The South Korean Music Industry: The Rise and Success of K-Pop'
The South Korean Music Industry: The Rise and Success of K-Pop'
The South Korean Music Industry: The Rise and Success of K-Pop'
Bachelor’s Thesis
Johan Williams Jolin
Supervisor: Gabriel Jonsson
Johan Williams Jolin The South Korean Music Industry 2
1. Introduction 4
5. Conclusion 50
6. Appendix 55
7. Bibliography 56
The year is 2005. The global recorded music industry revenue is a total of 20 billion American
dollars (all currency applied will be in USD and noted with $). Even though this is undoubtedly a
hefty sum, the global recorded music industry has lost $3.3 billion since the new millennium started.
Internet piracy is widespread and the online video-sharing site, YouTube, is launched this year as
well. What no one could predict was what the future held for the global music industry. It took ten
years for the global music industry to start showing positive figures once again since its heyday.
After losing an additional $4.3 billion, the total revenue of the music industry in 2016 landed on
$15.7 billion dollars (“Global Market Overview” 2017).
The year is 2005. South Korea (here on Korea) ranks as the thirty-third largest music market (in
terms of total revenue) in the world according to the International Federation for Phonographic
Industry’s (IFPI) official reports. However, in comparison to the rest of the world, Korea has been
showing positive figures almost every year since then. In 2007 they climbed to twenty-seventh, in
2009 they came in at fourteenth, and then in 2012, they were the eleventh largest music market. By
2014, Korea broke into the top ten of all global music markets, also having the strongest overall
growth (+19.2 percent). Currently, in 2016 they are ranked as the eighth largest recorded music
market (IFPI n.d., “Market Overview” 2015). Since early 2013, Korea joined the United Kingdom
(U.K.), the United States (U.S.), and Sweden, as one of only four countries in the world to export
more music than import (Lindvall 2013a).
This thesis aims to clarify how Korea rose to become a world leading recorded music industry. To
do this, it will answer the following questions:
• How has South Korea since 2005 become a global superpower in the 2017 music industry?
• What differentiated the Korean music industry from the rest of the world?
• What strategy is used to export a cultural product able to attract and compete within foreign
markets?
• And finally, how has Scandinavia contributed to the development of Korean pop music into a
global phenomenon?
When it comes to cultural products such as K-pop, it is argued that removing cultural odor is
essential in order for consumers to adopt cultural products. Consumers, who are gradually becoming
more global minded, could then inscribe own personal meaning, yet also, it may create a shared
experience between different cultures creating one common pan-Asian culture, something that is
desired by many East Asian consumers.
On the other hand, some people claim that retaining cultural odor is necessary in order to
differentiate products and connect them to the origin (Chen 2015).
There are two main theories that attempt to explain the reason behind the K-pop phenomenon.
First, many scholars argue that K-pop “rests on the concept of cultural hybridity or Pop Asianism”
and not a new cultural force (Oh 2013, pp. 389). The success of Hallyu as a whole is mainly
attributed to the fact that the Korean culture inherits a supernational hybrid of characters (Kim 2015).
There are three major archetypes the advocates of this theory suggest K-pop stems from.
First and foremost, there is the circular argument. Korean popular music stems from Chinese and
Japanese culture and their earlier global success. K-pop is a hybridity of the grand Asian cultures,
China and Japan, and was therefore bound to succeed considering the advancements of Asian culture
(Oh 2013).
Secondly, it is the exploitation of cultural resonance. With regards to Korean cultural products,
Roald H. Maliangkay states that they are:
common among Chinese consumers, their selection of Korean products may in part
stem from the strong connection of these products with Chinese culture itself. If the
cultural similarity is a major factor, then, it may not be so important that the
product derives from Korea. […] Will Chinese consumers continue to favor
Korean entertainment when they find that domestic products are just as good and
Show a similar degree of economic and technological success (q.b. Oh & Park
For example, the dance from PSY’s widely popular hit single ‘Gangnam Style’ is based on
traditional Korean horse dancing. This dance resonated with American culture, which allowed
Americans form a connection with PSY’s song. Through this, ‘Gangnam Style’ managed to find vast
success across the U.S. (Oh 2013).
Lastly, is the argument that K-pop is a hybrid between Western pop music and Korean culture.
Also, K-pop acts as a filter for Western products, adapting them to an Asian market (van der Ploeg
2016). K-pop has a Western origin and simply mimics the concept of singing and dancing at the
same time from Michael Jackson (Oh 2013). K-pop has reached global success unmatched by
Chinese, Japanese, or Indian music because of K-pop’s utilization of Western creativity (Park 2013).
However, a Korean scholar, Ingyu Oh, quickly dismisses this theory stating that this kind of
circular argument does not explain how K-pop became successful because it “wrongfully assumes K-
pop is similar to Chinese or Japanese popular music (Oh 2013, pp. 400).” The argument reduces the
entire Korean music industry to a mimetic machine, which lacks creativity and originality (Park
2013). Furthermore, Oh questions why other East Asian music industries such as Taiwan have not
been globally successful if cultural hybridity is credited for the advancement of Korean music. Also,
if simply resonating with Americans’ appeal for Cowboys and copying Michael Jackson is the key to
success, this would easily be exploited even further by other countries as well.
Instead, Oh proposes another theory, which seems to be more commonly applied today among
scholars. This theory implies that there is, in fact, nothing in K-pop that could be considered
“Korean” (Oh 2013). Just as Keewoong Lee, a sociologist at Yonsei University, said in an interview
with The Wall Street Journal: “The key to K-pop's worldwide success is not its Korean-ness, but the
lack of it (Russell 2012).” Korean popular music today might possibly have no influence from
traditional Korea music. K-pop is dance orientated, mixes foreign languages, and written in an eight-
note diatonic scale. This is very different from the traditional Confucian influenced style, which used
to dominate the Korean music scene, where singers stood still and sung in a five-note pentatonic
scale (Lie 2012). K-pop is rather a combination of the liberalization of the music market in Asia as
well as the rest of the world. He mentions four causes which are central.
First of all, he claims that Korean singers have a distinct physique that has given them an
advantage compared to the Japanese and Chinese. This distinct physique is a result of evolution,
Since K-pop has been so heavily influenced by Western music, one can ask what the “Korean-
ness” in South Korean music is. The mix of global elements due to K-pop collaboration with foreign
stylists, choreographers and music producers, makes the Korean aspect ambiguous (Rånes 2014).
Furthermore, as Gil-Sung Park argues, K-pop does not simply mimic foreign material but is instead a
product of global collaboration through a division of labor. Korean contemporary music’s global
following is widely credited to the development of social media networks and not solely due to a
pan-Asian cultural hybridity. Without services such as YouTube and Facebook, the global
dissemination of K-pop would not have been possible (Park 2013). This will be discussed more in
detail in this paper.
K-pop today signifies the exportation of music, which is made in Korea for global consumers. It
was necessary for K-pop to globalize because of the small local market and a previously large
problem with illegal downloading in South Korea. It was not until the 21st-century that K-pop gained
global attention. Earlier, Europe and the U.S. (which will further on in this paper be referred to as
West) did not pay any interest to Korean musical talents. The music simply was not Western at all.
Local music, ‘trot’, which is considerably different to today's pop music, dominated Korea (Oh
2013). It is notable that up until 2016, an estimated 80 percent of the songs recorded for the K-pop
market is produced or written by musicians based in either the U.S. or Europe, with a majority of the
Europeans hailing from Scandinavia. Many hit songs from Korea’s most famous artists are either
written or produced by Scandinavians (Blume 2016). Between which exact years this is referring to
is not stated. K-pop has only started to actively outsource foreign talent since 1995 and therefore, it
could be speculated that it is within this time frame (1995-2016) that 80 percent of Korea pop music
is either written or produced by the West.
