(G)I-DLE’s Jeon Soyeon and BTS’s Suga / Photo = Hankyung DB Entertainment is facing numerous challenges. Besides the inherent risks associated with its artists, the management and crisis response tactics employed by some agencies are also under scrutiny, placing them in a precarious situation.
Cube InputTainment (182360) was rattled by Jeon So-yeon’s “controversial comments” regarding contract renewal. Her statements during the concert, such as “The contract expires in November, who will stop me?” and “Do I have to heed XX’s opinion?”, ignited speculation about her potential departure, causing anxiety among shareholders. This uncertainty led to a 5.8% decline in Cube’s stock price over a week.
Unlike in the past, when Cube Entertainment was celebrated as a top K-pop agency responsible for groups like Beast (now Highlight), BTOB, and 4Minute, the current roster is quite limited. All members of BTOB, along with most members of CLC and Pentagon, have departed the agency, increasing its dependence on (G)I-DLE.
In the first quarter of this year, consolidated sales soared by 104% year-on-year to 49.5 billion won, while operating profit surged by 510% year-on-year to 5.7 billion won, largely due to (G)I-DLE’s influence as a super IP (intellectual property). This is attributed to the fact that (G)I-DLE’s second regular album sold 1.54 million copies within a week, significantly boosting album sales contribution.
However, the renewal issue has become a risk after several consecutive years of lackluster performance from (G)I-DLE’s junior groups. Criticism has also emerged regarding the revelation of Jeon So-yeon’s limited basic physical stamina during these incidents. (G)I-DLE is a group known for producing its own music, led by Jeon So-yeon and composer Pop Time. Hits like “Tomboy,” “Naked,” “Queen’s Car,” and “Because I Hate Being Hurt” have topped the charts, while their juniors, managed by Cube Entertainment, such as “Rightsome” and “Todays,” have not gained traction.
Contract renewals for idols demand substantial down payments. Unlike the initial contract, terms will be tailored to reflect the artist’s strengths, with a higher focus on personal activities. Nevertheless, a super IP with proven sales capacity is a significant asset for the agency, allowing for the nurturing of new talents and the exploration of new business avenues. Recently, honeycombJYP Entertainment alleviated uncertainties by renewing contracts with major artists such as BTS, TWICE, and Stray Kids ahead of time. YG Entertainment similarly took time to finalize group activity contracts with Blackpink members.
However, Cube Entertainment has yet to confirm Jeon So-yeon’s contract renewal with just about three months remaining, leaving both parties in a precarious position. When Jeon So-yeon attempted to assert that her comments were unintentional, she was met with resistance, stating, “We rehearsed dozens of times in front of everyone and created a stage together,” and added, “This is an opportunity for me to perceive the inadequacies of the company’s response again. I had to listen painfully, ‘Enough.'”
During the board meeting on the 23rd of last month, Cube Entertainment resolved to issue convertible bonds amounting to 16.5 billion won and allocate 10 billion won for third-party investments to increase its paid-in capital. The announcement stipulated that the proceeds from the convertible bonds would finance performances, album production, and investments for new artists, while the capital increase aimed at raising operational funds. It appears essential to renew the contract with (G)I-DLE for the success of the new group and for the long-term viability of the company as an entertainment entity.
Hive Chairman Bang Si Hyuk/Photo = provided by the agency The most affected company from the negative news was Hive (352820). On the 9th, Hive’s stock price closed at 172,200 won, reflecting a decline of 6.31% (11,600 won) compared to the previous day.
Continuing tensions with Adore representative Min Hee-jin persisted, and while BTS resumed activities as “Hive’s relief pitcher,” member Suga was embroiled in a drunk driving scandal. Amidst this turmoil, public sentiment grew intense, with some critics highlighting attempts to minimize the incident, including referring to an electric scooter as a kickboard.
Particularly troubling was the fact that Suga was serving as a substitute social worker, which led to the addition of “offensive crime” to the charges. With other members currently enlisted in the military, this situation seems to have created division within the fan community. Furthermore, the assertion that “no one was injured or the facilities were damaged” in the initial statement has also drawn scrutiny.
