JYP, SM AND YG: THE THREE COMPANIES THAT CONTROL K-POP
Three three entertainment giants dominate the K-pop industry: JYP Entertainment, SM Entertainment and YG Entertainment. John Seabrook wrote in The New Yorker: “S.M. Entertainment is the largest, followed by J.Y.P. Entertainment and Y.G. Entertainment. (The initials stand for the names of the agencies’ founders, all of whom are former musicians or dancers: Lee Soo-man, Park Jin-young, and Yang “Goon” Hyun-suk, respectively.) The agencies act as manager, agent, and promoter, controlling every aspect of an idol’s career: record sales, concerts, publishing, endorsements, and TV appearances. S.M. and J.Y.P. are in Gangnam, and there are always groups of young girls, many of them Japanese, in the streets outside, hoping for a glimpse of an idol or two (even though the idols generally move anonymously through the city, in minivans with tinted windows). Both sets of offices are surprisingly shabby inside, with cramped studios and worn-looking décor. Y.G., across the river, has much more lavish facilities, including around a dozen state-of-the-art recording studios and a staff of sixteen in-house producers, among them Teddy Park, who wrote “Fantastic Baby,” for BIGBANG, and most of the music for 2NE1, Y.G.’s two most popular groups. [Source: John Seabrook, The New Yorker, October 8, 2012 =]
Lee Young-ho wrote in Variety: “The oldest and largest entertainment company in the K-pop world, SM (named for founder Lee Soo-man) gave birth to the first generation of pop bands in the late ’90s and created the first K-pop wave with talents like H.O.T., S.E.S. and BoA. “Since then, SM has since grown into a major conglomerate. In addition to idol sensations like Super Junior, Shinee, Exo, TVXQ and Girls Generation, it also produces stage musicals and TV, develops K-pop-themed travel merchandising, and manages actors like Jang Dong-gun (“No Tears for the Dead”) and Kim Ha-neul (“Blind”) through its subsidiary SM C&C. [Source: Lee Young-ho, Variety, May 11, 2016]
“Established by Yang Hyun-seok, former member of legendary boy band Seo Tae-ji & Boys, YG is known for its hip-hop and electronic dance music with artists like Psy, Big Bang and 2NE1. When Psy’s “Gangnam Style” became a global hit (2.5 billion views and counting on YouTube), Scooter Braun — the talent manager who also reps Justin Bieber — approached YG and helped Psy and 2NE1’s singer CL make soft debuts in the U.S. market. YG also operates subsidiaries for fashion model management, beauty and sports.
Founded in 1997 by J.Y. Park, a pop star in his own right, JYP Entertainment initially rose to fame with boy band god and singer-actor Rain (“Ninja Assassin”) in the early 2000s. In 2008, its girl group Wonder Girls was one of the first K-pop acts to find Pan-Asian success with “Nobody.” JYP’s more recent lineup of talents includes 2PM, Miss A, Got7 and Twice, all featuring members from other Asian countries in an effort to appeal to the region. Park also produced a music video with Conan O’Brien during the comic’s visit to South Korea.
Seabrook wrote: “At J.Y.P., I briefly met Park Jin-young, a tall, athletic forty-year-old who was educated in the U.S. He was in the agency’s training facility. Dressed in workout clothes, he was in the middle of a session with some of the trainees, and he couldn’t stop to talk; he disappeared into a dance studio, outside of which there was a pile of kids’ shoes.” =
The value of the industry is said to be in the billions of dollars. The value of BTS alone was estimated to be worth US$3.5 billion to the South Korean economy every year, according to the Hyundai Research Institute in 2019. SM Entertainment, YG Entertainment and JYP Entertainment revenues rose toUS$326 million in 2012, more than triple the figure in 2009, with most of that growth coming from overseas. The three entertainment companies made almost US$400 million in 2013. [Sources: Choe Sang-Hun, New York Times, August 9, 2013; John Power, Mashable, February 29, 2016]
Why it Was So Easy for Korea to Overtake Japan in the Pop Culture Wars
Euny Hong wrote in Quartz: “Why is Japan’s cultural influence waning? Reason 1: These days, Japan makes stuff mostly for Japan. Japanese pop culture, like the Japanese archipelago itself, is too isolated from the rest of the world to have remained a sustainable global influence. This is evidenced by the neologism “Japan Galapagos Syndrome,” which compares Japan to the South American island that has its own species and ecology. In 2010, Japanese electronics company Sharp launched a tablet in Japan that was initially sold nowhere else in the world, appropriately called the Galapagos tablet. Similarly, many of Japan’s videogames are for the Japanese market only. [Source: Euny Hong, Quartz, November 16, 2012]
“Some say the problem is Japan’s reluctance to learn English and its negative population growth. Others point out that Japan, whose population is 127.8 million, is a huge enough consumer market as it is, and Japanese retailers don’t feel the need to take the huge risk of launching an overseas marketing campaign. (South Korea’s population is less than half that, at 49.8 million). Ironic, given that it was Korea, not Japan, that was once dubbed “the Hermit Kingdom” by frustrated Western conquistadors in days of yore.
“Reason 2: Korean culture is puritanical–and for global spread, that’s a good thing. Despite what you see in Korean movies, sexual repression in everyday South Korea is enforced to an annoying degree. A female Korean-American friend of mind recalls not being allowed to attend slumber parties as a child, because, “You don’t sleep at another person’s house until you are married.” When I’m with my parents, who live in Seoul, I am still expected to walk out of the room if we’re watching a movie with a sex scene, even though I’ve been an adult for quite a long time. They still won’t let me take taxis at night because they’re worried I’ll be kidnapped.