The ones orchestrating the success of K-pop are the Korean music labels. Unique to the Korean
music industry is how their music labels are different from a traditional Western music label. As will
The Korean music industry is led by three main large agencies: Star Museum (SM) Entertainment,
Yang Goon (YG) Entertainment, and Jin-Young Park (JYP) Entertainment. SM Entertainment is the
largest and has arguably been the most important label for the development of K-pop (Oh 2013).
In order to answer how the Korean music industry reached its level of success, I have gathered my
information from six distinct areas. I have utilized articles written by scholars, analyzed the thoughts
from K-pop enthusiasts on blogs, and collected news surrounding Korean idols from various
Hallyu news outlets as well as from newspapers and magazines. This paper also contains information
from a documentary produced in Sweden, which has been uploaded in three parts to YouTube.
Furthermore, Pelle Lidell, a Swedish A&R (Artist and Repertoire, a person who signs
songwriters/producers and place their songs with labels and artists) who currently works at Ekko
Music, allowed me to conduct an interview with him. He is actively working together with SM
Entertainment. This interview was conducted in Swedish at his office. The style of the interview was
free flowing. However, I did bring up some pre-planned questions, all of which will be listed in the
appendix. All other sources besides the interview and documentary are in either English or Korean.
These six unique sources help to provide a broader perspective as previous articles omit either the
perspective of K-pop fans or the viewpoint of K-pop fieldworkers. This thesis will also be the only
extensive paper I have come across which cover several significant fields, such as a background
of Hallyu and soft power, influence of the legislative instances, exportation and differentiation
methods, as well as revenue collection. Furthermore, this project will give a comprehensive overview
on the prosperity of the Korean music industry and how various strategies have been applied along
with the advancements of media technologies since 2005 to further its evolution.
This thesis is, therefore, structured as follows. Firstly, the paper briefly examines the Korean
wave as well as the notion of soft power, which is the foundation K-pop’s success. Secondly, with
K-pop was not the product that first sparked off the Korean Wave. In fact, its global success can
be attributed in part to earlier South Korean cultural products gaining worldwide recognition and
popularity. Some scholars refer to K-pop as “Shin-Hallyu”, the new Korean wave, or the Korean
Wave 2.0.
The term Hallyu was invented to describe the expanding popularity of South Korean popular
culture in China during the late 1990s by the Chinese press. Scholars like Bok-Rae Kim and Steven
Chen both argue that Korean dramas and movies originally fueled the Korean wave. Kim describes
the Korean wave as a developing phenomenon undergoing three generations, Hallyu 1.0, which
lasted from 1995 to 2005, Hallyu 2.0, from 2006 to recent years and Hallyu 3.0, which is what
Hallyu is transitioning into today (Kim 2015).
In order to help understand how Korean music amassed such a huge following of global
consumers, this section will briefly examine the background of the Korean Wave and how South
Korea’s music played a major role in the evolution of Hallyu.
According to Joseph S. Nye, the power to change another’s behavior to one’s liking can be
exercised in three distinct ways: force, payment or attraction. In particular, the method of attraction is
what Nye refers to as “soft power” (Nye 2006). Soft power examines how a country exercises its
power through the calculated management of its perceived image (Martinroll 2017). Generally, there
are three main resources from which a country can harvest soft power: political values, foreign
policies, as well as culture (Nye 2006). A prime example of this can be seen from the way the U.S.
has created a unique and desirable image for itself through the propagation of Hollywood movies,
stars and even the advertisement of products such as iPhones and Levis jeans. This is the trajectory
that Korea intends to take with Hallyu (Martinroll 2017).
Unlike most developed countries, Korea dedicates a significant amount of its reserves to export
pop culture with the goal to establish itself as a leading global soft power.
In addition to hard power resources, most notably a robust military force, the South Korean
Through the exertion of soft power, Korea aimed to progress economically through globalization.
The former South Korean president, Myung-Bak Lee (who served as the Korean president between
2008-2013) employed the catchphrase, “Global Korea” in his political agenda. In addition, he
established the Presidential Council on National Competitiveness, which sought to promote the
Korean brand by enhancing the image and prestige of Korea. This ultimately led to Korean products
and services to be more lucrative and highly valued (Kalinowski & Cho 2012).
In the early 1990s, the Korean government stopped enforcing state-owned media co-operations,
and even encouraged private investments into media, entertainment, and other industries. This gave
rise to new channels being aired. To further fill airtime, broadcasting stations produced a plethora of
low budget dramas, which mainly targeted middle-aged woman. In 1991, the government enforced a
quota on television companies, pressuring them to acquire a certain number of dramas from
independent producers. This implementation help lay the foundation for the Korean Wave (Chen
2015, Negus 2015. Rånes 2014) and provided the precedence for the first stage of Hallyu, which was
the popularization of K-dramas in China (namely, the dramas ‘What is Love About’, 1997 and ‘Stars
in My Heart’, 1999) and Japan (‘Winter Sonata’, 2002 and ‘Dae Jang Geum’, 2003) (Chen 2015).
By the same token, it was during this time that the Korean policymakers and media outlets
realized that their cultural product was not only a financially viable export product but also a means
to control the global image of South Korea. This led to the utilization of soft power. In 1994, the
Presidential Advisory Board of Science and Technology of Korea showed that the box office
earnings of the Jurassic Park movie were equivalent to that of 1.5 million exported Hyundai cars. It
is widely agreed upon that this is the point when the government realized the importance and
influence of the cultural industries. It is also the springboard for a paradigm shift where the
government would lay the foundation for Hallyu (Chen 2015).
However, according to several scholars, the economic crisis faced by South Korea during the mid-
1990s provided the impetus for the rise of Hallyu (Negus 2015). Other than causing a huge blow to
the financial sector of Korea, this crisis led to the retraction of many international investors and
The K-drama Winter Sonata in particular played an indispensable role in the first rise of Hallyu. It
became an overnight success in Japan when it was first released in 2002. Many scholars today
believe this to be the start of the Korean wave. Initially, the success of Hallyu was solely attributed to
K-dramas (Lie 2012). Between 1995 and 2007, the total revenue for Korean dramas grew from $5.5
million to an astounding $150.9 million (Jin 2012). I speculate that since the drama is well produced,
it managed to be carried by four factors that are arguably the reasons for the success of Hallyu, the
Korean government, technological developments, the diaspora of the Korean people, and cultural
similarities. These four factors will be further discussed in next chapter but in relation to K-pop.
South Korean music was, however, not completely irrelevant during this era with the Korean boy
band High Five of Teenagers (H.O.T) instigating the craze for K-pop in China and the singer BoA
amassing an immense following in Japan. Along with a few other artists, H.O.T and BoA laid the
foundation for K-pop stars today (Chen 2015, Lee 2014, Kim 2015). This period of the Korean Wave
opened new markets and turned the eyes of consumers in China, Japan, and Taiwan towards Korean
products (Kim 2015).
In contrast to Hallyu 1.0, which appealed to mainly middle-aged women, Hallyu 2.0 attracted
young people from Asia, North America, and Europe through the proliferation of vibrant and
energetic music. (Chen 2015, Oh & Park 2012) Hallyu 2.0 is most widely believed to have begun in
2006 as digital technologies developed, thus, easing the diffusion of Korean cultural content, in
particular, K-pop. The main driving force for the rise of Hallyu 3.0 is the popularization of the K-
brand. With the rising success of K-pop, consumers are eager to try new products from South Korea,
one of which is Korean fashion (Kim 2015).
It is incontrovertible that Hallyu has been an extremely profitable commodity for the Republic of
Korea both financially and culturally. It has also played a crucial role in building South Korea’s
image since 1999. In 2004 the total net revenue of Hallyu was approximately $1.87 billion. This
staggering figure multiplied to an estimated total of $11.6 billion in 2014 (Martinroll 2017). BBC
also notes that K-pop exclusively contributes with $2 billion per year to the Korean economy (q.b.