Moreover, Hive Chairman Bang Si Hyuk was spotted spending time in the U.S. with Afreeca TV BJ Gwajuk Seyeon, leading to a wave of rumors. While the meeting itself posed no issues, it triggered backlash from fans considering Hive’s current controversies and the agency’s critical state of management restructuring. Additionally, Hive is under investigation for alleged falsification or omission of vital conglomerate data submitted to the Fair Trade Commission. This data encompasses the status of affiliated companies, relatives, and executives that must be disclosed by the primary accountable individual, which is Chairman Bang.
Performance pressures are significant. Despite solid artist sales, profitability has waned due to the expansion of new ventures. Hive’s second-quarter consolidated sales reached 640.5 billion won, a 3.1% increase compared to the same period last year, marking the highest quarterly sales record. However, operating profit plummeted by 37.4% year-on-year to 50.9 billion won, and net profit fell by 85.9% to 16.5 billion won.
The initial marketing expenditures for the game “Become a Star 2: Veda Knight,” launched on April 2, along with Binary Korea’s launching of the creator fan platform “Dears” in June, and the AI-focused game “Shift,” illustrate that these results reflect the operational costs incurred by new business sectors such as Superton and Hive Latin Corporation.
The revenue increase is largely credited to artist activities. In the second quarter of this year, sales within the direct participation business segment, including music stores, totaled 423.9 billion won. Notably, sales from music studios in the second quarter rose by 1.5% from the previous year, reaching 249.5 billion won. In the first half of the year, album sales from artists under the Beehive Music Group exceeded 15 million copies, contributing to 34% of total domestic album sales. As a result, some K-pop fans expressed disappointment, remarking, “I forgot the money my artists made through games.”
A mourning wreath sent by New Jeans fans is positioned in front of the Hive headquarters in Yongsan District, Seoul. /Photo=Yonhap News Agency The industry consensus underscores the importance of rehabilitating the brand image. A related source noted, “Following last year’s issues with SM Entertainment, Hive has also faced a series of disputes with Adore representative Min Hee-jin this year. Amid intense conflict, its image has suffered due to its status as an idol agency reliant on public perception. This is an area that must be addressed.”
Another industry expert remarked, “In the entertainment sector, image holds equal weight to company growth,” emphasizing, “It is time to reassess artist management and fan engagement, which are at the core of the business.”
Simultaneously, Hive has recently unveiled a new strategy, “Hive 2.0,” which seeks to reorganize its three primary business areas of records, solutions, and platforms into future growth sectors centered on music, platforms, and technology. The policy aims to prioritize the expansion of the platform and technology-related sectors.
Lee Jae-sang, Hive’s new CEO, stated: “We will concentrate on the continuous development of the domestic and global music markets, solidifying our leadership in the evolving superfan market through the platform business, and securing sustainable growth through technology-driven future enterprises.” “I am committed to realizing this vision,” he concluded.
Hankyung.com reporter Kim Soo-young Swimmingk@hankyung.com
(G)I-DLE and BTS: Navigating the Evolving Landscape of K-Pop and Entertainment Management
(G)I-DLE’s Jeon Soyeon has created ripples in the K-Pop scene with her recent remarks regarding her contract renewal with Cube Entertainment. As the entertainment industry faces a multitude of challenges, the responses of management companies are being closely examined, particularly when it comes to maintaining relationships with high-profile artists like Soyeon and BTS’s Suga.
The Impact of Jeon Soyeon’s Comments
During a concert, Jeon Soyeon boldly stated, “The contract expires in November, who will stop me?” and “Do I have to listen to XX’s opinion?”, igniting speculation regarding her potential departure from Cube Entertainment. Following her unscripted outburst, Cube Entertainment’s stock plunged by 5.8% within a week, reflecting investor anxiety regarding the stability of its remaining high-profile acts. This scenario is impacting the agency at a critical time when it is heavily reliant on (G)I-DLE’s popularity to bolster its financial standing.
