Listeners in the K-pop genre’s home market are beginning to doubt their importance after a bidding battle for a label with global implications. The audience in a Seoul nightclub roared when Harim Choi played some of the newest K-pop songs. But for the partygoers, the songs from ten years ago, including those by 2NE1 and the Wonder Girls, seemed to have a unique meaning.
“The older songs bring us back to a time when we could simply enjoy the music when we didn’t have to worry about the business behind it all,” Mr. Choi, a 26-year-old D.J., said.
Hardcore fans, casual listeners, artists, and business leaders have all been riveted in recent months by an extraordinarily public and contentious corporate conflict involving major K-pop businesses. Girls’ Generation is among the musicians on the roster of SM Entertainment, a K-pop institution. Two suitors were circling it: Kakao, a South Korean digital behemoth, and Hybe, the business behind BTS.
Both businesses saw the purchase of SM Entertainment as a chance to increase their presence abroad.
K-pop’s future lies outside of South Korea now, following years of expansion at home. Despite the fact that the genre has followers in practically every country, just a small portion of the world’s music sales come from the top K-pop labels.
Some Korean fans are thrilled by this attempt to broaden K-appeal, pop’s but it has alienated others, prompting the awkward question: Does K-pop still require its domestic audience?
“There’s a sense that the industry is targeting the West and leaving Korean fans behind,” said Kim Yoon Ho, a 36-year-old fan who lives in Seoul.
The majority of today’s top K-pop songs are designed with an American audience in mind. Jimin, a member of BTS, won this week’s Billboard Hot 100 singles chart with “Like Crazy,” although the song placed lower in South Korea.
According to a statement from Hybe, the company has always had global aspirations and is “dedicated to offering content to fans around the world, regardless of culture, religion, gender, or region.” SM Entertainment stated that it was “closely paying attention” to fans all across the world.
One of the first indications of change occurred in February when SM Entertainment fired its founder, producer Lee Soo-man, who is regarded as the father of K-pop, on claims of financial wrongdoing. The 70-year-old Mr. Lee denied any wrongdoing and gave Hybe a portion of his firm stock in exchange for it becoming SM Entertainment’s largest shareholder.
According to Lee Dong Yeun, a professor at the Korea National Institute of Arts, “There have been both significant and minor management disagreements in the 30 years of K-pop.” but none as significant as this.
Once BTS declared a break, Hybe saw an opening to grow its roster, so it moved to boost its investment in SM Entertainment, which has a sizable following in Japan and Southeast Asia. However, SM Entertainment perceived the approach as unfriendly and proposed a partnership with Kakao, whose messaging and payment apps have become essential infrastructure in South Korea but have not been particularly successful elsewhere.
A deal would help Kakao establish a foothold in the K-pop business and offer a chance to expand abroad, Mr. Lee said. Kakao is attempting to capitalize on the South Korean cultural craze in order to expand its global company through webtoons, games, and music.
Kakao proposed $962 million for a 35% share in SM Entertainment, having just raised close to $1 billion from Saudi Arabian and Singaporean sovereign wealth funds.
Hybe demanded a court order to halt an agreement with Kakao and charged SM Entertainment with “illogical actions.” To bring its staff on board with a merger with Kakao, SM Entertainment offered a 15% pay boost. Dissidents have driven away.
Kakao’s vast financial resources ultimately prevailed. It revealed last week that it had acquired a 40 percent stake in SM Entertainment, a company whose shares had increased in value by a factor of two during the takeover conflict. SM Entertainment would choose the performers, according to a statement from Kakao.
Fans saw the maneuver as proof that the businesses’ profit-driven goals triumphed over those of the artists and their supporters, with global interests taking precedence over regional record sales and shows.
“The fight has created a situation where you can’t just listen to K-pop comfortably,” said Mr. Choi, the D.J. “It’s as if the artists are chess pieces to them.”
Longtime SM Entertainment fan Lee Sangmi, 36, expressed concern that a merger may result in her favorite groups “having less independence.” High school student Kwon Yeyoung, 17, who maintains a YouTube fan channel, said she was curious to see how product design, performance atmosphere, singer attire, and album covers will evolve. Others worry that more K-pop songs will be totally written in English.
Not only Korean fans have been experiencing concern.
“I’m still nervous about Kakao to run the show. I don’t feel like music is their top priority,” said Deena Marshall, 36, who lives in Washington. “Who knows, maybe they’ll surprise us.”
Several fans did express excitement over prospective innovations. Kakao created a girl group that only lives in the metaverse, and their YouTube videos have received more than 20 million views.
Labels were financed by lone producers until K-pop expanded into a multibillion-dollar cultural powerhouse. With the equivalent of around $38,000, Mr. Lee, a former folk musician, founded SM Entertainment in the 1990s. Other powerhouses in the field, like YG and JYP, started off in a similar way.
The businesses courted investors and offered shares to the general public in the ensuing decades. Subsequently, Kakao and Naver, two other significant South Korean tech companies, began to support music and video projects as well, partly in an effort to attract foreign clients.
Hybe has been one of the most prosperous K-pop labels outside of Korea. For roughly $1 billion, it acquired Ithaca Holdings in 2021, the management company for Justin Bieber and Ariana Grande. It bought Atlanta rap label Quality Control Music in February. These agreements have enabled Hybe to more than treble its sales, which now account for three-quarters of its total revenue.
According to industry watcher K-Pop Radar, roughly 90% of K-pop listeners worldwide reside outside of South Korea. However, some fans claim that companies are no longer concentrating on what made K-pop so great as the business competes for more international admirers.
“A hobby that was supposed to be fun became more of a source of worry,” said Kim Su-yeon, 19, a student in Seoul. “The changes have stressed me out.”