Seabrook 2012). How these numbers are calculated is not explicitly stated in neither of my sources,
but I speculate that it is the total revenue including sales from merchandise, concerts, movies,
In 2015, Korea made a total of $15.2 billion from the 13 million tourists visiting the country. This
figure is set to grow at an annual rate of 3.3 percent. In addition to this, the government’s steady
investments in Hallyu attractions will continue to allow South Korea’s tourism sector to thrive.
Currently, the “K-Culture Valley”, which is a Hallyu inspired theme park, is under construction
and will officially launch in 2017. This theme park will showcase quintessentially Korean cultural
contents, such as film studios, restaurants, concerts, and merchandise all in one area, thus, catering to
and attracting numerous fans worldwide (Kim 2015, Martinroll 2017).
Hallyu 1.0 set a firm foundation for the rise of South Korean music as it broke into the foreign
markets of China and Japan as well as generated global interest in Korean cultural products. One can
only speculate if K-pop would have been equally successful if K-dramas had not first paved the way
for entering into these new markets. But without the local government’s interest and efforts to
improve South Korea’s image enabling the rise of Hallyu, it would have greatly aggravated the
possibility for K-pop’s recent advancement.
As discussed in the previous section, Hallyu 1.0 opened up new markets, created a more
heterogeneous consumer base for Korean products, and laid the foundation for South Korean music
to reach a global audience. This section will provide a more in depth view of how social changes
were crucial to the advancement of K-pop. It will also discuss how Hallyu 2.0 managed to gain
relevance across borders as well as the reasons for the South Korean music industry’s success.
There are four main areas mainly disused amongst scholars when trying to explain the recent
sweep of Hallyu. Steven Chen discusses in his research Cultural technology: A framework for
marketing cultural exports – analysis of Hallyu (the Korean wave) all four underlying factors
contributing to the global success of South Korean music industry: (1) the development of media
technologies (such as the Internet and YouTube), (2) the South Korean government (sanctioning the
influx of foreign pop music and enforcing copyrights), (3) the resonance of the Korean cultural
products with other East Asian cultures, and (4) the diaspora of the Korean people.
That Korea would have great success in exporting music was inconceivable up until the mid-
1990s. Before that, Korea’s music industry catered almost exclusively to their domestic audience,
with a few trot singers and classical musicians being the exception. Despite SM Entertainment’s
efforts during the early 1990s to export Korean music, they were met with lukewarm response (Lie
2012).
The actual motivation behind K-pop’s sustaining popularity cannot be credited to either industrial
context or state support (Kim 2015). Instead, the most important social change for the success of K-
pop was the enhancement of media technologies. With the rise of broadcasting TV and music videos
popularity growing since the launch of the American TV-channel Music Television (MTV) in the
early 1980s, K-pop was suitable for its era of music video showcasing very photogenic singers and
dancers. K-pop was a form of pop perfectionism consistent of catchy melodies, attractive idols,
captivating choreography and fashionable clothing.
There were especially two significant developments during this period that lead the music market
towards digitalization. The MP3 player, which was invented in 1996, allowed music to be portable
Furthermore, with the development of social network services (SNS), new benefits were apparent
in connecting fans and also attracting new ones. Compared to tours, CDs, TV, and even digital
tracks, social media (most specifically YouTube but also Twitter and Facebook) is easily accessible
thanks to advanced mobile platforms and the Internet. These SNS does not require consumers’
timely presence, are portable, have an ongoing community thanks to social medias practicality
disseminating music and leaving comments, and most importantly, it is free. YouTube and other
social media networks, share the promotion and distributions qualities CDs and radio have
separately. The only restriction consumers have when using YouTube is that they are required to
watch a commercial before the video.
This has led to a new type of business referred to as “Business to Business” (B2B) strategy. It was
difficult to imagine how digital music could be profitable because of the widespread piracy but has
been combated by selling virtual commercial space to multinational enterprises (MNE), and thus
enabling content to be consummated free of charge. In comparison to the “Business to Consumer”
(B2C) strategy (which focus of selling products directly to the consumer), the B2B strategy focuses
on selling content to MNE, which largely reduces marketing and transaction costs. This is, however,
a risk since the content is free and relies on the royalty revenues of an untested product’s appeal to
Nonetheless, this strategy is implemented today broadly by all K-pop agencies because of the
successive growth of YouTube and how Korean music have prospered from it. SM Entertainment is
the leading model for the B2B strategy in Korea garnishing almost $40 million (45 billion KRW (X-
rates.com)) in 2010 which accounted for 80 percent of their total revenue, with 81 percent of the
royalties coming from abroad. In comparison YG Entertainment’s total revenue from B2B in 2010
was 40 percent, however, the total income for royalty fee has been growing exponentially every year
from 2006 to 2010 (Oh & Park 2012).
As revealed in figure 1 above, this system requires Korean labels, artists, writers, and producers to
upload their content to YouTube for free, and then collect royalties from YouTube based on the
number of video views. The royalties are generated by MNE paying for commercial space depending
on the contents consumer attraction value (Oh & Park 2012). A clear example of the Korean music
industries reliance on SNS revenues happened in 2012. Korea’s market grew steadily from 2008
(+25.6 percent, 2009 10.4 percent, 2010 +12.3 percent) until 2011 (+6.4 percent), but as Korea’s
largest social networking platform Cyworld collapsed in 2012, the Korean market lost 4.3 percent
due to a staggering 25 percent loss in digital revenue (Lindvall 2013a).
However, it is not merely accidental that foreigners get introduced to K-pop. Even though
YouTube is a free content browsing site, European consumers rarely encounter K-pop accidentally.
According to an interview with dedicated foreign K-pop fans in Korea by Ingyu Oh and Gil-Sung
Park, a majority tends to be introduced through hubs of Chinese and Japanese pop culture, with many
young French people initially being interested in Japanese anime and manga. As these young
consumers are introduced to Korean music by local K-pop communities or hubs, the subjects in
question became a source of K-pop dissemination on social media (Oh & Park 2012). This would
suggest that K-pop’s success is built on the foundation of common grounds between Asian cultures.
Chinese and Japanese products attract foreign youths who through these are introduced to K-pop.
Many scholars claim that the expansion of Korea’s cultural industries was led by the central
government. It was a strategy implemented in order to boost tourism and other business institutions
by enhancing Korea’s position as a soft power in the world (Negus 2015). In 2017, Korea’s Ministry
of Culture had a budget of $500 million. The aim is to build a culture export industry worth $10
billion by 2019. Furthermore, the government sponsors 20 to 30 percent of the funds used to nurture
and export Korea pop culture products. The remaining 70 to 80 percent is made by investments from
banks and private companies, which is managed by Korean Venture Investment Corporation. An
additional interesting anecdote is that one-third of all venture capital in Korea is spent on the
entertainment industry (Martinroll 2017).
Starting in the 1990s and 2000s, the South Korean government gave several government
institutions the responsibility to market K-pop on an international level. Even though it is often
argued that they work actively promoting and sharing K-pop, they do not actually produce any
First, they work actively to showcase talent and music at international events. This had led to
many events, such as Incheon Asian Games in 2014 and the Thailand- Korean Cultural Center
Opening Congratulatory Event, being visited by K-pop stars in order to improve relations and “help
in the unity of Asia” creating a pan-Asian culture (Chen 2015).
Secondly, K-pop groups are an efficient tool to promote tourism in Korea because of their
international power and influence. Different organizations often team up with stars in order to
promote tourism. For example, the Visit Korea committee organized a concert to promote tourism in
Jeju Island. Korail (Korea Railroad cooperation) did a promotion together with SM Entertainment.
By the same token, Lotte Duty-free, Korea’s largest duty-free retailer, sponsored sixteen K-pop stars
in order to promote South Korean tourism. Their marketing director explained that their “aim is to
expand Korea's tourism industry through “Enter'tour'ment” marketing, a combination of the tourism
industry and the entertainment industry” (q.b. Chen 2015, pp.34).