“Weirdly, a lot of Western parents can relate to, and even envy, such concerns. If a somewhat conventional culture like the U.S. is going to accept a foreign pop trend, it has to have palatable morals, and overprotectiveness is an appealing one. Japan is a different story. It, too, is sexually repressed, but it’s not puritanical. Take the J-pop band AKB48 (so named because the band has 48 members). They frequently wear school uniforms while performing, and their songs have lyrics like “My school uniform is getting in the way.” A song like that would be banned in Korea. In Korea, by contrast, schoolgirl uniforms are only worn… for school. And they have much longer skirts than do their Japanese counterparts. Japanese girl idols are expected to publish photobooks, consisting of pin-up style pictures. The Guardian wrote that such books “will invariably feature a selection of bikini shots shot on beaches in Hawaii…Sales of photobooks are so brisk that they have their own charts.”
“Meanwhile, Korean culture protects childhood innocence at any price. Which means that even if the K-pop idols are of age, they can’t appear in a spread that would be inappropriate for their child fans. Patrick St. Michel noted in our sister publication the Atlantic that K-pop bands “aren’t glimmering examples of feminism, but at least they look and act like grown women.” An example of a somewhat grown-up K-pop girl band is the nine-member Girls’ Generation, recently featured in The New Yorker. And for what it’s worth, the K-pop boy acts (Rain, Super Junior, Big Bang) were popular exports before the girl bands ever were. I hope this means that the popularity of K-pop has to do with general appeal and not just some submissive fantasy of Asian women.
Korean Pop Industry Run like Hyundai and Samsung
Euny Hong wrote in Quartz: The Korean pop industry is run like Korea’s chaebols (giant Korean conglomerates). Hyundai and Samsung are much closer models to Korean music companies than are EMI or Columbia records. There are only three big Korean recording companies (SM Entertainment, JYP Entertainment, and YG entertainment), and they own all the distribution channels and every point of entry. Independent talent agencies are insignificant; record labels do all their own recruiting. [Source: Euny Hong, Quartz, November 16, 2012]
“They don’t find the star; they make the star. Tiffany, a member of Girls’ Entertainment, was discovered in a California mall and trained for three years and seven months before ever appearing in public. Like the Monkees or Menudo, the bands exist before the members are picked. There is virtually no room for a Bob Dylan type to start out strumming in coffeeshops and rise out of obscurity.
“No US record label would invest the resources to train performers for that many years. A lot can happen to a teenager between the ages of 14 to 18: they could go to another label or turn to drugs. The Korean recording contract, by contrast, is airtight. The performers in K-pop bands are usually not even allowed to date. At all.
“The structure of the J-pop industry is superficially similar to that of Korea, but it’s always had one major difference: Japanese pop music is much more experimental and often avant-garde (think of the Plastic Ono Band). They even went through a rockabilly stage in the 1960s (“rokabiri”) and play around with cross-cultural hybrid sounds. South Korean tastes, meanwhile, are factory-made and conventional: the country has never had a hair band.
S.M. Entertainment: The Company That Created K-Pop
Andrew Salmon wrote in Forbes: ““S.M. kicked off the K-pop phenomenon in the 1990s. With its boot-camp-style training for the performers and production-line approach to the music, it perfected the model for churning out acts that storm Top 40 charts and pack concert halls across Asia and beyond. An S.M. report lays out the industrial scale of the enterprise. For spots in its groups, it receives 300,000 applicants in nine countries every year. Its training facility in Gangnam is 2,550 square meters. It collaborates with 400 songwriters worldwide and samples some 12,000 songs a year. From 2010 through last year its artists played to a total audience of 2.5 million. Its YouTube page gets 1,000 views a second. One key to its success: It was the first Korean label to market "bands as brands," says Bernie Cho, an ex-MTV executive and now president of Seoul entertainment agency DFSB Kollective. [Source: Andrew Salmon, Forbes, July 31, 2013]
“The S.M. model is immensely profitable.” In 2012, net income almost doubled, to US$38 million, on an 82 percent jump in revenue, to US$225 million. The company, which went public in 2000, now boasts a market capitalization of US$660 million — much bigger than its closest rival, YG Entertainment, the label of global superstar Psy. All this puts S.M. on FORBES ASIA's version of the music charts this year — for the second year in a row it makes our list of the best 200 listed companies in the Asia-Pacific region with an annual revenue of under US$1 billion.”
2012-2013 was “bumpy for S.M. — though not bumpy enough to offset a stellar five-year track record that puts it on our list again. The stock is down 23 percent in 12 months, and this year's first-quarter profits dropped 30 percent from the year-earlier quarter. Kim Shi-Woo, who covers S.M. for Korea Investment " Securities, blames the weaker yen and a lack of major S.M. events in Japan — K-pop's biggest overseas market — during the period. He says more concerts and other events are planned for the rest of the year. Indeed, analysts expect net income for 2013 to rise 22 percent over last year, to US$40.2 million, according to an average of estimates collected by Bloomberg Finance. Revenue is seen increasing 11 percent, to US$166 million. Samsung Securities sees S.M. rolling out a strong lineup of new acts, while new television and telecom services will provide new sales channels.
