As K-Pop Sets Record Numbers and KCON L.A. Retu...

As fans of Korean pop music gather in Los Angeles for KCON L

Published Time: 26.07.2024 - 16:31:32 Modified Time: 26.07.2024 - 16:31:32

As fans of Korean pop music gather in Los Angeles for KCON L.A., a three-day convention and concert series featuring many leading acts, the K-pop genre looks to be in rude health.

Global media is watching closely. Multinational streamers, such as Apple TV+ — which is readying six-part series “K-Pop Idols” for a late August launch ––Rakuten Viki and KOCOWA are now battling with Disney+ to compete for Korean music content.

But, back home in South Korea, the talent agencies that generated mania for idol groups like BTS and Blackpink and fed an appetite for other aspects of K-culture such as food and cosmetics are now under financial pressure.

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K-pop is still wildly popular, with the genre’s overseas sales surpassing KRW1 billion ($720 million) for the first time ever in 2023, according to a government report published on Wednesday. Expanding overseas performances, such as those by Blackpink at Coachella or Suga’s solo Agust D concert series, and growing album sales gave K-pop a 31% surge in foreign income to KRW1.24 billion ($890 million), according to data from the government-affiliated Korea Culture & Tourism Institute. While Taylor Swift topped the global charts last year, Korean acts represented four of the top 10 bestselling artists in 2023, according to IFPI. Seventeen and Stray Kids were in second and third spots, bigger than Drake and The Weeknd. Tomorrow x Together and NewJeans (pictured above) were in eighth and ninth places, respectively.

Investors, however, are more downbeat. They have pushed the shares of the Korean music industry’s major players to 12-month lows.

Hybe Corp., the company that was propelled to the forefront of the industry by its creation and management of BTS, closed Thursday at KRW170,300, down 34% compared with the same point last year.

SM Entertainment (Super M, Aespa, EXO) traded at KRW70,000, down 41% on the year, while YG Entertainment (Treasure, Bigbang) was at KRW35,800, down 51%. JYP (Itzy, Twice) has lost 59% of its value in a year to close at KRW53,200.

Part of the problem stems directly from the companies’ recent financial performances.

In May, Hybe revealed a steeper than normal slowdown in the three months to March. Revenue was down by 12% and operating profits fell by 70% to just $11 million. It blamed the absence of new material from BTS, whose members were all on mandatory military service at the time, but also on the high cost of launching and breaking new acts. Financial analysts expect YG Entertainment to do even worse when it reveals second quarter figures. One broker, at DAOL Investment, forecasts YG revenues to be down by more than a third and for operating profits to be all but wiped out.

Like Hybe, YG is suffering from the current absence of its biggest act, Blackpink. Although the girl group renewed its contract with the company, the individual band members did not (Rose moved to The Black Label, while the other three established independent labels) and now they are off doing solo projects.

Another depressant is the shape of the export market. While K-pop is a growing force in the U.S., Europe and Latin America, it is in danger of losing one of its core markets nearer home: China. Fortunately, K-pop is still a big force in Japan, but provisional figures for Korean album sales to China show a more than 90% drop this year.

China and South Korea have been at diplomatic loggerheads for several years, following the deployment of U.S. anti-missile defenses in the country. China has retaliated by explicitly penalizing the Korean culture industry. No Korean movie has been released in Chinese theaters since 20 -

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16. Recently, waning tourist numbers and authorities’ efforts to clean up entertainment consumption in China have further weighed against the Korean music business in China. And the longer the standoff continues, the more costly it will be for Korean labels to return, making Korean entertainment’s “China issue” a longer, structural problem.

The big four companies’ standard responses to the highs and lows of the music biz include launching new acts and trying to diversify revenue streams. (Hybe successfully used its late 2020 stock market flotation to buy itself out from over-dependency on BTS and in anticipation of the band members’ inevitable military callup).

Hybe last year saw NewJeans take up some of the running from on-hiatus BTS. This year, YG appears to be having success with its new girl group Babymonster, which enjoyed record numbers with its first album, released in April. The agencies are also seeking to create other new acts with more international — less Chinese and more English-language — components.

There is also the prospect of some of the biggest names in K-pop making a comeback. JYP’s fortunes look better following the successfully renewed contract talks with Stray Kids. In recent days, YG has been able to announce that girl group 2NE1, which disbanded in 2016, is being re-formed and will start a world tour from October, with Tokyo and Osaka among the first stops.

But the big four Korean music-talent agencies may have also created problems through their own fractious corporate behavior.

Hybe’s short-lived attempt at gaining control of SM Entertainment in early 2023 has had repercussions which have not yet fully died down.

SM Entertainment staff were horrified by the prospect of being taken over by their rival and sought out a counter-offer from Korean tech giant Kakao. With wealthy financial partners, Kakao soon drove the SM Entertainment stock price beyond Hybe’s pain threshold. But the maneuver quickly attracted accusations of stock price manipulation, which regulators have taken seriously. Kim Beom-su, the billionaire founder of Kakao, was this week the third person involved in the bid to be arrested by Seoul prosecutors.

This week, too, Min Hee-jin, the head of Ador a talent agency within the Hybe empire, filed a police complaint against Hybe’s CEO Park Ji-won and a quartet of other executives. Min previously alleged that Hybe had copied her ideas for her proteges NewJeans when it launched Illit. Hybe denied that, but responded by trying to fire Min for attempting to hive off Ador, a move which she successfully beat with a court injunction. Hybe also conducting an internal audit of Ador and seized personal computers.

On Wednesday, Hybe announced that Park had resigned and would be replaced by ‘Jason’ Lee Jae-sang instead. It said nothing of the fight with Min and instead explained that “thetransition has been part ofHybe’s ongoing leadership initiative since the start of 2024, positioning Lee as the central figure for the forthcoming ‘Hybe2.0’ strategy rollout.”

Investors will be hoping that the big four companies can put aside their skirmishing, get acts like Blackpink back on the road and making music soon.

If the KTCI is right, there is money to be made. “Overseas sales are expected to increase in 2024, considering the diversification of K-pop’s overseas markets, the rise of new artists, and consistent efforts to expand globally,” its report forecast.