Lastly, K-pop agencies conducted a lot of charity work in conjunction with Korean governmental
institutions. This work helps promote the talent agencies and gives K-pop stars an entry into the local
market. It is essentially “a form of state-sanctioned entry into new markets" (Chen 2015, pp. 33).
Through this, the government was able to control and construct their own national image, and
increase their influence, as well as push their national agenda in the East Asian region (Lie 2012).
However active or passive Korea’s government has been in the success of K-pop, it is clear that
important law reformations have been made which helped the music industry in Korea to flourish.
Due to political tension in the 1970s, the Korean government had banned all forms of music from, or
with connections to Japan. It also prohibited the dissemination of modern music (such as rock music)
coming from America for fear of corruption and degenerative influences. It was not until the 1990s
that American pop and rock music began to be accepted in society. This influenced the music
produced today. More importantly, the Korean government has lifted its ban of all restrictions of
Japanese cultural products by 2002 (Lie 2012). This was severely damaging to the creative market in
short term, as Korea could not compete with the influx of foreign culture. However, in long term,
these reformations were very beneficial. It spurred the development of creativity and diversity of
Korean content, which turned K-pop into what it is today (Parc, Messerlin & Moon 2016).
Nonetheless, in the 1990s, Korea was eventually listed on the priority watch list by ‘International
Intellectual Property Alliance’ due to the rampant piracy growth that came along with the
Furthermore, the Japanese market, which today is the largest market for Korean Hallyu products
(Oh & Park 2012), made a significant change in 2007. The Japanese Society for Rights of Authors,
Composers and Publishers (JASRAC), and the Korea Music Copyright Association (KOMCA),
signed a mutual agreement where both parts agree to oversee the management of copyright, which
includes both collection and distribution of royalties (“JASRAC, KOMCA Sign Copyright Deal”
2007). This was done in order to further protect copyrighted music by local legislative and accelerate
the exchange of music between both parts (JASRAC 2008). Today, some perceive Korea as a
“model for the future” with its sophisticated and rigorous copyright enforcement (Negus 2015).
Yet, simply strengthening the copyright is not necessarily healthy for cultural industries and can,
in fact, be harmful for the development of creative content as argued by Jimmyn Parc, Patrick
Messerlin, and Hwy-Chang Moon. They argue that only a well-balanced copyright regulation
between creativity and monopoly is essential in order to enhance a cultural market. This ‘loose-ness’
allowed a creative revolution as young people could easily access new music from the West
(although through piracy) and mimic it, which has enhanced creativity and allowed Korean music to
be influenced by Western pop music. By not limiting the access of K-pop and the dissemination of it
online, yet protecting revenues for the authors, it may be argued that the Korean government has
managed to implement a well-balanced copyright regulation based on K-pop’s increasing success
(Parc, Messerlin & Moon 2016). This might also be the reason for why the Korean music industry
I personally think that the government of Korea would only assist the continuous diffusion of a
specific product if it would be beneficial and representative of Korea. Therefore, assuming that the
Korean government has intentionally assisted in the inundation of the K-brand through K-pop, there
would in fact be a lot of “Korean-ness” in Korean music, which is contradictory to Oh’s proposed
theory. However, it may not be part of what is traditionally know as Korean but instead a form of
“Neo-Korean-ness” that is taking shape.
The Korean society, like most of the East Asian countries, is based on Confucian values. The
products originating from Hallyu are therefore clearly influenced by these values, which resonate
with people from other East Asian countries. This causes Hallyu products to be more relatable and
tends to make consumers think reflexively about their lives, culture, and relations. Also, the products
showcase an Asian modernity, which is highly desirable throughout Eastern and South Eastern Asia
(Chen 2015). For example, K-pop culture manages to capture the passion of the young Chinese
population and gives them what the former generation did not (Kim 2015). Korean cultural products
are arguably a fusion of the Eastern and Western elements. The consumption of Korean culture may
therefore also be a sign of ‘modernity and global cosmopolitanism’ in Eastern Asia (Chen 2015).
In 2010, CNN conducted an interview with Tae-Ho Sung, senior manager in the Korean
Broadcasting System's content business office. He explained that Korean dramas’ equal, or perhaps
even larger success compared to Western shows in East Asia, is due to the fact that Asians can relate
to it more.
Hallyu products created a niche that caters to East Asian youths who did not look to European and
This cultural unity within East Asia is also said to have nurtured collaborative efforts in order to
compete with the West as leading producers and distributors of cultural content (van der Ploeg
2016).
As Koreans and other East Asians migrated to other locations around the world, the Korean
culture became a way to stay connected to their Asian heritage (Chen 2015). South Korea is a
relatively small country with an estimated population of 50.9 million according to Central
Intelligence Agency’s website (The World Factbook 2013). However, in 2011, Koreans were the
most scattered people in the world, about 7 million across 176 countries, making the diaspora of
Koreans the second largest in the world after Jews (Ro 2011). The countries with by far the largest
Korean population (outside of Korea itself) are China (2.5 million), the U.S. (2.4 million) and Japan
(2.2 million) (Status of Korean Diaspora 2016).
This diaspora is suggested to have laid the groundwork for the initial dissemination of Hallyu
products. Korean immigrants, who tried to stay connected to their home culture, consumed these
products and further spread them. Furthermore, these diasporic Koreans have been recruited by
Korean music agencies to enter foreign markets (Chen 2015). Korean-American idols were signed by
agencies as they could sing and rap in English (Park 2013). An example of this is the K-pop group
2NE1. The four-member girl-group consists of two Korean-Americans who were used to make the
English lyrics in their songs, which have been frequently adopted, more authentic (van der Ploeg
2016).
Relating back to the previous factor, the diaspora of East Asians is argued to be a cornerstone for
What is notable is that two of the largest markets for K-pop (“Hallyu, Yeah!” 2010) is where most
Koreans have migrated, namely China and Japan. However, exactly how and to what extent this has
boosted K-pop and the popularity of other Hallyu products needs to be further studied.
It is impossible to neglect the three leading music agencies in Korea as a large factor in the
success of K-pop. In 2014, Korea was the eighth largest recorded music market in terms of sales.
However, 50 percent of SM Entertainment’s total sales were generated abroad, making the foreign
markets extremely valuable (Parc, Messerlin & Moon 2016). For agencies to compete both locally as
well as globally with more major music industries such as Japan and the U.S., staying relevant to the
foreign markets and attracting new consumers is not an easy task. Even though there has been an
increasing interest in Korean music, K-pop still has to overcome language and cultural barriers while
competing with local products in respective markets. In order to avoid market irrelevance, Korean
music agencies implemented ‘cultural technologies’, credited to SM Entertainments founder Soo-
Man Lee, as the system to produce, market and spread their products. This system is applied for K-
pop to compete and suit the local markets (Chen 2015). This section will further explain how this
strategy differentiated the Korean music industry with the rest of the center markets and how they
managed to compete with local markets. It will also explain how Scandinavian countries have played
a role in creating the K-pop phenomenon. I have conducted an interview with Pelle Lidell in order to
further examine how Korean music agencies collaborate with Scandinavian countries (in particular
SM Entertainment’s collaboration with Sweden) and to give a more comprehensive perspective on
how SM Entertainment work.
Korean music belongs to a type of musical globalization where there has been a new global
division of labor created between the actual production of music and the dissemination of it. This
division of labor is what Ingyu Oh labels as G-L-G (Global-Local-Global) music market in his article
“The Globalization of K-pop”. The G-L-G music market refers to the process of using a global
product/service (G), localizing it (L), and then distributing it again globally (G). For example, in the
past, Japan exported vinyl LPs with American pop music to America since they could produce it
with high quality for a low price. Still today, European talents are going to America, especially to
New York and Hollywood, in order to produce and release music and enter the big lucrative market
(Oh 2013).
Therefore, there are three procedures to take into consideration while examining the recent
success of the South Korean music industry: (1) The outsourcing – G, (2) the localization process –
L, and (3) the entry of global center markets – G.