Lee Soo-Man: the Man behind S.M. Entertainment
Andrew Salmon wrote in Forbes: “The man behind S.M. Entertainment is 61-year-old Lee Soo-Man. He was a moderately successful folk and rock singer, and later a deejay, but his real talent proved to be business. While studying computer engineering at California State University, Northridge in the early 1980s, he had a front-row seat for the music revolution launched by a new cable-TV channel, MTV, which was forcing bands to be visual as well as musical. In 1995 he started his record label and talent agency, using his initials for the name. From the start he saw S.M. as an outfit that would build acts rather than simply sign them. He stepped down from the board in 2010 but remains the largest shareholder, owning a 21.3 percent stake that's worth US$160 million. Citing their busy schedules, Lee and the top executives declined to be interviewed for this story. [Source: Andrew Salmon, Forbes, July 31, 2013]
“The first K-pop group to roll out of the S.M. factory was the boy band H.O.T. in 1996. It popularized an upbeat, catchy style of dance music that had been coming into vogue, overtaking the folk, rock and protest songs of yore. More superstars followed: the first K-pop girl group S.E.S., BoA, TVXQ, Super Junior and Girls' Generation. The process that produces these bands is formidable. "My day would start at 7 a.m.," recalls Brian Joo, 32, a Korean-American who was one-half of S.M.'s rhythm " blues duo Fly to the Sky, now in hiatus. "We did dance with two different choreographers, vocal training, how to speak to the camera, how to approach people." Any faults meant extra work: Joo, who was "a little chubby," had to stay late for extra dance sessions.
Joo, who this year started his own label and considers Lee Soo-Man a father figure, says: "No other label will train you to that extent. S.M. knew exactly how to find an artist's inner talent. That's what S.M. did for me." In recent years “Lee himself may be refocusing. Industry observers say the mogul, who is believed to own a California vineyard, is now as fascinated by wine as by music.
Lee Soo-man is regarded as K-pop’s primary architect. People at S.M. refer to him as Chairman Lee. John Seabrook wrote in The New Yorker: “Lee retired as the agency’s C.E.O. in 2010, but he still takes a hand in forming the trainees into idol groups, including S.M.’s newest one, EXO. The group has twelve boys, six of them Korean speakers who live in Seoul (EXO-K) and six Mandarin speakers, who live in China (EXO-M). The two “subgroups” release songs at the same time in their respective countries and languages, and promote them simultaneously, thereby achieving “perfect localization,” as Lee calls it. “It may be a Chinese artist or a Chinese company, but what matters in the end is the fact that it was made by our cultural technology,” he has said. “We are preparing for the next biggest market in the world, and the goal is to produce the biggest stars in the world.”
Jin-Young Park, JYP Entertainment and Rain
Jin-Young Park, the founder of JYP Entertainment (JYP are his initials), speaks good English and had his first big success with Rain in the 2000s. His father was news correspondent based in the U.S. At age 9, Park moved with his mother to New York. He lived there for three years before Park returned to Seoul for high school. He later attended Yonsei University, one of South Korea’s best universities, during which time he released his first two albums. He graduated with a bachelor's in geology in 1996. [Source: Wikipedia]
Deborah Sontag wrote in the New York Times: Mr. Park “had made his debut in 1994 as a "crazy, lunatic hip-hop artist from the Ivy League" of South Korea. He was a bad-boy performer who wore see-through vinyl costumes, but he got away with being outlandish because he had graduated from a prestigious university, he said. After finding high-powered backers for an entertainment management and production company, Mr. Park opened the academy in 1998. He aimed to discover and make stars, and Rain clearly had potential as well as need. [Source: Deborah Sontag, New York Times, January 29, 2006]
“Mr. Park (who goes by the initials J.Y. or J.Y.P.) accepted him into the JYP Academy. "He had this hunger," Mr. Park said. "That is true," Rain said. "I was literally hungry." "As soon as I signed Rain, he asked me to help his mother and explained the situation," Mr. Park said. "I was like, 'Yo, get in the car.' We went to his house, and I saw his mom lying there on this cold floor. We got a big surgery done on her. But then she insisted on no more treatment. She wanted me to spend my money on her son. He would tell her, 'Yo, Mom, J.Y.P. has enough money to support both of us.' She passed away a year before he debuted."
“After three years of training, Rain's first stage experience came as a backup dancer for Mr. Park. Mr. Park, who still writes all his songs, created Rain's first album, "Bad Guy," in 2002. With the second album, "Running Away From the Sun," Rain said that he began asserting himself in the realm of choreography. "By the time his third album came out in 2004, they stopped calling him little J.Y. and started calling me Rain's producer," Mr. Park said. Soap operas are the engine of celebrity in Asia for Koreans, and so Rain's move into television was a calculated one. "We saw Korean drama flowing all over Asia," Mr. Park said. "I said to Rain, 'Since you know how to act, we should use this to make you go overseas.' As soon as his second TV drama, 'Full House,' exploded all over Asia, we went over to hit them with concerts."”
In the soap opera, "A Love to Kill," Rain played “a martial arts fighter. To alter his physique for the role, he told Korean journalists, he was jumping rope 2,000 times a day and eating only chicken breast and mackerel. This kind of discipline defines him. In addition to his acting, recording and some modeling, he is finishing a university degree in postmodern music. Although unable to attend many classes, he does all the homework, he said, plus studies not only English but Chinese and Japanese, too. Mr. Park said that Rain was motivated by a sense of obligation to his late mother. "He promised his mom that he was going to be the No. 1 singer in the whole world," he said. "That's why he never parties, never drinks, never goes out and practices hours every day."
