Korean K-pop fans feel abandoned – 4/7/2023 – Market

At a nightclub in Seoul, South Korea, the crowd cheered as Harim Choi played some of the latest hits in Korean pop music, or “K-pop.” But decades-old songs, like those by 2NE1 and the Wonder Girls, seemed to have a special resonance with the regulars.

“The older songs take us back to a time when we could just enjoy the music, when we didn’t have to worry about the business behind it all,” said Choi, a 26-year-old DJ.

In recent months, an unusually public and bitter dispute involving major K-pop corporations has captivated die-hard fans, casual listeners, artists and industry figures alike. At its center was SM Entertainment, a K-pop mainstay whose roster of artists includes Girls’ Generation. Surrounding her were two candidates: Hybe, the company behind BTS, and Kakao, the South Korean tech giant.

Both saw the acquisition of SM Entertainment as an opportunity to expand their reach overseas.

After years of domestic growth, K-pop’s future now lies outside of South Korea. Although the genre has fans in almost every corner of the world, sales from the biggest Korean pop labels represent a small slice of the global music market.

This effort to increase K-pop’s global appeal has excited some Korean fans but left others feeling alienated, raising a nagging question: Does K-pop still need fans in the country?

“There is a feeling that the industry is targeting the West and leaving Korean fans behind,” said Kim Yoon Ho, 36, who lives in Seoul.

Many of today’s biggest K-pop hits were created for American audiences. This week, “Like Crazy,” a single by BTS member Jimin, topped the Billboard Hot 100 chart but ranked lower in South Korea.

In a statement, Hybe said its ambitions have always been global and that the company “will remain committed to bringing content to fans around the world, regardless of culture, religion, gender or geography.” SM Entertainment said it pays “attention” to fans everywhere.

One of the first signs of turmoil came in February, when SM fired its founder, producer Lee Soo-man, considered the godfather of K-pop, over accusations of financial irregularities. Lee, 70, denied embezzlement and sold part of his stake in the company to Hybe, which became SM Entertainment’s largest shareholder.

“There have been big and small administrative disputes in K-pop’s 30 years,” said Lee Dong Yeun, a professor at the Korea National University of Arts. “But none as big as this one.”

Sensing an opportunity to expand its roster a few months after BTS announced a break, Hybe moved to increase its stake in SM Entertainment, which has a large fan base in Japan and Southeast Asia. But SM considered the offer hostile and instead proposed a deal with Kakao, whose messaging and payment apps have become crucial infrastructure in South Korea but have had little success abroad.

A deal would help Kakao establish itself in the K-pop business and offer a chance to expand overseas, Lee said. Kakao is trying to ride the wave of South Korean culture to bolster its international business in webtoons, games and music.

After raising nearly $1 billion from sovereign wealth funds in Saudi Arabia and Singapore, Kakao offered $962 million for a 35% stake in SM Entertainment.

Hybe accused SM of “illogical behavior” and asked for an injunction to block a deal with Kakao. SM gave employees a 15% raise to put them on the Kakao merger support line. Dissidents were expelled.

In the end, Kakao’s deep pockets won out. Last week, it announced the purchase of a 40% stake in SM Entertainment, whose shares doubled in value during the takeover battle. In a statement, Kakao said that SM Entertainment will make the decisions about the artists.

For fans, the stunt was a demonstration of how the companies’ financial motives trumped the interests of artists and supporters, with global interests taking precedence over record sales and local shows.

“The struggle has created a situation where you can’t just comfortably listen to K-pop,” said DJ Choi. “It’s like artists are chess pieces for them.”

Lee Sangmi, 36, a longtime fan of SM Entertainment groups, said she worried that her favorite groups might “have less freedom” after a merger. Kwon Yeyoung, 17, a high school student who runs a YouTube fan channel, said he was waiting to see how album covers, artists’ fashions, the mood of concerts and the design of merchandise would change. Others worry that more K-pop songs will be written entirely in English.

Before K-pop became a multi-billion dollar cultural juggernaut, record labels were funded by individual producers. Lee, a former folk singer, founded SM Entertainment in the 1990s with the equivalent of $38,000. Other industry powerhouses like YG and JYP had similarly humble beginnings.

In the decades that followed, companies courted investors and sold shares to the public. Eventually, Kakao and Naver, another major South Korean tech company, also began supporting music and video ventures, in part to reach overseas customers.

Among K-pop labels, Hybe has been one of the most successful overseas. In 2021, he bought Ithaca Holdings, which manages Justin Bieber and Ariana Grande, for about $ 1 billion. In February, it acquired Atlanta-based rap label Quality Control Music. Those deals have helped Hybe more than double its sales, three-quarters of which now come from outside South Korea.

About 90% of K-pop listeners live outside of South Korea, according to K-Pop Radar, an industry tracker. And as the industry fights for more fans overseas, some fans say record labels are no longer focusing on what made K-pop so successful.

“A hobby that should be fun has become more of a source of concern,” said Kim Su-yeon, 19, a student in Seoul. “The changes stressed me out.”

_{Translated by Luiz Roberto M. Gonçalves}