Three shops have grown into entertainment conglomerates and exercise considerable power over the business
Korean pop music has astonished the world with its rapid rise in popularity — exemplified by the so-called Korean Wave that has swept Asia since the early 2000s. Leading this rise to the top are three entertainment giants that dominate the K-pop industry: JYP Entertainment, SM Entertainment and YG Entertainment.
The oldest and largest entertainment company in the K-pop world, SM (named for founder Lee Soo-man) gave birth to the first generation of pop bands in the late ’90s and created the first K-pop wave with talents like H.O.T., S.E.S. and BoA.
Since then, SM has since grown into a major conglomerate. In addition to idol sensations like Super Junior, Shinee, Exo, TVXQ and Girls Generation, it also produces stage musicals and TV, develops K-pop-themed travel merchandising, and manages actors like Jang Dong-gun (“No Tears for the Dead”) and Kim Ha-neul (“Blind”) through its subsidiary SM C&C.
Established by Yang Hyun-seok, former member of legendary boy band Seo Tae-ji & Boys, YG is known for its hip-hop and electronic dance music with artists like Psy, Big Bang and 2NE1. When Psy’s “Gangnam Style” became a global hit (2.5 billion views and counting on YouTube), Scooter Braun — the talent manager who also reps Justin Bieber — approached YG and helped Psy and 2NE1’s singer CL make soft debuts in the U.S. market. YG also operates subsidiaries for fashion model management, beauty and sports.
Founded in 1997 by J.Y. Park, a pop star in his own right, JYP Entertainment initially rose to fame with boy band god and singer-actor Rain (“Ninja Assassin”) in the early 2000s. In 2008, its girl group Wonder Girls was one of the first K-pop acts to find Pan-Asian success with “Nobody.” JYP’s more recent lineup of talents includes 2PM, Miss A, Got7 and Twice, all featuring members from other Asian countries in an effort to appeal to the region. Park also produced a music video with Conan O’Brien during the comic’s visit to South Korea.
These agencies are all attempting to reach the West, but China remains their largest market. The term Korean Wave was first used to describe Chinese fans’ craze for K-pop boy band H.O.T. during their concert in Beijing in 2000. China’s music market — like its film market — has become one of the world’s biggest in recent years.
The Korean music industry responded quickly, recruiting Mandarin-speaking talents to appeal to the Chinese fanbase. And the Korean entertainment industry has seen a huge influx of Chinese cash — as much as $2.5 billion over five years — a move welcomed by Korean companies that have looked to expand to the Chinese market with fewer legal obstacles.
Major examples of such investments include Chinese e-commerce giant Alibaba’s purchase of a 4% stake in SM Entertainment for $29.7 million. In addition to setting up online music distribution, marketing and merchandising in China through Alibaba Music Group, SM is also set to establish a Chinese branch via Hong Kong-based subsidiary Dreammaker Entertainment. “Our goal for this year is to set up a subsidiary in China similar to our local subsidiary in Japan and pursue the Chinese market more aggressively,” an SM source told Variety.
The other two majors are following suit. In 2014, YG signed an exclusive music distribution contract with Chinese Internet giant Tencent, the developer behind messaging service WeChat. JYP has also signed a music distribution agreement with China Music Corp. that is worth $4.56 million with plans to launch a China-based joint venture in the near future.
As South Korea goes, so goes Asia.