“It was Mr. Park who, with 20 CD's in his backpack, set their global journey into motion. He took off for Los Angeles and went door to door "being nobody." After a year, he got his first call, from Bad Boy, P. Diddy's entertainment company, expressing interest in one of his songs for the rapper Mase. After that, the collaboration with Americans began. Mr. Park said he believed that other Asian pop stars have failed in the United States by trying "to impersonate what was going on here." He said that he and Rain wanted to avoid "being another couple of Asian dudes trying to do black music," by embracing their inner delicacy and letting their Asian-ness show. The moment is ripe, Mr. Park said. "Every market has been tapped except for the Asian market, and that's 5 percent of America," he said. "That's our base. But I believe that we can move beyond that, and I believe that the American music industry needs to partner with us to make inroads into Asia, too."
YG Entertainmnet and Bigbang
YG Entertainment is a US$630 million publicly traded record label, talent agency and concert promoter with fingers in pies from fashion to marketing to film run by K-Pop idol Yang "YG" Hyun Suk. Zack O'Malley Greenburg wrote in Forbes: The company and its founder are responsible for creating not only Bigbang but also, to a great extent, the modern K-Pop movement, which is in the midst of a transformation from regional staple to international craze. [Source: Zack O'Malley Greenburg, Forbes, July 26, 2016]
“Bigbang took home US$44 million in pretax earnings” in 2015, “easily more than the US$33.5 million collected by today's highest-paid American all-male arena pop group, Maroon 5. Bigbang landed the No. 54 spot on our Celebrity 100 list, even topping such artist-entrepreneurs as Dr. Dre (No. 63, US$41 million) and Jimmy Buffett (No. 66, US$40.5 million), though that's more attributable to the popularity of the group's music than the depth of its members' business savvy. "We made more than Maroon 5?" says front man Kwon "G-Dragon" Jiyong, 27, through a translator.
“Within YG's roster” are “2NE1 sells out arenas around the world and even did an Adidas commercial with Nicki Minaj, while the video for "Gangnam Style," from pop-rapper Psy, holds the all-time YouTube record, with 2.6 billion views since its 2012 debut. That sort of virality wasn't possible a decade ago, when K-Pop was available beyond Asia mostly via illegal download or at specialty record stores.”
K-Pop Hits Its Stride in the Late 2000s and Early 2010s
K-Pop seemed in really take off in the late 2000s and early 2010s. CNN reported: “Korea's content watchdogs say K-pop exports grew nearly 50 percent from 2011 to 2012, grossing an estimated US$290 million last year. K-pop concerts sell out in minutes. They raise television ratings, and their branding can get teens, and even some adults to buy just about anything.” [Source: Jane Sit, CNN, December 11, 2013]
Aja Romano wrote in Vox: “No song more perfectly embodies these characteristics than Girls’ Generation’s 2009 hit “Gee,” a breakout success that came at a moment when K-pop was starting to turn heads internationally due to a number of recent milestone hits — notably Big Bang’s “Haru, Haru,” Wonder Girls’ “Nobody,” and Brown Eyed Girls’ “Abracadabra.” “Gee” was a viral internet earworm, breaking out of typical K-pop fan spaces and putting Girls’ Generation within striking distance of US fame. [Source: Aja Romano, Vox, February 26, 2018]
“The combination of cheeky, colorful concept, clever choreography, cute girls, and catchy songwriting makes “Gee” the quintessential K-pop song: It’s fun, infectious, and memorable — and it was all but algorithmically produced by a studio machine responsible for delivering perfect singing, perfect dancing, perfect videos, and perfect entertainment. The then-nine members of Girls’ Generation were factory-assembled into the picture-perfect, male-gaze-ready dolls you see in the song’s music video via extreme studio oversight and years of hard work from each woman — a combined 52 years of training in total, beginning in their childhoods.
