In a nightclub in Seoul, South
Korea, the crowd cheered when Harim Choi played some of the latest K-pop hits.
But the decade-old songs, like those by 2NE1 and Wonder Girls, seemed to have a
special resonance for the partygoers.
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“The older songs bring us back to a time
when we could simply enjoy the music, when we didn’t have to worry about the
business behind it all,” Choi, a 26-year-old DJ, said.
In recent months, an unusually public and
acrimonious corporate feud involving major K-pop companies has captivated die-hard
fans, casual listeners, artists, and industry figures alike. At the center was
SM Entertainment, a K-pop mainstay whose roster of artists includes Girls’
Generation. Circling it were two suitors: Hybe, the company behind BTS, and
Kakao, a South Korean technology giant.
Both companies saw the acquisition of SM
Entertainment as an opportunity to expand their reach overseas.
After years of growth at home, K-pop’s
future now lies outside South Korea. While the genre has fans in almost every
corner of the world, the sales of K-pop’s biggest labels account for a tiny
sliver of the global music market.
“There’s a sense that the industry is targeting the West and leaving Korean fans behind.”
This effort to increase K-pop’s global
appeal has excited some Korean fans but has made others feel alienated, raising
an uncomfortable question: Does K-pop still need the fans at home?
“There’s a sense that the industry is
targeting the West and leaving Korean fans behind,” said Kim Yoon Ho, a
36-year-old fan who lives in Seoul.
Shifts in the systemMany of today’s biggest K-pop hits are
wired for an American audience. This week, “Like Crazy”, a single by BTS member
Jimin, topped the Billboard Hot 100 chart but ranked lower in South Korea.
In a statement, Hybe said its ambitions
were always global and that the company “will continue to be committed to bringing
content to fans around the world, regardless of culture, religion, gender, or
geography”. SM Entertainment said it was paying “close attention” to fans
everywhere.
One of the first signs of upheaval came in
February, when SM Entertainment pushed out its founder, the producer Lee
Soo-man, considered the godfather of K-pop, over allegations of financial
improprieties. Lee, 70, denied wrongdoing and sold part of his stake in the
company to Hybe, which became the biggest shareholder in SM Entertainment.
“The fight has created a situation where you can’t just listen to K-pop comfortably. It’s as if the artists are chess pieces to them.”
“There have been large and small management
disputes in the 30 years of K-pop,” said Lee Dong Yeun, a professor at the
Korea National University of Arts. “But none as big as this.”
Kakao climbsSensing an opportunity to expand its roster
a few months after BTS announced a hiatus, Hybe moved to increase its ownership
in SM Entertainment, which has a large fan base in Japan and Southeast Asia.
But SM Entertainment saw the overture as hostile and instead proposed a deal
with Kakao, whose messaging and payment apps have become crucial infrastructure
in South Korea but have had little success overseas.
A deal would help Kakao establish a
foothold in the K-pop business and offer a chance to expand abroad, Lee said.
Kakao is trying to tap the South Korean culture wave to build its international
business with webtoons, games, and music.
Fresh from raising nearly $1 billion from
sovereign wealth funds in Saudi Arabia and Singapore, Kakao offered $962 million
for a 35 percent stake in SM Entertainment.
Hybe accused SM Entertainment of “illogical
behavior” and sought a court injunction to block a deal with Kakao. SM
Entertainment gave employees a 15 percent raise to get them in line behind a
merger with Kakao. Dissenters were pushed out.
In the end, Kakao’s deep pockets won out.
Last week, it announced it had taken a 40 percent stake in SM Entertainment,
whose shares had doubled in value during the takeover battle. In a statement,
Kakao said SM Entertainment would make the decisions about artists.
Profits over performersTo fans, the maneuvering was a display of
how the companies’ profit-driven motives trumped the interests of artists and
supporters, with global interests taking priority over local record sales and
concerts.
“The fight has created a situation where
you can’t just listen to K-pop comfortably,” said Choi, the DJ. “It’s as if the
artists are chess pieces to them.”
Lee Sangmi, 36, a longtime fan of SM
Entertainment’s groups, said she was wary that her favorite groups might “have
less freedom” after a merger. Kwon Yeyoung, 17, a high school student who runs
a YouTube fan channel, said she was waiting to see how album covers, the
artists’ fashion, the mood of the concerts, and merchandise design would
change. Others fear more K-pop songs would be written entirely in English.
“A hobby that was supposed to be fun became more of a source of worry,” said Kim Su-yeon, 19, a student in Seoul. “The changes have stressed me out.”
Before K-pop grew into a
multibillion-dollar cultural juggernaut, labels were funded by individual
producers. Lee, a former folk singer, started SM Entertainment in the 1990s
with the equivalent of about $38,000. Other powerhouses in the industry, like
YG and JYP, had similarly humble beginnings.
In the following decades, the companies
courted investors and sold shares to the public. Eventually Kakao and Naver,
another big South Korean tech company, also started backing music and video
ventures, in part to reach customers overseas.
Among K-pop labels, Hybe has been one of
the most successful abroad. In 2021, it bought Ithaca Holdings, which manages
Justin Bieber and Ariana Grande, for about $1 billion. In February, it acquired
the Atlanta rap label Quality Control Music. These deals have helped Hybe more
than double its sales, three-quarters of which now come from outside South
Korea.
Overall, about 90 percent of all K-pop listeners
live outside South Korea, according to K-Pop Radar, an industry tracker. And as
the industry jostles for more fans overseas, some fans say the labels are no
longer focusing on what made K-pop so successful.
“A hobby that was supposed to be fun became
more of a source of worry,” said Kim Su-yeon, 19, a student in Seoul. “The
changes have stressed me out.”
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