[Inside Chodong] The Success and Limits of K-pop's "Multi-Label" System

Jo In-kyung, Content Manager of the Industry Division

The conflict between Min Hee-jin, CEO of Adore, the agency managing the idol group NewJeans, and its parent company HYBE is intensifying. Min’s press conference, held shortly after HYBE raised suspicions of a hostile takeover attempt of Adore’s management rights, has become a daily topic of public interest. As the dispute between the two sides continues, it is expanding beyond the music industry and stock market to become a broader social concern.

The most notable aspect of this situation is that HYBE, on the verge of being designated as a large business group for the first time among entertainment companies, has exposed the vulnerabilities of its so-called “Multi-Label” system, which it had touted as a core growth engine. Unlike overseas markets, the “Korean-style Multi-Label” system, which has taken root domestically alongside the growth of K-pop, functions as a kind of subsidiary structure under large entertainment companies. In HYBE’s multi-label system, backed by massive capital, trainees are managed centrally by HYBE, while each label independently handles album production, marketing, and other practical tasks. Because labels operate independently, the system was designed to foster coexistence of unique and creative music and artists, and to promote overall growth of HYBE through competition and cooperation among labels. Under HYBE, as many as 65 companies and 11 labels operated simultaneously. Among them, Big Hit Music, represented by BTS; Source Music, home to Le Sserafim; and Pledis Entertainment, which manages Seventeen, have achieved great success and were key drivers of HYBE’s record-breaking revenue growth in recent years.

However, within the limited genre of K-pop, the multi-label system inevitably led to competition involving similar music styles, concepts, and marketing strategies. Since the fan bases targeted by these labels often overlapped, the fate of each label depended on who could attract more fans through competition. Although not visible on the surface, it is rumored that each label has long suffered from invisible conflicts and power struggles. Beneath the competitive dynamic between Le Sserafim and NewJeans, which triggered the current crisis, subtle tensions had been brewing since the production process. The recent controversy over “I-Lit” allegedly copying NewJeans was also a somewhat predictable risk.

There were problems not only with the system itself but also with its management. According to HYBE, there was an attempt to seize management rights at Adore, which HYBE detected and responded to with a sudden audit, ultimately leading to the accusation of Min Hee-jin for breach of trust. On the other hand, Min vehemently denied any intention of a hostile takeover, claiming that HYBE was simply suppressing a subsidiary CEO who was delivering strong performance, and launched harsh criticism against HYBE’s management. The dispute also revealed embarrassing truths about the music industry’s chronic issues, such as forced album sales and random distribution of photocards, which lie behind K-pop’s success. This exposed comprehensive shortcomings not only in subsidiary management but also in artist management and crisis management within the multi-label system.

Last year, the management dispute between Kakao and SM Entertainment shook both the entertainment industry and the stock market. The legal battle between the girl group Fifty Fifty and their agency ATTRACT was a shock not only to the artists but also to fans. Similarly, the conflict between HYBE and Adore is causing economic losses and emotional distress to many HYBE shareholders and domestic and international fans. Above all, the HYBE crisis threatens to significantly undermine the stature of K-pop beyond just a domestic entertainment industry issue. We sincerely hope that both parties can resolve this matter amicably and that this incident will serve as an opportunity to strengthen the multi-label system that has driven K-pop’s success, enabling even greater leaps forward.