This global division of labor and manufacturing in the Korean music industry is implemented the
same way as with other manufacturers. Corporations buy and import materials, which they process in
their own local factories. Even though there is a difference in the method of manufacturing and
distribution between the entertainment industry and other enterprises, the idea and structure behind
the global division of labor and production is essentially the same. These industries need to import
material and advanced technology. Usually, center markets control even the raw materials. Similarly,
the Korean entertainment industry has outsourced music composers from center markets, the U.S.,
Britain, and Sweden (Oh 2013). Since SM Entertainment has outsourced most out of the three large
music agencies in Korea and most information available on this matter relates to them, this section
will largely focus on SM Entertainment.
Korea’s B2B strategy was enabled due to the outsourcing of global creativity. Both
choreographers, as well as songwriters, have actively been brought from overseas to help produce K-
pop’s content (Oh & Park 2012). Korea’s three major K-pop agencies all actively outsource
creativity in order to generate hits. SM Entertainment has more actively and diversely outsourced
foreign talent compared to their local competitors and has been doing so since the agency started
back in 1995 (Park 2013). On the other hand, YG Entertainment is known for focusing more on local
production (Paek, 2012). SM Entertainment’s famous pop group S.E.S. (representing the first initial
in each members’ name: Sea, Eugene, Shoo) released a single as early as 1998 “Dreams Come
True”, which harvested foreign talent (Rånes 2014). SM Entertainment has continuously built
international contacts over the years across both America and Europe. Notably, according to a
spokesperson within SM Entertainment, they have built a close relationship with Universal Music
Publishing Group Sweden (Oh 2011).
The entire notion of outsourcing is what K-pop is all about; nurturing a cultural product to be
extremely accessible and also adaptable on the global market (van der Ploeg 2016). Global
consumers have historically viewed Western, most notably the American music to be a “golden
standard by which music is evaluated” (Chen 2015, pp. 39). Korea’s collaboration with Western
artists and producers thus allows Korean music to be more credible (Chen 2015). Furthermore, it is
argued that Koreans are not creatively adept. Rather, they have developed a skill for marketing and
Karst van der Ploeg argue in his thesis that K-pop “combines genres of what is essentially
Western music styles, with some distinct Korean (arguably “Asian”) cultural elements and
commercial strategies, respectively, to appeal to an international market” (van der Ploeg 2016, pp.
19). Every creative aspect is outsourced in the industry. Songwriters, producers as well as
choreographers are enlisted to create K-pop (van der Ploeg 2016).
Park believes that SM’s success derives from outsourcing musical talent from around the world
(Park 2013). This process has been criticized for copying and simply repackaging Western music
(van der Ploeg 2016). However, outsourcing allows the Korean music industry to modify original
creative work from foreign composers through an internal process that will be explained more in
detail later. This allows K-pop to be a more global product (Park 2013).
Before the 1980s, Korea limited cultural importation, and the music industry was solely local. The
production consisted mainly of Korean trot music. This music is a stark contrast to Western popular
music as well as today’s K-pop. This made Korean music very alien to any foreign listener.
Moreover, with the limited importation and consumption of Western, a musical distance was created
between the two cultures. This caused Korean producers to be unable to develop pop production
skills in Korea until the late 1980s (Lie 2012).
Therefore, instead of simply mimicking Western music, Korean music agencies have outsourced
previously developed markets and mixed it with their own cultural components (Park 2013).
Subsequently, a K-pop production is a collaboration between multiple countries. An example of this
is the very successful Girls’ Generation song “I Got a Boy” (Rånes 2014). The song is credited to
thirty-six songwriters and fifteen producers, hailing from Korea, Sweden, the U.S., Norway,
Denmark, Netherland, Ireland, Wales, England and Morocco (Rånes, 2014).
It is possible that through outsourcing, Korea has managed to also develop local talents. When I
met with Pelle Lidell, he pointed out the large difference between Korean and Western songwriters
and producers back in 2009. He goes on saying:
If I compare 2009 with 2017 and look at all the new hot producers in Korea, they
With regards to Western influences, Lidell notes that while West has influenced Korean music,
they have made it original and are “standing on their own now” (P. Lidell, personal communication,
April 24 2017). He goes as far to say that he “feels a lot more eccentricity from music coming from
the East” even if it is produced in the West (P. Lidell, personal communication, April 24, 2017).
Korean music agencies practice outsourcing with two methods: through foreign publishing
companies or hosting writing camps. Most common is the cooperation between foreign publishing
companies and A&Rs like Lidell. They receive a wide repertoire of demonstration samples (demo)
of music before discussing which songs they wish to acquire for their artists. Once a demo is
selected, they notify the foreign producers who will then send the instrumental version and the
recorded vocals in acapella to the Korean agency. The Korean agency can then adjust the song to suit
their performer. Since outsourced producers do not necessarily speak Korean, there is a process of
rewriting lyrics to Korean and fine tuning the production to fit an entire K-pop group and its image.
This process may range from four months to over three years. Therefore, when Western songwriters
and producers write K-pop, it is essential to write songs that are compatible with the Korean
language. Dsign Music’s (a Norwegian record label that has produced number of hit songs for SM
Entertainment) CEO, Robin Jenssen, told the Korean Herald that compared to when they write songs
for English-speaking artists, it is absolutely crucial to write a melody with more syllables. This is
necessary for Korean agencies to be able to tailor the song for the Korean language (Oh 2011).
The second method requires more resources and thus cannot be applied by smaller music labels in
Korea. As SM has created a large network and possess ample resources, they are able to host music
camps called “Fantaisia”, which Pelle Lidell helps to arrange (Park 2013). Through these camps, SM
is able to give more detailed guidelines to assist songwriters in creating their desired music. It is an
opportunity for SM to have songs tailored for a specific artist (Oh 2011). In October 2013, Lidell
organized along with SM representatives a “Fantaisia” camp, which brought together twenty-one
composers hailing from Sweden, Norway, England, and Germany. With twenty-one composers, SM
received twenty-one different tracks, which were all exclusive for SM Entertainment. These camps
span over four days where they make music over the entire period. Each night the group is split up
However, there is a strong cultural hierarchy in Korea, which governs the music production and is
important to consider when creating K-pop music. In order to successfully write a song for a Korean
agency, writers cannot create content on their own terms. When Korean agencies outsource material,
they look for products that fit a specific artist. Therefore, it is important for writers to follow the
guidelines given by these agencies that follow a top-down structure in order to control its cultural
content (Rånes 2014). These guidelines often require songs to be upbeat and dance-friendly since K-
pop has a big emphasis on choreography and music videos. These songs also have to follow the
current trend around the world. Korean music is therefore commonly created through a formulaic
hybrid of demands and markets trends. In comparison, the Western traditional form is solely based
on musical and cultural premises (SVT 2012, Rånes 2014). Pelle Lidell appreciates the clarity from
the Korean agencies and compares working with Korean music labels to Japanese ones, stating that
he “could never get [his] head around J-pop and what the Japanese wanted” (Russel 2012).
In a 2012 episode of the Swedish culture show “Kobra”, which was broadcast on Sveriges
Television (SVT), they discussed K-pop and how Swedish musicians make music for the Korean
audience. In an interview with the Swedish production trio Trinity, who have written many
successful K-pop songs, they also mentioned that they like the clarity from the Korean briefs.
They give us a reference of how they want the rhythm, of which song the lyrics are
supposed to resemble, giving us a bunch of songs they want the sound to resemble.
While a Western brief can be more like ‘Send us hits’ (SVT 2012).
The Swedish songwriter Sarah Lundbäck-Bell also expresses the focus of creating dance friendly
music for the Korean agencies.
We try to see how it feels to move to the music [when writing]. We also add these
breaks in the music, which they need for their videos because it is a very important
This set formula for creating music is a part of cultural technology which is the blueprint invented
by Soo-Man Lee through which K-pop is created and made unique. Cultural technology and its
application and result in K-pop will be further explain more in the next section.