Teresa Cerojano of Associated Press wrote: “The success is not by accident. South Korea has developed an entire industry to take attractive actors and singers and turn them into larger-than-life stars, carefully managing their look and every move. The polished productions caught on elsewhere, and a few bands such as TVXQ and 2PM are now being created with overseas markets partly in mind. The music is modeled on American and European pop, said University of the Philippines professor George Fabros, who taught in South Korea in the 1990s, but with crisper performances and flashy hair colors and fashion that appeals to Asian youth. "They train for years before their debut, and for every album they have different concepts so you won't get bored with them," said Daren Lazaro, a 20-year-old management student in Manila. For some, it is also easy to identify with stars and story lines from another Asian culture. The downside may be a stifling of individual creativity, but the TV ratings, DVD sales and screaming fans at K-pop concerts show it's a formula that works.” [Source: Teresa Cerojano, Associated Press, September 21, 2011]
Choe Sang-Hun wrote in the New York Times: “K-pop stars frequently are the faces for top South Korean brands in television commercials, and Psy fronts for a range of products, from Hite beer and Samsung refrigerators to a line of cosmetics for men called Man’s Balm. [Source: Choe Sang-Hun, New York Times, August 9, 2013]
Sun Jung, Research Fellow at National University of Singapore (NUS), who’s been studying the emergence of Korean culture in Asia since 2003, told CNBC.com: it’s no surprise the K-pop phenomenon is growing so rapidly globally, because social media has made the music more accessible. “People can share, distribute and consume foreign pop cultures much more easily these days,” Jung said. “It’s very significant how Korean language K-pop is popular somewhere like South America and European countries. Internet and social media technology kind of enhance those flows.” [Source: Rajeshni Naidu-Ghelani, CNBC.com, July 16, 2012]
Rajeshni Naidu-Ghelani wrote in CNBC.com: “Online social networks are the biggest medium that K-pop fans around the world use to follow their favorite bands. According to a report by YouTube, K-Pop video clips were viewed nearly 2.3 billion times in 235 countries in 2011. The views have jumped three-fold since 2010. K-pop’s similarities to American pop, hip hop, R&B and European electronic music genres makes it more appealing to Western audiences as the bands start to target global audiences, according to NUS’s Jung. “It actually is rooted in the Western pop genre, but at the same time the Korean pop industry brought that Western pop element into Korea and localized and made it something unique by mixing it with other elements,” she said. “Seoul based Sean Yang, CEO of music service provider Soribada which started distributing K-pop to iTunes and Amazon in 2009, says demand for the music really started picking in 2011. “If you look at the past six months, K-pop sales in iTunes have tripled,” Yang said. “We’re seeing very rapid growth recently.”
“On the economic front, K-pop’s growth abroad is proving to live up to South Korea’s reputation as a top global exporter. Choon Keun Lee, General Director at KOCCA says K-pop exports are having a positive effect in increasing the overall exports of consumer goods. “It has been researched that for every US$100 of K-Pop exports, there was an average increase of US$395 worth of I.T. goods such as cell phones or electronics that were being exported,” Lee said. K-Pop is becoming an iconic representation of Korea, along with mobile phones and Internet technology.”
Jung Ha-Won of AFP: “Music videos and footage of the stars' private lives are posted on Facebook and YouTube — often live or before being released on TV and elsewhere. "Korean acts are not only monitoring but also monetizing their Twitter trends, Facebook likes, and YouTube views," said Bernie Cho, president of DFSB Kollective, a Seoul-based creative agency providing digital media solutions to more than 350 K-pop artists. "More Korean bands have multilingual members who can sing verses, carry choruses, and conduct interviews in English, Chinese, and Japanese. Language is no longer a barrier, it is now the carrier." "They've got the sound right, they've got a supportive government that invests very heavily into the development of the arts, and they are all very good looking," said Ruuben van den Heuvel, executive director of GateWay Entertainment, a music consultancy firm. "They're a complete pop package."[Source: Jung Ha-Won, AFP, June 23, 2013]
How K-Pop Became So Successful in Asia
Rajeshni Naidu-Ghelani wrote in CNBC.com: “Indonesian Marcia Tianadi started listening to South Korean pop music last November after being introduced to the genre known as “K-pop” by a friend. The 20-year-old finance student, who doesn’t understand the South Korean language, now listens to K-pop more than any other type of music including Western pop, which used to be her favorite. Despite the release of English versions of several K-pop songs, Tianadi says she prefers the Korean version even though she doesn’t understand most of the lyrics. She is one of millions of K-pop fans around the world who aren’t letting a language barrier stand in the way of consuming what is becoming a major global powerhouse in the music scene. [Source: Rajeshni Naidu-Ghelani, CNBC.com, July 16, 2012]
“With their synthesized bubble-gum pop sound, flashy outfits and video art, K-pop groups such as Girls’ Generation, Big Bang and 2NE1 are carefully-selected, slickly-produced acts that can feature as many as 17 members. These “manufactured” girl and boy bands are creating a frenzy among their young fans by selling out concerts within minutes worldwide, breaking through billboard music charts and even being featured on postage stamps in Korea. The industry’s revenues hit about US$3.4 billion in 2011, according to the Korea Creative Content Agency (KOCCA), a government group that promotes the country’s cultural initiatives. K-pop’s exports also rose to US$180 million last year — jumping 112 percent compared to 2010. Exports have been growing on an average annual rate of nearly 80 percent since 2007.
“The executive manager of one of South Korea’s biggest K-pop production companies, who wished to remain anonymous, says producers try to recruit international artists to broaden their fan base. “There’s a Thai guy in 2PM, he’s really popular in Thailand. We have other nationalities practicing on the road,” the former musician said. “Lately we’ve been recording in English, Korean and Japanese for them, we really try to release one for every market.”
“Thai native Tan Somboonsub, 31, who’s been following Korean television dramas and music for the past 10 years, says the K-pop sound has transformed in the past decade. “The rhythm, the sound — there’s a lot more sound engineering involved,” Somboonsub, who performs K-pop songs, said. Dance routines by groups like nine-member Girls’ Generation, is also a big hit among fans. Somboonsub says she’s visited Seoul to watch the weekend “street dance” by thousands to choreographed K-pop songs. Internationally, dance studios in Singapore for example offer classes that teach K-pop moves.
