Fans, artists kept in the dark in SM Entertainment takeover

K-pop

Published: 05 Mar. 2023, 15:47 Updated: 05 Mar. 2023, 16:00

Fans, artists kept in the dark in SM Entertainment takeover

A picture of the SM Entertainment logo is displayed at the K-pop agency's headquarters in Seongsu-dong of Seongdong District, eastern Seoul. [YONHAP]

SM Entertainment’s artists and their fans are being used as nothing but pretext for a battle for control over one of the largest entertainment companies in Korea, critics said in a debate held Friday regarding the ongoing stock sale fiasco surrounding SM Entertainment.

“It seems as though the companies are only using the artists and fans as a shield for themselves,” pop music critic Kim Do-heon said at the event, co-organized by nonprofit activist group Cultural Action and the Seoul National University Asia Center.

Culture critics and academics took part in the “How to view the SM Entertainment management battle” debate, held at Seoul National University in southern Seoul.

“It’s true that the artists and fans do not have a say in the business aspect,” he continued. “What can fans do when the manager says that they’re going to do something? But what the companies keep ignoring is that when it comes to the K-pop industry, fans are not just consumers — they are the key to its success.”

Since early February, when SM Entertainment’s board first announced that it will be issuing new stock for Kakao and then the K-pop agency’s founder Lee Soo-man fought back by selling his shares to HYBE, all parties involved have been claiming that they have the best interest of the artists, fans and shareholders at heart.

HYBE and SM Entertainment both agree that tilting away from the old method, where all music production depended on founder Lee, will guarantee SM Entertainment increased profit for shareholders’ dividends, creativity for artists and content for fans. But they differ on which company can best deliver on such results.

Fans have been expressing their dismay at the HYBE-SM takeover on online forums, and half of SM Entertainment’s staff have also come together to issue a joint statement opposing the deal with HYBE. Still, there has been no official channel of communication for fans, staff or, most notably, the artists.

Critics and academics take part in a debate titled "How to view the SM Entertainment management battle" at Seoul National University in southern Seoul on Friday. [YOON SO-YEON]

“Both companies are arguing that the current brawl is hurting artists and trainees,” Kim said. “If they are so important, then why has no one asked their opinion before all this happened? The reason so many people are being confused and devastated by all this is that nothing was shared with them beforehand.”

HYBE argues that its global management structure — established with the immense global popularity of its boy band BTS — will give it the upper hand in growing SM artists’ influence overseas, especially by nurturing the so-called derivative intellectual property (IP) businesses.

Derivative IP businesses refer to the production and sales of secondary content based on primary IP — the artists, their music and performances — such as related videos, webtoons, games and merchandise.

But such plans to make money on derivative IP will not work if fans grow tired of the battle and decide to walk away from SM Entertainment altogether, according to Lee Jee-heng, a Ph.D. researcher at the Institute for Gender and Affect Studies at Dong-A University.

“Derivative IP does not work without a robust fandom, but fandoms cannot be produced artificially,” Lee said. “The achievements that BTS has accomplished in the Western world were because of the BTS members’ content, their personality and their narrative, not by a systematic execution of the company. HYBE arguing that it can reenact BTS’s legacy denies the fandoms' role in K-pop.”

Images of LED trucks parked in front of the HYBE headquarters in Yongsan District, central Seoul, on Feb. 28 [SCREEN CAPTURE]

Attorneys from law firm Yoon & Yang head to the Seoul Eastern District Court on Feb. 22 for the first hearing of the injunction filed for SM Entertainment issuing new stocks to sell to Kakao. [YONHAP]

Concerns from smaller competitors that the SM-HYBE or SM-Kakao merger could both lead to a monopolization of K-pop are not so valid in the global perspective, especially compared to the three largest music companies in the world: Universal Music Group, Sony Music Entertainment and Warner Music.

“Can we really say that these companies are hindering the diversity in music?” critic Kim said. “If HYBE does decide to change SM Entertainment’s style, that will be to their loss because the strength of a multi-label system only comes to fruition if you respect each label’s uniqueness.”

One major problem that has been unearthed amid the feud is that there was no labor union at SM Entertainment, even though it is one of the oldest and largest companies in K-pop, and that the founder alone was left with such dominant power over the company.

A statement released by a coalition of 208 SM Entertainment employees opposing the ″hostile takeover″ by HYBE [SCREEN CAPTURE]

SM Entertainment was founded in 1995 by Lee, JYP Entertainment by Park Jin-young in 1997, YG Entertainment by Yang Hyun-suk in 1996 and HYBE — then known as Big Hit Entertainment — by Bang Si-hyuk in 2005. All of the founders have been directing the music and concept for the artists at their agencies, hence the distinct style of artists that debut with each agency.

“The statement from SM Entertainment staff broke my heart,” critic Seo Jeong Min-gap said. “Whether or not Lee Soo-man is at fault, the fact that the employees could only talk about it now means that there is no union to represent their voices. The realities of the entertainment industry, where laborers’ rights are not protected, came to light.”

Whichever company wins, the end result of the battle will mark a historical moment in K-pop, according to Prof. Lee Dong-yeun at the Department of Korean Traditional Arts Theory at the Korea National University of Arts.

“The results will change the K-pop landscape like never before,” he said. “K-pop has been around for 30 years, and this will be the most pivotal moment yet. At a time where the old, pre-modern management structures are being ousted from the market, this battle sheds light on essential issues such as the generation shift of first-generation K-pop agency founders and monopolization of content.”

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]