By the same token, if a demo is not up to given standards, it will simply be buried in a catalog of
unpublished tracks, and not be published (Rånes 2014). SM, for example, collects around four- to
five- hundred demos every year from foreign composers (S.Y. Kim 2016). A medium sized company
has a total catalog of demos close to one thousand songs. Only a few of which will actually be
released for public consumption. Demos that live up to an agency’s demands will eventually be
repackaged for the Korean market, often accompanied by a dance and music video (Rånes 2014).
SM’s outsourcing strategy has evolved throughout the years with a large growing network of
people from all over the world. This business network could in part be credited to Lidell (Park 2013).
He was introduced to SM Entertainment through his fellow coworker and friend, Hayden Bell, after
SM requested to get in touch with someone from Sweden. Lidell was kind enough to let me conduct
an interview with him. A Google search on ‘Sweden K-pop Production’ will yield a majority of
articles that refer to Pelle Lidell. Lidell’s role as an A&R is to find songwriters and producers and
sell their songs to music acts. Working together with an international group of songwriters, his roster
sold over 10 million K-pop records in total between 2008, when he first began working with SM, and
2012 (Russell 2012). He has pitched songs to some of K-pop’s most famous acts such as TVXQ,
BoA, Girls’ Generation and many others. Explaining the reason behind his collaboration with SM
Entertainment, he stated:
They asked Hayden, who in Sweden is the person to meet? Hayden told them it’s
Pelle at Universal.
I [Pelle Lidell] asked them [SM Entertainment] what they wanted from me and
they told me: we need hit material and great songs (P. Lidell, personal
communication, April 24, 2017).
So why Scandinavia? The trend in Korean music has been to create music with fast beats. It is
As noted in the introduction, Sweden is one of the countries that export more music than it
imports along with the U.S., the U.K. and more recently, Korea. It is impressive that Sweden has
managed to be a major influence in the world of pop music despite the country’s small domestic
market. What makes the case of Sweden unique is how the country has managed to sustain its
success over such a long period of time. Global Swedish pop music first stemmed from the success
of the Swedish pop act ABBA. Until today, the band’s music can be heard in public areas.
Additionally, in 2012, ABBA sold a total of 400 million CD records worldwide, which is equivalent
to the sales of The Beatles and Michael Jackson. Today, Sweden has renowned music producers,
such as Max Martin, working together with the most famous Western pop stars (Lee 2012). This
would be why Korea turned its outsourcing focus partially towards Northern Europe. Pelle Lidell
told The Wall Street Journal:
Koreans study world markets thoroughly… At one point, something like six singles
in the Billboard Top 10 were produced by Swedes. That's why they approached me
(Russell 2012).
Sweden had built a reputation, thanks to Max Martin, Dennis Pop, and others, that
in Sweden we are hit-makers. We can make hits and produce great music (P.
Lidell, personal communication, April 24, 2017).
Also, William Pyon, co-founder of Xperimental Entertainment, noted that the trend for
outsourcing Scandinavians was possibly stimulated by Max Martin and his team’s work with high
profile pop stars like Britney Spears (Oh 2011).
When I myself asked Lidell why the Korean agencies were so keen to collaborate with Swedish
songwriters and producers he answered:
I asked them, why do you like to work with me? They said, ‘when we work with
Scandinavians, and especially Swedes, you listen to what we say and you analyze
it. Then, you come back with a product based on our requests and have added
something that makes it even better. And also, you are honorable businessmen.
They say we deliver on time and we deliver great quality. The Americans have the
groove but they think we do so as well. However, we also have the melodies and
the hooks. That is the Swedish way of writing music, we write one hook but there is
always room for more. We are humble, come on time, and work hard. We have a
strong work ethic, which impresses them. In this way, we get work, and they keep
coming back. Now, after nine years of distributing, we send them [SM
Entertainment] a new song every week (P. Lidell, personal communication, April
24, 2017).
Furthermore, the show “Kobra” draws parallels between Sweden and Korea to try and explain
why Sweden has become one of Korea’s main hit suppliers. Both countries’ music industries share a
common notion of picking up global trends, repackaging them and creating an end product that
appeals to many within their cultural sphere (SVT, 2012).
Even though Korea first initiated collaboration with Scandinavian countries, both Sweden and
Norway are eager to keep nurturing the relationship. The latter countries have domestically small
Up until now, China has been untouched and shut off. Almost no records have been
sold in that enormous, potential market. We have got a head start, as we have
already been active and successful in Asia the last two years (Rånes 2014, pp. 37).
This is why the Norwegian music label Dsign, follows the trends of the Korean market very
closely (Oh 2011). Lidell agrees with Jenssen and further details the focus of the Western music
industry. “US, Europe, North America, this is ‘worldwide’, maybe 1 billion people. That is the
whole market”. He goes on explaining; “Look at Asia, China with 1.5 billion people, India 1.3
billion, Indonesia 300 million1…. These are sleeping giants”, referring to the rapidly growing middle
class across Asia (P. Lidell, personal communication, April 24, 2017).
Additionally, the fees paid to songwriters are also higher in Asia as compared to the West. Pelle
Lidell tells me that the mechanical license is 20-30 percent higher in Japan compared to Sweden, and
is the highest in the world. With a growing number of potential consumers in the heavily populated
Asia, a market with also larger returns, the America market is becoming less of a priority for some
Scandinavian production teams (Rånes 2014).
This is why Lidell believes that the Asian market will overtake the Western one day in terms of
value.
Everything depends on the Chinese and Indian market. They have a growing
middle class, which are the most important customers. If no war breaks out or as
long as North Korea does not lose it, I would be surprised if the East Asian market
was not the biggest in… well in how many years only God knows, but long term….
Everyone wants to get into the Chinese market (P. Lidell, personal communication,
1
In 2016, China had a population off 1,37 billion people, India 1,26 billion people and Indonesia 258 million people (The World
Factbook 2013).
Moreover, Norwegian writer, Brian Christer Nebb Rånes, argues in his master thesis that what
attracts Norwegian songwriters and producers to the Asian market is that it is easier to penetrate
compared to the American one. He claims that domestic artists and producers dominate the
American market (Rånes 2014). To what extent this statement is applicable can be argued,
considering Swedish producers’ widespread success in the American market. It should also be noted
that like the case in America, domestic artists dominate the Korean market as well. In Korea for
example, Lidell mentioned his surprise when he discovered how little Western artists matter there.
Koreans want the Western sound tweaked with its own touch.
However, Pelle Lidell’s vision of the music business is global. Instead of focusing solely on one
market, he thinks that both Western and Asian markets should be utilized in order to give his
songwriters a platform. This gives producers and songwriters an increased opportunity for
establishing themselves within the industry. Thus, it is my view that the Korean market enables
larger opportunities, rather than being more penetrable than the American one.
Despite the global dissemination of K-pop and the possibilities of entering the Asian market as
discussed previously, the Global industry still disregards Korean music, as American music is, yet
today, commonly perceived as the golden standard. “This is based on complete and utter ignorance.
People do not know or understand”, Lidell tells me when he explains that people are puzzled by his
decision to work closely with the Asian market. He explains that there is a sense of cultural
superiority in the Western pop industry that disparages Korean music and views it as being
underdeveloped.
Korea is ahead in many aspects… Design, architecture, music, their eye for details.
They do not do anything halfheartedly. Their perfectionism. I love it.
I have never seen such a 2.0 company [SM Entertainment] in the world… When
people like me come here and see this, we start to understand. They know how to
attract the fans… [We start to understand] how to promote music in the 21st
century (P. Lidell, personal communication, April 24, 2017).
Due to the fact that the Korean music industry has been so actively outsourcing, it has been
widely claimed that rise of K-pop was derived from a cultural hybrid between the West and Korea.