S.M. Entertainment Marketing
Andrew Salmon wrote in Forbes: “For a look inside S.M. Entertainment 's K-pop marketing machine, stop by the Lotte Young Plaza department store in central Seoul this summer. For two months South Korea's top record label and music talent agency is branding the six-story building with a giant banner of its latest act, EXO, a boy band aimed at the Korean and Chinese markets. S.M. has taken over the basement with a pop-up store selling everything from bags, clothing, folders and postcards to collector's edition CDs of Girls' Generation, Super Junior and the company's other groups. Some fans buy multiple copies of the same Girls' Generation CD, which are packaged with different covers for each of the nine members. [Source: Andrew Salmon, Forbes, July 31, 2013]
In the mid 2000s, “South Korea, with its advanced broadband and mobile phone infrastructure, became the first country where digital music sales surpassed physical sales. But booming digital sales hammered pricing as online music outlets aggressively slashed prices in an effort to kill piracy. So with music-sales earnings evaporating, S.M. began deploying its artists more widely. Helped by their squeaky clean images, the K-pop singers signed on for product placements, TV appearances, roles in musicals and endorsement deals. Concert revenues and merchandizing became a bigger part of the business.
“Like South Korea's manufacturing conglomerates, Lee realized that profits beckoned abroad. As the hallyu, or Korean Wave, of pop culture washed across Asia, S.M. jumped in, becoming the first Korean label to join with overseas players, notably Japan's Avex Group. Mark Russell, author of Pop Goes Korea , says that was key to breaking into a music market 20 times as big as South Korea's. Today S.M. maintains overseas offices in Japan, China, Hong Kong, Thailand and the U.S., and language lessons are an important part of S.M.'s training programs.”
Culture Technology and K-Pop Group Brand
Joseph L. Flatley wrote in The Verge: Lee Soo-man “is also the creator of something he calls Culture Technology, or CT. This might be one of the most extreme systems of pre-packaging pop bands yet (a tradition that includes such fine acts as The Monkees, Sex Pistols, and New Edition). In the United States, even the most cynical music industry professionals I have met seem to think, on some level, that music is magic and that there is an ineffable "something" that must happen for an act to make it big. Lee Soo-man has done away with that quaint notion entirely. [Source: Joseph L. Flatley, The Verge, October 18, 2012]
“The process of creating a K-Pop group, as described in Korea Times, begins when SM Entertainment finds potential singers, often through global auditions. "After screening applicants," writes Chung Min-uck, "the company operates [a software] simulation of how the voice and the appearance of the trainees would change in three to seven years." If everything checks out, the future stars are taught to sing and dance, act, and learn foreign languages. According to a story in the Harvard Business Review blog by Dae Ryun Chang and Kyongon Choi, "these talent agencies resemble the old Hollywood studios in terms of their size, organization, contractual relationship with their stars, and control of their private lives.... [the] model tries to embed more and more foreign singers from strategic markets into larger girl or boy bands. These imported singers are then used to promote their acts back in their respective home countries."
“In the South Korean model, a pop group is more like a brand and a talent pool than a proper band. For instance, SM Entertainment’s Super Junior boasts 12 members. This allows the company to break the band down into sub-units targeting different markets, including Super Junior-M (Mandopop, Mandarin pop music), Super Junior-T (trot music, a form of Korean popular music dating back to the early 1900s), and something called Super Junior-Happy. "K-Pop is not just a song or a genre, it's an entire culture," one fan said.. "You're really getting involved in a community of people. They all like the same band as you, and you all get to know the same thing, and it becomes a family of people. So that's why everyone's so passionate."
K-Pop and K-Drama Money Machine Spread to Beauty and Fashion
Hideo Shinada of Nikkei Entertainment wrote: “The Korean wave has a ripple effect beyond the content industry. TV shows and movies feature a wide array of South Korean home appliances, cars and cosmetics, creating demand for those products among overseas audiences. A growing number of consumers have likewise developed an interest in South Korean food and fashion through entertainment, and many of them shop at South Korean chains. [Source: Hideo Shinada, Nikkei Entertainment, January 8, 2015]
Ryan General of Nextshark wrote: “A huge part of the world has collectively embraced two of South Korea’s main exports: K-pop and K-drama. Their influence has so far transcended into fashion and even beauty standards in many countries, creating a huge market for Korean beauty products and fashion brands. International companies, including top luxury brands, have started pouring investments into Korean products after realizing the enormous market potential brought about by the “Hallyu” phenomenon, according to Asia One. [Source: Ryan General, Nextshark, September 4, 2016]
“TV drama celebrities and K-pop artist endorsements have played huge roles in Korean companies’ international success in the cosmetics and fashion industry. L Capital, a subsidiary investment bank of LVMH (Louis Vuitton, Fendi and other brands), for instance, invested US$50 million into Korean brand CLIO, according to Reuters. The brand, which was founded by Han Hyun-ok in 1997, had its products initially manufactured in Europe before moving its production to its own manufacturer. When Korean actress Kong Hyo-jin wore CLIO eyebrow liner in the movie “The Producers,” the company earned a record sales of 100 billion won, or about US$90,485,000, in 2015, registering more than double of what it sold from the previous year. The movie was an international success, especially in China where it was a huge hit.
“Similarly, Goldman Sachs Group and Bain Capital Private Equity have made some significant Korean investments by acquiring a stake in Carver Korea, a popular cosmetics firm in South Korea, Reuters reported. Carver Korea owns several cosmetic brands, including Vivito, Dr. MJ, Shara and A.H.C., selling over 1,000 products sold through various channels. Since 2013, company earnings have surged from 27.3 billion won (US$24 million) to 156.5 billion won (US$140 million) in 2015.
