both the original and the reduced rates.
2. Key Issues and the Reasoning Behind TIPO’s Determination:
(1) Ambiguity in the Scope of Application of the Rates:
MÜST argued that the Rates were specifically designed for the OTT industry, applicable to platforms where operators provide content without allowing user uploads. The Participating Service Providers did not express opinions on the applicable subjects of the Rates, but believed that the case should be calculated according to the 2012 Rates.
TIPO determined that the 2012 Rates already covered various forms of musical work utilization in different types of audiovisual programs transmitted over the internet, including the public transmission of music by service providers via OTT platforms. Accordingly, TIPO concluded that the Rates overlapped with the scope of the 2012 Rates, which could create uncertainty for service providers in determining which rates to apply. TIPO therefore determined that the Rates should be deleted.
(2) Unreasonable Calculation Basis for the Rates:
The Participating Service Providers argued that using "total revenue from the previous year" as the calculation basis for the Rates could easily result in the inclusion of revenue unrelated to music. One provider additionally argued that, with respect to freely available content, the Rates could result in double charging, as free episodes would first be charged based on the number of plays or views before subscription, and again based on annual total revenue after subscription.
MÜST responded that revenue unrelated to music, as listed in third-party audited financial statements, would be excluded from the calculation of “annual total revenue.” As for freely available content, MÜST explained that while the 2012 Rates were based on advertising revenue, not all OTT service providers offer advertising. Therefore, a distinction should be made: providers with advertising revenue should be charged based on annual total revenue, whereas those without advertising revenue should be charged NT$1.12 per click.
Upon review, TIPO concurred with the Participating Service Providers and further found that the increase in subscriptions and advertising revenue resulting from freely available content had already been incorporated into the calculation basis of the 2012 Rates. Charging again based on the number of plays could thus raise concerns of double charging. Moreover, the Rates appeared to divide public transmission into separate stages, which was inconsistent with the definition of "public transmission" under Article 3, Paragraph 1, Subparagraph 10 of the Copyright Act.
(3) Differential Treatment from the Reduced Rates:
The Participating Service Providers argued that adopting conditions—such as non-cross-border service platforms, fewer than 2 million registered users in Taiwan, and a business scale in Taiwan of less than NT$800 million—as prerequisites for applying Reduced Rates was unreasonable and violated the equal treatment principle under Article 34, Paragraph 1 of the Collective Management Act. MÜST argued that the Reduced Rates were established considering the ongoing development of the OTT industry and different platforms' music usage volumes, without discriminatory treatment.
Upon review, TIPO concurred with the Participating Service Providers, determining that under the same rate structure, calculating royalty rates based on a certain percentage of revenue could already reflect that royalties naturally increase with an OTT service provider’s revenue. Therefore, the application requirements for the Reduced Rates created discriminatory treatment for users in the same situation of utilizing musical works, violating Article 34, Paragraph 1 of the Collective Management Act.
3. TIPO’s Decision and Future Developments:
TIPO ultimately determined that the Rates should be deleted and that users of musical works should instead apply the 2012 Rates, further noting that the Reduced Rates should likewise be adjusted in line with the above determination.
MÜST has filed an administrative appeal with the Ministry of Economic Affairs under the Administrative Appeal Act, and the case is currently under review by the Ministry’s Administrative Appeal Review Committee. If the appeal outcome is unfavorable to MÜST, it may file an action for revocation with the administrative court under the Administrative Litigation Act. How the Ministry of Economic Affairs—and potentially the administrative court—will examine this determination is crucial for both the streaming audiovisual and music industries and deserves continued attention.
[1] For the detailed grounds of the application, see the public notice of the Taiwan OTT Association’s application for review of the Music Copyright Society of Chinese Taipei (MÜST)’s blanket licensing royalty rates for public transmission of OTT (Over-the-Top) audiovisual streaming services, Taiwan Intellectual Property Office, Ministry of Economic Affairs (May 3, 2022), https://www.tipo.gov.tw/tw/copyright/721-8787.html.
