[Inside Chodong] K-pop Agencies Must Also Meet Global Standards

I belong to the H.O.T generation. The school playground during my third year of middle school was filled with the sound of H.O.T's song "CANDY." The sight of my friends dancing to that song remains a warm memory of my adolescence. In high school, my favorite song at the coin karaoke, which relieved the stress of entrance exams, was S.E.S's "Oh, My Love," and I must have watched the music video for the same group's "I'm your Girl" at least 100 times, mesmerized by member Eugene's unreal beauty.

Not only me, but the majority of South Koreans likely have their own childhood memories related to K-pop. The feelings I have for S.E.S, Fin.K.L, H.O.T, and Sechs Kies are the same nostalgia that today's youth will carry for aespa, NewJeans, BLACKPINK, and BTS in the future.

More than 20 years after the birth of H.O.T, the power of K-pop has grown even greater. In 2020, when COVID-19 struck our lives, BTS's "Dynamite" reached number one on the US Billboard chart. The lively music video and live performances comforted people around the world suffering from quarantine life. K-pop holds even more value as it provides solace in the present reality and becomes a cherished memory tied to a moment in life once time has passed.

Group H.O.T Activity Scenes
[Photo by SM Entertainment]

K-pop also has another side. We cannot deny that behind K-pop's charismatic allure lie rotten parts that need to be cut out, such as "slave contracts," "sexual exploitation of minors," and "emperor-style management." Recently, in the capital market, the "emperor-style management" of Lee Soo-man, the founder and largest shareholder of SM Entertainment, considered the originator of K-pop, has come under scrutiny. The activist fund Align Partners pointed out chronic problems with the producing contract between Lee Soo-man's personal company, Like Planning, and SM Entertainment. They highlighted that the largest shareholder personally took a large portion of profits that should have been fairly shared among SM shareholders, gaining support from minority shareholders.

The pressure from the activist fund triggered instability in SM's governance, leading to a fierce battle between the IT giant Kakao and HYBE, BTS's agency, over control of SM Entertainment. The acquisition competition between the two companies escalated into an endless "war of money," and to stop the bleeding, HYBE and Kakao sat down at the negotiating table.

Although Kakao ultimately won the decisive victory, the muddy fight during this merger and acquisition (M&A) process exposed the ugly side of the capital market and K-pop in detail. Of course, without the unique producer Lee Soo-man, the current state of K-pop would not exist. K-pop is recognized worldwide wherever you go.

However, as members of the capital market and as a listed company, K-pop agencies have not lived up to that standard. They have not escaped the backward management style led by a single individual's personal skills. For K-pop to continue to develop sustainably while providing cultural and economic richness to people, the agencies producing K-pop must also adopt global standards as listed companies.

It must also be acknowledged that K-pop is not the possession of any one individual, whether Lee Soo-man, Bang Si-hyuk, or Kim Beom-soo. It is a result achieved through the investments and efforts of not only controlling shareholders but also minority shareholders, company members, artists, partners, and, furthermore, K-pop fans. An activist fund has fired the starting shot for reforming K-pop agencies, but the conclusion remains the responsibility of the major shareholders. Even at this moment, we must not disappoint the boys and girls around the world who have K-pop stars' faces stuck on their walls, nurturing their memories with care.