K-POP as an industry

Agencies


A billboard for the SMTown Live '10 World Tour in Times Square, Manhattan.
The three biggest agencies in terms of revenue are S.M. Entertainment, YG Entertainment and JYP Entertainment,[122] often referred to as the "Big Three", whose stocks are traded at the Korea Exchange.[123] In K-pop these record labels also function as agencies for the artists.[122] They started operating as such at the beginning of the 2000s.[122] They are responsible for recruiting, financing, training, marketing and publishing new artists as well as managing their activities and public relations.
In terms of market share the biggest agency is S.M. Entertainment.[123] Their artists started the Hallyu wave in K-pop and managed to break into Japan.[123] The "Big Three" occasionally cooperate, for example Se7en, managed by YG Entertainment received a song from JYP Entertainment founder Park Jin-young in 2012[124] and the representatives of the three agencies judged at the SBS reality talent show "K-pop Star".[125] The "Big Three", together with Star J Entertainment, AM Entertainment and Key East founded the United Asia Management (UAM),[126] which aims to spread K-pop globally as well as facilitate the development of better artist recruitment and management processes.[127] UAM auditions are global and not restricted to Korean talents.[127] Besides musicians, UAM also manages actors, directors, stylists, hair and make-up artists.[127] The merge was highly criticised as it might put pressure on content providers as well as further pressurize other Asian countries, like the Chinese market, which is unable to respond to and compete with the mass production of Korean entertainment companies.[127]
In 2009, DFSB Kollective became the first distributor of K-pop songs on iTunes.[128] The recent overseas expansion by K-pop music agencies has led to significant increases in profit and total revenue.


Logo of JYP Entertainment
Total revenues of K-pop record labels (in USD million)
Year of
establishment Record label 2008 2010 2011 2012 Source
1995 S.M. Entertainment 42.5 87.1 129 217 [129]
1996 YG Entertainment 51.8 70.3 96.9 [130]
1997 JYP Entertainment 3.1 9.1 17.8 13.5 [131]

Sales and market value
The Korean music industry grossed nearly $3.4 billion in the first half of 2012, which amounts to a 27.8% increase from the same period last year, according to Billboard.[6] Before the digital market took hold, the South Korean music industry was nearly destroyed in the early 2000s by the large amount of illegal file sharing, a problem threatening other countries at the time as well. In 2006, however, South Korea's digital music market surpassed the physical market,[132] with more than half of revenue coming from digital sales.[133] K-pop's social media presence on Korean and English websites such as Facebook and Youtube have also had a major impact on the size of its global market.[134] Viki, the video and music streaming website, has influenced global K-pop trends by providing translated subtitles for music videos.[135]
In 2011, 1,100 albums were released in South Korea. The hip-hop genre had the most among them at two-thirds of the total albums.[136] One-third of the albums were from other genres, including rock, modern folk, and crossover.[136] This shows that there is a variety of genres in South Korea outside of what is produced by K-pop idols.[136] Illegal downloads have pushed down prices significantly. In 2012, the average cost of obtaining a K-pop song in South Korea amounted to US$0.10 for a single download, or $0.002 when streamed online.[137]
K-pop is more than music or pop culture, but it is a new type of business model. It especially makes tourism work in a global scale. Fans from all over the world are coming to South Korea for tours and this has contributed positively to the total sales and market value of K-pop. Hence, according to Mfrascog, K-pop is "a model used to drive geographical interest and spawn tourism
Trainee system[edit source | editbeta]
See also: Slave contracts
Cultural technology, or CT, is a concept popularized by Lee Soo-man, founder of the South Korean music label and talent agency S.M. Entertainment.[146] It is a 3-step process of exporting K-pop overseas as part of the Korean wave and consist of a tightly controlled training system. Joseph L. Flatley from the American news network The Verge described it as one of the most "extreme" systems of pre-packaging K-pop bands,[147] which are owned by a handful of entertainment agencies.[148] The three steps to the Cultural technology described by Lee Soo-man consists of the following: (1)exporting cultural products; such as placing Korean singers in different countries, (2)creating international collaborations and (3)globalizing the product by cooperating with musicians from different countries to create a global brand. Lee's CT method makes the singers to have different images and styles depending on the nation that they perform in, thus allowing to target the specific audiences in the right way.[149]
South Korean entertainment companies such as S.M. Entertainment have created a process to train singers and dancers in its groups. The journey to stardom often starts around age 9 or 10, when tightly supervised trainees begin dance and voice classes at night and live together while attending school.[150] Besides singing and dancing trainees are also taught foreign languages, most notably English, Japanese and Chinese.[151] According to the CEO of Universal Music's Southeast Asian branch, the Korean idol trainee system is unique in the world.[122]
To guarantee the high probability of success of new talent, talent agencies fully subsidize and oversee the professional lives and careers of trainees, often spending in excess of $400,000 to train and launch a new artist