Karst van der Ploeg discuss the potential Westernization of Korean music in their article. K-pop
has frequently been accused of being Western pop music simply repackaged to appeal an Asian
market. Even though it is undeniable that K-pop has Western influences due to its close association
with Western producers and songwriters, the Westernization of K-pop is still widely debated. Some
claim that K-pop’s success is due to its Westernization. Since American products are too culturally
foreign for the Chinese market, K-pop offers an Asian filter for Western pop culture products.
Koreanized versions of Western pop music would act as a substitute for Western products by
creating an imaginary Asian product, which could more easily appeal to an Asian market. K-pop is,
therefore, a reinterpretation of Western commercial music, and Korea is the bridge that mediates
between West and Asia (van der Ploeg 2016). This would suggest that K-pop is, in fact, a cultural
hybrid between West and Korea.
However, Karst van der Ploeg argue that one cannot state that K-pop is simply an Asian filter for
Western music. He notes that not every aspect of K-pop is entirely determined by the West. In fact,
K-pop is an amalgamation of global influence and elements. Even though K-pop has been created on
a Western pop basis, it contains other influences as well. It is argued that there is a cultural fusion
taking place within Eastern Asia alongside growing American influences. Therefore, Karst van der
Ploeg suggest that there is “a hybridizing globalization process going on, creating unique
articulations of cultural modernity, as global (Western and Asian) influences are combined with local
influences” (van der Ploeg 2016, pp. 21). This argument concurs with the proposed theory that there
is, in fact, nothing Korean in K-pop. Instead, K-pop is a blend of various cultures and can be referred
to as a hybridized global product.
How K-pop differentiates itself from Western music instead of simply mimicking it will be
discussed in the following section.
It is important to note that the global division of labor and manufacturing does not guarantee the
success of a product. For starters, it is difficult to compete with the dominating center markets of
So how has this been accomplished by K-pop? The talent agencies are the ones behind Korea’s
unique system, with SM Entertainment as the pioneers. Cultural technology is the guidelines by
which SM began cultivating their trainees, known as trainees, and make music discussed in previous
section. This system has become the blueprint through which most agencies raise their trainees to
become future idols. By applying this blueprint, the Korean music industry has managed to create a
different and attractive localized product (Seabrook 2012). The three major agencies have a
systematic market management system, which gives them control over their trainees’ careers. They
share the same core idea of educating their trainees, in specialized training systems, which are often
compared to schools (Chen 2015). In an interview with SM Entertainment back in 2013, they stated
that they “find talent, train talent, and produce talent. [SM] is the only company in the world to do
that” (q.b. Lee 2014, pp. 78).
To then create a unique and appealing localized product, Ingyu Oh argues that K-pop agencies
have a three-part strategy: Voice-dance coordination, physique, and numbers.
It is important for idols to demonstrate expertise in the entertainment field in order to satisfy
consumers. By investing heavily in the recruitment and development of their trainees, top
entertainment industries in Korea function like venture capital firms. This process is unique to Korea.
Agencies scout new talented aspirants either through auditions or K-pop cram schools. Cram schools
have become large industries in themselves as interest in K-pop has flourished exponentially and
many younger Koreans aspire to become K-pop stars instead of opting for the conventional academic
route.
Interest in these cram schools has most definitely spiked following the rise of Hallyu 2.0. At “Def
Dance Skool” in South Korea, the number of students increased from four hundred in 2006 to one
thousand students in 2013. Also, in a survey conducted in 2012 by the Korea Institute for Vocational
Education, being an entertainer was the most popular choice of career by Korean primary, middle,
and high school student, alongside teacher and doctor (Choe 2013). By 2015, 21 percent of all pre-
teens in Korea wanted to be K-pop idol, thus, making it the most popular dream career (Benjamin
2015a). Young hopefuls practice and wait for their chance to impress one of YG, JYP or SM
Entertainment who regularly pay a visit to these cram schools in order find future K-pop stars. The
Agencies look for new young trainees and as soon as one has been discovered, agencies offer
long-term contracts with music labels to aspirants, some even as long as thirteen years. Once signed,
these trainees undergo rigorous training, which includes vocal, dance, language, and even acting
lessons for at least five hours a day in addition to their regular school hours. Talent agencies also
conduct image management training and “long-term image strategies to maximize the success of
their talent” (Chen 2015, pp. 35). They provide sexual education to their trainees in order to manage
their sexual temptations that come along with fame in order prevent future scandals (Chen 2015).
These contracts do not necessarily guarantee that a trainee will debut as a K-pop star. They
instead give talent agencies a large pool to pick young aspirants from when forming a group (Oh
2013). On average, one in ten trainees will be casted in a K-pop act (Seabrook 2012). SM
Entertainment, for example, receives 300 000 applications across nine countries every year (Salmon
2013). Just to construct one girl group, they screened one hundred hopefuls, who were selected from
their pool of 300 000. Nine members were eventually selected from the group of one hundred. These
nine girls had to undergo seven years of training before eventually debuting as the girl group
commonly known today as Girls’ Generation (Chen 2015).
Admittedly, these contracts are controversial with many speaking out against the harsh training
process. Some even argue that these are slave contracts since the agreement is extremely long term
and trainees are required to work very hard without any guarantee of one day debuting. Moreover,
even if a trainee manages to debut, the pay they receive tends to be very low compared to the group’s
total revenue.
The Korea agencies rebut the claims of critics, stating that their program is hardly any different to
other cram schools that specialize in areas such as golf, soccer, and mathematics. They also highlight
the fact that they pay for the education of their trainees, which other institutions do not do. They
reason that in order to recoup training costs of their idols, the salaries that these artistes receive will
consequently be reduced. Also, the severity of their training routines is a means of preparing them
for future stardom (Victoria2 2013). This system forces young trainees who all dream of becoming
K-pop stars to work very hard from a young age.
Nonetheless, the agencies even maintain their control over inaugurated artists (Chen 2015). The
2
Certain authors go by usernames and full name will, therefore, not be stated in cases such as Victoria, Airi., Beansss, Hania. In these
cases, username will be noted in the bibliography.
Hwa-Young Lee of BOYS24 was for example released from his agency CJ Entertainment &
Media Music Performance Division. They terminated his contract since a scandal blew up after he
was caught insulting fans (Kichi 2017). Also, Sungmin Lee from SM Entertainment’s boy band
Super Junior, has been accused of ruining the band’s image ever since his marriage in 2014. After
the news broke in June 2017 that he would be returning to the band after 2 years of military service,
fans have demanded the expulsion of Sungmin from the group (mkim93 2017, Beansss 2017a). To
date, there is still no resolution to this situation.
On the other hand, it can be argued that it is reasonable for agencies to have such strong influence
over the personal lives of their idols as negative news stories surrounding stars can affect agencies
economically. For example, in 2015, it was revealed that Suzy, a singer from JYP Entertainment’s
girl group Miss A, was in a relationship with the widely popular Korean actor, Lee Min Ho. JYP
Entertainment’s stock prices, which had earlier gone up in the same month, dropped about 5 cents at
the end of the day (Herman 2015). Furthermore, after rumors that YG Entertainment’s Park Bom had
been smuggling drugs into Korea went viral in 2014, YG Entertainment’s stock prices fell
significantly. Over the course of a month, their stock prices declined by approximately $8.50 (kafox
2016). Whether other external factors contributed to the decline of stock prices remains inconclusive.
What more is that Soo-Man Lee’s first successful artist, Hyun-Jin Young, back in 1989, was arrested
for drugs just prior to reaching wider recognition. This sparked Soo-Man Lee to initiate this firm
control over idols to prevent these instances (Seabrook 2012).
