Korea and K-Pop's Remarkable Rise
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ISSUE 360 | 18 FEBRUARY 2015 thereport Contents 05 Beyond music: Peter Molyneux/ Kickstarter 06 Pinboard: Stats, deals, startups and more Seoul music 08 Country profile: Brazil Korea and K-pop’s remarkable rise 2 t is estimated as being a $3bn industry ISSUE 360 and Time has called it “Korea’s greatest 18.02.15 COVER FEATURE export”, now K-pop is going through its imperial period – growing sharply and Iexporting into whole new markets outside Se ul music of Asia that were previously oblivious to the genre. A recent survey in the country found that Korea and K-pop’s remarkable rise 21% of pre-teens in South Korea want to be Psy might be consigned to the heap marked One-Hit Wonder but he has helped kick open the doors for K-pop stars, by far the single biggest career ambition. Its dominance in the local market K-pop internationally. Local production companies, which launch upwards of 30 new acts a year, are thinking is staggering – jumping from around a 50% globally now, especially as the cost of developing a K-pop act can spiral into the tens of millions. There share a decade ago to 83% in 2014. is also a profound knock-on effect in terms of how the major labels in the country are looking to reinvent A report by the National Tax Service themselves. The West is now shifting to grab a piece of this boom with both Kanye West and Louis Vuitton in South Korea found that the average annual income earned by K-pop stars making strategic investments here recently. That said, while K-pop is expanding internationally, neither Western rose 72% between 2010 and 2013 – where musicians nor Western digital services are going to find it easy to have any impact in this market that has they make 46.74m won (£27k), up from reached a fascinating point of maturity without their involvement. 26.97m won (£16k). To put that in context, the average income for salaried workers in the country is 30m won. And, for the biggest acts, there are considerable sums being generated. Super Junior made Boys Republic 31.4bn won (£18.5m) in the first six months of 2014, Girls’ Generation made 30.3bn won (£17.8m), Big Bang made 29.4bn won (£17.3m) and 2NE1 made 27.5bn won ($16.2m). Girls Generation and Super Junior report the 3 Now the international labels are doubling down here and looking to change the ISSUE 360 way they do business in the country, no longer just relying on the independent From left – SM Entertainment, 18.02.15 COVER FEATURE production houses to source and develop acts they can partner with” YG Entertainment and JYP Entertainment The cost of entry, however, into the market is phenomenal. It is estimated that it can cost up to $3m to develop each member of a K-pop group (and many have five or more members). They are often signed up by management companies/production houses – notably SM Entertainment, YG Entertainment and JYP Entertainment – at the age of 9 and put through what is ostensibly a K-pop boot camp where they learn to sing, recently, electronic dance music – with early 2000s had moved into Japan. This as part of this drive. dance, do interviews and also have lessons an indigenous leaning. Beom-Joon Yang, was partly down to the Asian financial There is now an accepted three-step to become fluent in multiple languages the CEO of Universal Music South Korea, crisis in 1997 where local labels had to process for the exporting of Korean music – including Japanese, Mandarin and, describes K-pop as “a globalised music” start to seriously think internationally in (under the “Cultural Technology” concept increasingly, English. These production and the “Koreanisation of international their signings and find ways to break into developed by Lee Soo-man who set up SM houses have an A-Z policy where they music”, suggesting an inherently hybrid new markets. Entertainment): cover everything from talent spotting right form that draws on other countries’ music The genre now gets a great deal through to TV promotion – operating like and then starts to export it back to them, of backing from the South Korean exporting cultural products by bringing super-charged cottage industries. much as The Beatles and The Rolling government because of its accelerating Korean singers to other markets; 1 The rewards here, if you get it right, Stones did with R&B to Sixties America. export power. The Ministry Of Culture & seeking out international are considerable. SM Entertainment, for K-pop started to be exported in East Tourism, for example, has set up multiple 2collaborations to boost local acts’ example, has a market cap of $660m. This Asia at the end of the 1990s and by the Korean Cultural Centres around the world profiles overseas; is