SM-Chenbaekxi Conflict Rekindled... "The Core Issue Is Tampering" vs "Provide Settlement Data"

Demanding 10% of Personal Sales... Chenbaekxi Reports SM
SM "Chenbaekxi Enjoys EXO's Rights but Neglects Obligations"

Conflict between EXO members Baekhyun, Xiumin, Chen (ChenBaekXi), and SM Entertainment has reignited. ChenBaekXi's side raised issues regarding SM's failure to fulfill promises and non-provision of settlement data, while SM countered by accusing ChenBaekXi and their current agency of tampering (pre-contract contact before contract expiration).

Group Chenbaekxi. [Photo by INB100]

On the afternoon of the 10th, ChenBaekXi's agency INB100 held a press conference at the Shilla Hotel in Jangchung-dong, Seoul, stating, "Last year, SM proposed a 5.5% commission rate on album and digital music sales to ChenBaekXi's agency INB100 as part of an agreement, but has failed to fulfill this," and added, "On the other hand, they are unfairly demanding 10% of the revenue generated by the artists from individual activities such as solo album releases, concerts, and advertisements."

Attorney Lee Jae-hak, representing INB100, disclosed a transcript of a conversation between Cha Ga-won, chairman of the parent company One Hundred, and Lee Sung-soo, CAO of SM Entertainment, at the time of the agreement. According to the transcript, the CAO persuaded Chairman Cha by saying, "We will set the distribution commission rate at 5.5%." Attorney Lee explained, "In April, we sent a certified letter pointing out SM's failure to fulfill this promise, but received no response."

Currently, ChenBaekXi's side finds SM's demand for 10% of 'revenue' unacceptable. Typically, profit-sharing is based on 'net profit,' not 'revenue.' If there is a loss, no payment obligation arises since no profit is generated, but if based on revenue, even in a loss situation, the money earned must be shared, which is unreasonable.

Regarding this, Attorney Lee emphasized, "The agreement is no longer meaningful, so we plan to cancel the agreement dated June 18 last year on grounds of fraud or breach of obligation, and also consider criminal complaints and filing with the Fair Trade Commission regarding the agreement process."

Baekhyun, Xiumin, and Chen (Chen Baek Xi) of the group EXO stated on the 10th that they cannot pay royalties of 10% of sales, arguing that SM Entertainment is not adhering to the 5.5% album and digital music commission rate promised last year. The photo shows a press conference held by Chen Baek Xi at the Shilla Hotel in Seoul on the same day. From left: Lawyer Lee Jae-hak, Cha Ga-won, CEO of One Hundred, and Kim Dong-jun, CEO of INB100. Photo by Yonhap News.

At the press conference, Cha Ga-won, chairman of One Hundred (also chairman of construction company Piac Group), said, "We intend to restart a full-scale confrontation with SM," and demanded, "SM must provide the settlement basis data for the members." Chairman Cha pointed out that SM still has not provided the settlement data.

INB100, ChenBaekXi's agency, was incorporated last month as a subsidiary of One Hundred, jointly invested by Chairman Cha and MC Mong.

In response to these claims, SM issued a statement clarifying, "The essence of all incidents is the unfair inducement (tampering, pre-contract contact before contract termination) by MC Mong and Chairman Cha Ga-won towards our artists."

SM stated, "While allowing individual activities through personal corporations, ChenBaekXi themselves signed the agreement to pay 10% of their personal corporation's revenue," and emphasized, "ChenBaekXi wants to enjoy EXO's rights and benefits but neglects their promises and obligations."

Regarding ChenBaekXi's claim of non-provision of settlement data, SM maintained their previous stance, saying, "The request for settlement data from ChenBaekXi was based on improper intent; while viewing the settlement data is possible, we initially did not accept the demand to provide copies."

Additionally, SM explained, "When it became difficult to adjust the distribution commission rate as ChenBaekXi desired despite our efforts, we provided other forms of consideration."

SM did not respond to CAO Lee Sung-soo's remarks.

ChenBaekXi immediately rebutted SM's official position, stating, "SM should clearly specify the standards and grounds for tampering. Is it tampering when artists receive advice and consult with acquaintances, seniors, or colleagues?"

They continued, "As a major agency, SM should stop petty, irrelevant nitpicking and public opinion manipulation claims without reasonable rebuttal regarding the essence of the issue."

Last June, ChenBaekXi notified SM of contract termination, citing unfairness in the exclusive contract. At that time, ChenBaekXi raised issues about the opacity of the settlement process and unfair long-term contracts. The two sides seemed to resolve the conflict by modifying parts of the contract and agreeing to conditional individual activities. However, in August last year, Baekhyun announced the establishment of a personal company, and in January this year, INB100 was launched to manage ChenBaekXi's activities.

INB100 was incorporated as a subsidiary of One Hundred last month. One Hundred is a company jointly invested by Chairman Cha Ga-won of Piac Group and MC Mong.