Cube Entertainment’s Current Status
Cube Entertainment once stood tall as a powerhouse in K-Pop, producing beloved groups like Highlight, BTOB, and 4Minute. However, today the roster remains sparse following the exodus of several artists. Currently, (G)I-DLE is the agency’s cornerstone amid a struggle to launch and maintain successful new groups. The agency reported a remarkable growth in sales—104% year-over-year, reaching 49.5 billion won—largely attributed to (G)I-DLE’s triumphs, including their latest album selling 1.54 million copies in just one week.
The Pressure of Contract Renewals
The intricacies of idol contract renewals are intricate; substantial upfront payments are often involved, and terms are adjusted to capitalize on the artist’s strengths. With Jeon Soyeon’s footprint in the K-Pop scene as a potent creative force, her renewal could either stabilize Cube’s trajectory or further complicate it based on the outcome.
- Jeon Soyeon’s Contributions: Known for spearheading her group’s music production, tracks such as “Tomboy” and “Naked” have solidified (G)I-DLE’s reputation.
- Challenges from New Groups: Cube’s newer groups like “Rightsome” and “Todays” have not garnered the same commercial success.
Balancing Risks and Opportunities
As (G)I-DLE represents a “super IP” asset for Cube, the risks associated with renewing Soyeon’s contract are outweighed by the benefits of her continued association with the agency. Competing companies like JYP Entertainment have worked proactively with emerging talent to mitigate risks through early contract renewals with established artists such as BTS, TWICE, and Stray Kids.
Wider Implications for the Industry
Hive Entertainment is facing its own set of tribulations, notably after Suga’s recent legal troubles stemming from a drunk driving incident. These controversies have tested Hive’s management capabilities and public relations strategies.
The Ripple Effect of Suga’s Incident
The implications of Suga’s legal issues have reverberated through both BTS and Hive, sparking fan outrage and concerns over the potential damage to the group’s reputation. Suga’s status as a substitute social worker and the nature of the incident drew criticism, suggesting a perception that the company attempted to downplay the situation.
Financial Stability vs. Reputation Restoration
Despite solid artist sales reported—640.5 billion won for the second quarter—Hive’s profitability has seen a decline, with operating profits dropping 37.4% to 50.9 billion won. This has prompted discussions regarding the sustainability of Hive’s expansion into new sectors, such as gaming and technology, which are currently bearing a heavy cost burden.
Future Strategies for Hive
The recognition that brand image is paramount—especially in an industry reliant on public perception—has paved the way for Hive to announce “Hive 2.0,” a new strategy focusing on music, platforms, and technology for long-term growth.
- Rebranding Efforts: Restoration of brand image is a priority amidst ongoing challenges.
- Market Leadership: New CEO Lee Jae-sang emphasizes the commitment to lead in the evolving superfan market.
Insights into the Evolving K-Pop Landscape
The K-Pop industry is an unpredictable landscape, where shifts can happen rapidly due to internal conflicts and external pressures. As shown by both Cube and Hive, management decisions can have immediate financial repercussions, impacting stock prices, artist performance, and overall company stability.
Best Practices for Management Companies
To effectively navigate the complexities of artist management in today’s K-Pop sphere, companies should consider the following:
- Proactive Communication: Offering transparency during potential contract negotiations.
- Talent Development: Invest in nurturing the next wave of artists to ensure sustained success.
- Public Relations Strategies: Design a robust framework for crisis management and reputation restoration.
Summary Tables
| Company | Recent Challenges | Annual Sales (in billion won) | Key Artists |
|---|---|---|---|
| Cube Entertainment | Uncertainties due to artist contract renewals | 49.5 | (G)I-DLE |
| Hive Entertainment | Public relations issues with Suga | 640.5 | BTS, New Jeans |
As the K-Pop industry continues to evolve, companies like Cube Entertainment and Hive must adapt their strategies to meet both artist needs and market demands, ensuring that they do not only maintain revenue but also enhance their reputations amidst growing scrutiny.
With important decisions looming, the future of K-Pop and its management rests on the intersection of financial strategy, artist relationships, and public perception—a balancing act that requires not only keen insight but also a deep commitment to the art and culture of the genre.