only going to grow as the world comes globalising the music by working with round to this most particular of genres. acts from other countries to make the Seo Taiji 3 & Boys music multicultural. ORIGINS OF K-POP India is another territory in the sights of The international success of Psy’s many K-pop acts and companies, with ‘Gangnam Style’, a huge hit and by far N-Sonic being the first group to play there YouTube’s most watched video, helped (in 2014) and the first K-pop tour of the throw a spotlight on both Korea and country happening this January. K-pop, but this is a genre with a long and fascinating history. IMPORT AND EXPORT The arrival of Seo Taiji & Boys in 1992 is commonly regarded as the start of It is not just one-way traffic here, with local modern K-pop, causing a massive change acts being developed to sell at home and in in how the South Korean record industry as many international markets as possible. was structured and how domestic acts Kanye West Creative Team, for example, report were subsequently developed. announced it was going to set up a JV in The style was a fusion of many Western Korea by the end of January. genres – such as pop, rock, hip-hop and, Known as 10-Jones, it is the company’s the 4 Mel-On ISSUE 360 COVER FEATURE 18.02.15 If Apple was to bring an iTunes track-only download service into the market, it would not work. A Spotify JJCC streaming-only service could work, but it would not be able to compete [easily] with the local players” company is concentrating on developing dominant revenue format in Korea for its own domestic acts with a view to record companies and, by 2014, digital was growing its share of the K-pop market. It making up 60% of the market, according to is also moving deeper into live and artist IFPI numbers. management, indicating a significant “It is not like five years ago where we structural change at the company in would focus on getting an article in a month) and more towards a pure access- recent years. newspaper or magazine,” says Yang on based approach. “Because of the high- first move into Asia. It is designed to help how the marketing and promotion of acts speed internet in Korea, everyone can break its own acts (notably Iggy Azalea COMPETITION AND has had to change. “We are focusing on stream tracks,” explains Yang, meaning and Drake) in the country but also to spot STANDING OUT mobile and online promotion as well as the technological advances are making and develop Korean acts for crossover in music platform side.” streaming seem more attractive and other markets. It will have brand, agency “The Korean market is totally dominated He says that 90% of Koreans now viable. and entertainment arms and there are also by K-pop – which includes lots of boy own a smartphone and this has caused a With local services having such a plans for a fashion division. groups and girl groups,” says Yang. “There fundamental shift in marketing. “It is no dominance in the country, it will mean the Actor and film director Jackie Chan are over 200 groups in the market right longer mobile-first in Korea,” he says. “It is likes of Spotify and (depending on Apple’s has interests here, helping to launch now and they are attracting lots of fans mobile-only.” plans) Beats will have a serious challenge JJCC there in 2014, a hip-hop boy ground from high schools and universities.” Neither iTunes nor Spotify are in the on their hands to break into the market. managed by Jackie Chan Group Korea. He estimates that around 30 new Korean market yet, which means that “Korean players are strong enough with Even Vuitton Moet Hennessy, Louis groups are looking to enter the market everything leans towards local services. the big mobile carriers,” says Yang. “If Vuitton’s company, has also made an each year. All of them will have been in MelOn, developed by SK Telecom, is the Apple was to bring an iTunes track-only $80m investment in YG Entertainment. development for several years and have leading digital music platform, followed download service into the market, it would Now the international labels are had millions of dollars poured into them – by KT Music, part of Korea Telecom. “The not work. A Spotify streaming-only service doubling down here and looking to change so the stakes are incredibly high. mobile carriers’ promotions have been could work, but it would not be able to the way they do business in the country, “Every week there are new groups very successful in the music industry,” compete [easily] with the local players.” no longer just relying on the independent coming in and the market is full of idol Yang says, noting that the country has 5m He also notes that, while YouTube was production houses to source and develop stars right now,” he says.