Exclusive long-term contracts later lead some groups to dispute the rigorous demands
Surh Jung-min, Music Correspondent
In the world of South Korean pop music, dubbed K-pop, there have been a string of disputes between popular idol groups like TVXQ, Super Junior and Kara and their management companies over their exclusive contracts.
It has ceaselessly been pointed out that there are a considerable number of problematic articles in the exclusive contracts signed in the entertainment sector. Most typical are the long-term contracts of 10 years or more. Also highlighted as problems are contract articles that violate the entertainers’ human rights, some for example that control their private lives. Also problematic is the way companies use unreasonable fines in the case of breach of contract as a tool to forcibly tie entertainers to their companies.
Despite these disadvantageous conditions, most aspiring entertainers sign these deals without much objection. This is because when there are so many aspiring entertainers, it is difficult for them to refuse. There are many instances, however, when entertainers change their mind after becoming famous. They demand to be treated in a manner worthy of their fame. There are also many instances in which other management companies try to lure entertainers over by offering better conditions.
Management companies protest that because they must invest a great deal of initial capital to make just one singer, long-term contracts and steep fines for breaking a contract are a minimum of protection. One music industry official said if a new musician releases an album, a management company must spend a significant amount of money on promotion, from 100 million Won ($89,662) to 300 or 400 million Won is the norm. In the case of major management companies, the initial investment can be even greater. Teaching dance, singing and foreign languages, taught from the time prior to their debut with foreign markets in mind, requires even more time and money.
The problem is that even if the costs are great, it is difficult to make money. Broadcast appearance fees are a pittance, and a great deal of money is required for coordinators and backup dancers to ensure frequent appearances. Profits from albums are also not huge. Even endorsements and events, a major revenue stream for signers, do not result in significant earnings for new singers.
“Even if a new singer reaches the top of the charts, he or she does not bring in much money, so for producers, three or five years will not cut it,” said one management company official. “With the exception of some big management companies, most producers are struggling.”
Despite this, many producers are still jumping into music. They look to hit the jackpot, as the music business is a model “high risk, high reward” business. With so many would-be singers, it is not easy to reform these outdated exclusive contracts and industry structures. Experts say the situation must be improved gradually by improving the profit structure and getting management companies to view their singers not simply as means to make money but as partners.
There have been loud calls to burst the bubble of promotional costs by changing the broadcast-centered singer promotion system. Broadcast companies should try to discover good music rather than dancing to management company promotion, and the public, too, should become an active consumer that looks for good music rather than just the music played on the radio.
Another basic change, too, would be to improve the digital music profit distribution system, in which music site and mobile telecommunication companies take an excessive share, to produce a market structure where performers could make money from their music alone, not advertisements and events. The Fair Trade Commission and other government bodies urgently need to keep continuous watch and make efforts to improve the situation so that unfair acts do not take place in the digital music market or in exclusive contracts with management companies.
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