“South Korean company Have & Be Co. Ltd, the parent company of cosmetics-maker Dr. Jart which produces the hugely popular BB cream, is also set to get a huge investment, this time from renowned cosmetics brand Estee Lauder, according to The Telegraph. Founded by young entrepreneur Lee Jin-wook, the company will get international exposure through Estee Lauder’s global network. Lee currently owns 66.7 percent of the company, which is worth around 17.8 billion won (US$15.9 million).”
Using K-Pop to Move Products
In 2016, CNBC asked: “How did a country with a relatively small population, living in an area only a little bigger than Indiana, become a popular culture giant, influencing global habits from hairstyles to fried chicken? Euromonitor's experts have studied South Korea's outsize impact on consumer goods, discovering the strategies that pushed the Asian nation to the forefront of cool and supported the sales of its consumer products. [Source: CNBC, June 10, 2016]
“Here's how Korean FMCG (fast-moving consumer goods) companies built their brand cachet: 1) Celebrity endorsement: Product placements in trendsetting Korean dramas has helped boost sales of everything from food such as fried chicken to beauty products. "The most unique and interesting strategy for South Korea manufacturers and government is South Korea's pop-culture, from the hit song, 'Gangnam Style' to the latest popular drama series, 'Descendents of the Sun'," wrote Singapore-based Euromonitor International research manager Warangkana Anuwong. "K-Pop has increased awareness regarding Korean products and lifestyles among audiences around the world. This soft approach has helped the Korean government set up companies and brands to succeed in other countries, since consumer demand is already prevalent globally,"
2) “International expansion: Asian countries are the top choices for South Korean companies to expand into, with emerging market Vietnam topping the list as only few international brands have set up shop in the Southeast Asian nation so far. About 33 percent of the 400 South Korean companies Euromonitor surveyed said they had expanded their brands into Vietnam.
“While economic giant China ranks second on the list for expansion targets, with 28 percent of 400 companies expanding into the country, its market size in terms of value terms dwarfs other markets, noted Euromonitor. Other developing economies also feature heavily in the top 10 list for South Korean companies. These include Indonesia, the Philippines, Thailand, Malaysia and Russia. South Korean companies are also moving into the U.S. and Europe. In 2015, Samsung phones had a 8 percent lead in the share of retail volumes over Apple's iPhone in Western Europe.
3) “Innovation: South Korean companies invest heavily in product development, such as cutting-edge technologies in consumer tech, and new beauty packaging systems, such as the compact cushion sponge that has been adopted by beauty giants like the L'Oreal Group.
4) “Fast product development: Beauty companies such as AmorePacific and LG Household and Health Care thrive on short product-development cycles in order to keep up with the latest trends, such as stamping Line characters on packaging and plastering gingerbread men on products over the Christmas season.
5) “Localization: While Korean pop culture may be successful in penetrating certain markets and consumers groups, companies are quick to customize products to cater to certain markets. Samsung, for instance, offers different apps for its smart TVs in the UK, France and Germany. A smaller example is kitchenware company PN Poong Nyun, which in 2013 launched a line of frying pans specially made for cooking everyday Indian dishes such as curry and naan. Two months after the product launched, the company had 10,000 of the pans.
South Korean Government Support of K-Entertainment
John Seabrook wrote in The New Yorker: “The Korean government has promoted hallyu, using it as a form of “soft power,” by making South Korea the Hollywood of Asia. Hallyu has erased South Korea’s regional reputation as a brutish emerging industrial nation where everything smelled of garlic and kimchee, and replaced it with images of prosperous, cosmopolitan life. Thanks to mini-series such as “Winter Sonata,” a 2002 romantic drama that was a huge hit throughout Asia, middle-aged Japanese women now swoon over Korean men, while complaining about the “grass-eating” — that is, lacking in virility — males of Japan. Korean ancestry used to be a stigma in Japan; now it’s trendy. At home, K-drama’s success has brought tourists from all over Asia to visit the sites depicted on the screen.” [Source: John Seabrook, The New Yorker, October 8, 2012]
Hideo Shinada of Nikkei Entertainment wrote: The South Korean “government has lent a hand” to South Korea's entertainment industry, “with a policy of promoting entertainment and other cultural exports. Since the 1998 currency crisis, each president has pitched in. Kim Dae-jung called himself a "cultural president," Roh Moo-hyun vowed to make South Korea one of the top five nations in the entertainment industry, and Lee Myung-bak set up a national branding committee. [Source: Hideo Shinada, Nikkei Entertainment, January 8, 2015]
“In 1999, South Korea increased its entertainment-related budget sixfold in a year. In setting up the Korea Creative Content Agency, or Kocca, the nation created a joint public-private effort to pitch South Korean entertainment to the rest of Asia. The result? A boom in the popularity of South Korean TV dramas and the emergence of the "Korean wave." In 2012, 279.8 billion won (US$253 million at the current rate) of the national budget was allocated to the cultural-content industry and 118.8 billion won to the media industry, reportedly about eight times Japan's allocations. The nation's exports have been growing along with this effort, from US$2.3 billion in 2008 to US$4.6 billion in 2012.
