SM, YG accused of exploiting fansThe nation’s fair trade watchdog is investigating Korea’s major entertainment giants SM Entertainment and YG Entertainment for overcharging on products sponsored by their K-pop idols, according to media reports.
The Korea Fair Trade Commission (FTC) has begun examining Korean entertainment’s two biggest players, upon a request submitted by Seoul YMCA last month. The consumers group said the two agencies charge too much for so-called fan goods, taking advantage of their status as exclusive holders of the image rights of their affiliated celebrities.
“The fan product prices are too high compared to their actual quality,” Seoul YMCA wrote in a statement last month, saying the group’s study found that some products are priced up to eight times higher than similar products sold by other retailers.
The entertainment giants operate stores sell clothes and fashion items that the celebrities wore at TV shows or concerts, and even daily-use products that have been designed through collaborations with various brands. And they have become a crucial source of profit for those firms.
After the YMCA report, the FTC reportedly started collecting price data on celebrity products, though its officials have yet to confirm.
One of the most expensive and disputed products currently available are high-end earphones priced at 1.23 million won ($1,047).
Shure’s SE846 earphones became coveted among fans of Exo, an immensely popular boy band from SM Entertainment, after some members of the group wore them during a show.
The earphones first sold in Korea in 2013 at 1.23 million won, the same price SM charges fans. But these days, the earphones are sold for as low as 900,000 won to 1.1 million won at audio shops on and offline.
Other pricey products include a rabbit doll, jointly designed by Exo and luxury brand MCM, priced at 565,000 won, and a luxury-brand sweatshirt jointly designed with Exo priced at 355,000 won.
YG Entertainment also sold products associated with their celebs. A jacket with boy group Big Bang’s 2014 concert logo was priced at 175,000 won, while other products like paper stickers were priced at 45,000 won.
But some experts say it won’t be easy for the FTC to punish the companies just for turning huge profits using their dominant market position,
According to sales data from local securities firms and SM Entertainment, the agency made 40.3 billion won last year from selling the image rights of their stars, a 12.6 percent year-on-year growth. Analysts expect SM’s sales from this business will reach 51.7 billion won this year.
BY KIM JI-YOON [email@example.com]