Kat Chow of NPR reported: “In the late '90s, when Asia went through a huge financial crisis, South Korea's leaders decided to use music to improve its image and build its cultural influence. So the country's government poured millions of dollars into forming a Ministry of Culture with a specific department devoted to K-pop. "It turns out that the Korean government treats its K-pop industry the way that the American government treats its automobile and banking industry, meaning that these are industries that have to be protected," Euny Hong, the author of The Birth Of Korean Cool, said. This included doing things like building massive, multi-million dollar concert auditoriums, refining hologram technology, and even helping regulate noeraebangs — karaoke bars — to protect the interests of K-pop stars. "They wanted Korea of the 21st century to be like America of the 20th century where America was just considered so universally cool that anything made in America would automatically be bought." [Source: Kat Chow, All Things Considered, NPR, April 16, 2015]
AFP reported: “Prominent music critic Kang Hun and others rejected suggestions that promotions by the Seoul government had helped sell K-pop overseas as its home markets become more saturated, saying it jumped on the bandwagon belatedly.” [Source: Jung Ha-Won, AFP, June 23, 2013]
SM, JYP and YG in China
SM, JYP and YG have all made inroads in the West, but China remains their largest market. Lee Young-ho wrote in Variety: “China’s music market — like its film market — has become one of the world’s biggest in recent years.” After first gain attention in China in the early 2000s, “the Korean music industry responded quickly, recruiting Mandarin-speaking talents to appeal to the Chinese fanbase. And the Korean entertainment industry has seen a huge influx of Chinese cash — as much as US$2.5 billion over five years — a move welcomed by Korean companies that have looked to expand to the Chinese market with fewer legal obstacles. [Source: Lee Young-ho, Variety, May 11, 2016]
“Major examples of such investments include Chinese e-commerce giant Alibaba’s purchase of a 4 percent stake in SM Entertainment for US$29.7 million. In addition to setting up online music distribution, marketing and merchandising in China through Alibaba Music Group, SM is also set to establish a Chinese branch via Hong Kong-based subsidiary Dreammaker Entertainment. “Our goal for this year is to set up a subsidiary in China similar to our local subsidiary in Japan and pursue the Chinese market more aggressively,” an SM source told Variety.
“The other two majors are following suit. In 2014, YG signed an exclusive music distribution contract with Chinese Internet giant Tencent, the developer behind messaging service WeChat. JYP has also signed a music distribution agreement with China Music Corp. that is worth US$4.56 million with plans to launch a China-based joint venture in the near future.
BTS Alone Generates Almost US$5 Billion A Year
According to a report titled “Economic Effects of BTS” published by the Hyundai Research Institute in December 2018, BTS's annual production inducement effect is estimated at 4.14 trillion won (US$3.67 billion). The report also estimated that BTS generates 1.42 trillion won (US$1.26 billion) annually in added value. Choi Moon-hee wrote in Business Korea: “The institute projected that 796,000 foreigners on average have visited South Korea for BTS-related reasons every year since the group’s debut in 2013. BTS-related exports have totaled US$1.12 billion (1.26 trillion won), including US$233.98 million (264.28 billion won) in clothing and accessories, US$426.64 million (481.89 billion won) in cosmetics and US$456.49 million (515.61 billion won) in foodstuffs, over the same period. In short, BTS is estimated to have been responsible for 7.6 percent of the 10.4 million foreign tourists who visited the country last year and 1.7 percent of consumer exports last year. [Source: Choi Moon-hee, Business Korea, December 19, 2018]
“The HRI said it analyzed BTS’s contribution to the South Korean economy since its debut in July 2013 by quantifying the search volume in “Google Trend” and analyzing the impact on the value chain over tourism and consumer exports context. When the popularity of BTS increased by one point, the number of foreign tourists went up by 0.45 point three months later, exports of clothing and accessories by 0.18 point, cosmetics by 0.72 point and foodstuffs by 0.45 point in the same month. The HRI expects that BTS will generate an economic value of 41.86 trillion won (US$37.06 billion) and an added value of 14.3 trillion won (US$12.66 billion) for 10 years between 2014 and 2023 if the band continues to maintain its popularity.
BTS’s estimated annual economic value of 4.1 trillion won is 26 times larger than the average medium-sized company in Korea, which earned just 159 billion won in 2016 according to the report. On factors that contributed to the success of the group, the reported said: “All BTS members participate in the songwriting and composing, often writing from their own perspective the concerns of young adults in their teens and twenties, and listeners are able to sympathize with them regardless of their nationality. BTS’s albums and concerts are also structured in a way that has a narrative, which helps attract the attention of fans and raise their expectations for upcoming albums and concerts as well.” Other factors mentioned include active communication with BTS fans - known as ARMY - through social media and the fans’ strong support. [Source: Kim Eun-jin, Joongang Daily, December 18, 2018]
Image Sources: Wikimedia Commons.
Text Sources: South Korean government websites, Korea Tourism Organization, Cultural Heritage Administration, Republic of Korea, UNESCO, Wikipedia, Library of Congress, CIA World Factbook, World Bank, Lonely Planet guides, New York Times, Washington Post, Los Angeles Times, National Geographic, Smithsonian magazine, The New Yorker, “Culture and Customs of Korea” by Donald N. Clark, Chunghee Sarah Soh in “Countries and Their Cultures”, “Columbia Encyclopedia”, Korea Times, Korea Herald, The Hankyoreh, JoongAng Daily, Radio Free Asia, Bloomberg, Reuters, Associated Press, BBC, AFP, The Atlantic, The Guardian, Yomiuri Shimbun and various books and other publications.
Updated in July 2021