Moreover, idols also possess restricted creative freedom. K-pop groups are created to portray the
image that is predetermined and closely monitored by the agency. Their content is supposed to
enhance their image. This inevitably limits artist’s freedom to express his or her own creativity. The
music is regulated by the agencies who, in many cases, do not allow idols to participate in the
production process (Zaykova 2016, Hania 2015). They adapt the images of K-pop groups to resonate
with the maturity of their fans. For instance, Girls’ Generation, debuted in 2007 with their song “Into
the New World”, which showcased them singing about teenage dreams while wearing school girl
uniforms. In 2009, they sang about their first love in their hit single “Gee”, while wearing colorful
Korean K-pop groups manage to gain global attention partially because of their physical appeal.
Both male and female idols in K-pop share idealistic features such as a slim and tall frame coupled
with feminine looks and cute facial expressions. Ingyu Oh claims that this is a result of a “long
process of evolution or mutation (or simply through cosmetic surgeries)” (Oh 2013, pp. 404). He
even goes as far to say that Koreans “look much sexier and trimmed than their competitors from
other countries” (Oh 2013, pp. 403). Oh adapts a very ethnocentric view, which is problematic since
whether someone’s looks are appealing or not is very subjective and hard to put in comparison with
people from other origins. Considering that many K-pop idols today are from other countries, as
previously mentioned, it is even harder to claim that Koreans would be sexier or more trimmed than
foreign K-pop stars (who are also very popular among consumers). However, looks do play a major
part in the construction of K-pop today, by which these stars captivate mostly young Asian and
Western female fans (Oh 2013).
The Korean society is known for having a very high beauty standard, to the extent that plastic
surgery is widely popularized and even encouraged. Several agencies place more emphasis on
recruiting attractive looking people. However, many trainees and idols across all agencies in Korea
undergo plastic surgery either before or after debuting in order to fit the ideal beauty standard (Yu
2014, Pak 2015, Hoi 2013, Hellokpop Community 2014). Even during their development as trainees
in academies, they go through regular fitness training as well as both skin and other beauty therapies
(Oh 2013). This has caused K-pop idols’ looks to strike a chord with their audience.
However, this standard of beauty differs very much from how beauty was perceived in traditional
Korea. The notion of plastic surgery strongly contradicts with the Confucian philosophy. According
to Confucianism, one's body is a precious gift from one’s parents. It is something that should not be
desecrated. Some would even refuse to cut their hair or fingernails in order to abide by this teaching.
Historically, Korea valued a rounder and chubbier appearance. During the 1980s, the most popular
idols were not skinny or fit like the ones gracing the screens today. They were significantly chubbier.
Through these examples, Lie argues that the standard of beauty has changed so rapidly and to such
an extent that it has lost touch with what is essentially ‘Korean’. Therefore, Lie suggests that there is
nothing Korean in K-pop (Lie 2012).
Even though the Western music industry releases pop acts as groups as well, there is something
comparatively peculiar about K-pop bands. By Western standards, music groups usually do not
exceed more than four to five members. While there are cases where K-pop groups adhere to that
formula, it is very common for a group to transcend those numbers. Many famous K-pop groups
today consist of nine to twelve members. Dr. Shin Dong Kim at Hallym University in Korea, was
asked to explain why this strategy is commonly implemented in Korea. He points out three key
factors for why Korean agencies use this approach. Firstly, it is about practicality. “Musicians are
running on terribly tight schedules… With a large number of performers, you can meet the demand
with more flexibility. When someone is sick or leaving the group, the management company can still
do the show with less risk.” Through this, agencies relieve themselves of leaning too heavily on one
idol to be responsible for promotion. They can also keep their schedule going in the absence of an
idol (Rachelle D 2014). As much as Korean agencies want to have big stars out of commercial
interest, they do not want to create a situation where one idol becomes indispensable for the label
(van der Ploeg 2016).
The second reason is that it enables agencies to target several markets at once. “Members of large
groups can re-package themselves into small groups or even a soloist, and eventually make the group
much more diverse… They can cover a wide spectrum of fan demands from fast dancing to slow
ballads.” This is practiced regularly by agencies. An example of this is SM Entertainment’s popular
K-pop group, EXO, which debuted in 2012 with twelve members. However, even though they are
one band, the group is divided into two six-member units, EXO-K and EXO-M. They both sing and
perform the same songs, but EXO-K sings and performs in Korean while EXO-M is designed to
cater to the Chinese audience and therefore sings and performs in Mandarin. In this way, they
manage to engage a wider audience while still keeping the brand name (Rachelle D 2014). This is
why it may not be sufficient to simply be talented in singing, dancing or possess good looks to
succeed in K-pop. Members are selected very carefully by agencies and in order to target a global
audience, “the ‘internationality’ of an artist has become another desirable trait” (van der Ploeg 2016,
Lastly, larger groups attract a broader spectrum of fans. “As fans’ taste and preferences are
diverse, the more a group has members, the better it can serve the fans’ tastes…. In other words, you
can find at least one or two boys or girls of your own taste from the large groups. In a sense, the large
groups reduce the risk of unpredictable fan enthusiasm” (Rachelle D 2014).
This system is truly unique to Korea even though it was initially inspired by Japan. Soo-Man Lee,
points out that this kind of system is not feasible in the U.S. and made possible in Korea because
East Asia’s cultural industries developed later.
The U.S. could not establish a management system like ours. Picking trainees,
signing a long-term contract, and teaching trainees for a long period of time, this
just cannot happen in the U.S. American agencies are hired as sub-contractors
after an artist has grown and gained popularity on their own. As a result, the
agencies only play roles of sub-contractors, and cannot make long-term
investments in singer-hopefuls. However, in Korea and Japan, whose cultural
industries developed later, agencies were free to make such contracts (q.b. Chen
2015, pp. 36).
Since entertainment companies cannot sign contracts longer than seven years with their launched
artistes, people refer to these contractual periods as the seven-year curse in K-pop. For a group to be
active throughout its seven year stint without disruptions before signing new contracts is very rare
(KpopJoA 2017). Therefore, entertainment companies in Korea utilize their idols to the fullest extent
during this period of time. Oh and Park claim that this is particularly evident through some agencies’
investments in pop acts. An example of this is how both Girls’ Generation and Kara, two girl groups
from SM, had in 2011, three live shows each over a span of twelve hours in both Korea and Japan
(Oh & Park 2012). This exploitation of idols is further evident from the rate that K-pop idols release
songs. A successful group is usually expected to release a full length album every eighteenth month
and a five-song mini album every year (Seabrook 2012).
In K-pop, they have a completely different tempo of releasing music. Here [the
West], in best case scenario, an artist releases a new album every second year.
I argue that this localization process, the culture technology it is built upon, is how the Korean
music industry manages to differentiate itself in the global market. The localization process makes
K-pop unique and helps attract new consumers. It is a method designed to cater to fans. By
implementing this system, entertainment companies have nurtured a unique image and reputation for
themselves. Since human error is inevitable, companies enforce strict policies to prevent situations
that could potentially be destructive to their reputation. When examining K-pop blogs on the
Internet, the idols themselves act like products living out the fantasies of their fans. This has been
possible through the cultivation of idol images. Scandals could potentially harm these fantasies as it
shatters the illusion that the idol belong exclusively to the fans. By keeping stars single and scandal
free, companies mold their stars into the model of an ideal boy-/girlfriend. Fans are thus able to live
out their fantasies of one day attracting the attention of their ideal types (Airi. 2014, Nabeela 2012).
To begin with, the Korean domestic market is large and cannot be overlooked. In 2014, Korea had
the eighth largest domestic market in terms of recorded music market sales in the world (Parc,
Messerlin & Moon 2016). However, since 1998, the Korean music industry has been focusing a lot
of its resources on entering foreign markets (Park 2013). The primary target markets for Korean
music have been Japan and China. More recently, there is a significant increase in exportation to
South East Asia (Chen 2015). Korea has had the most success in the world’s second largest popular
music market, Japan (Park 2013). K-pop’s success abroad keeps growing. During the first three
quarters of 2015, SM made a 41 percent increase of $30 million in profit while its total revenue grew
by 14 percent to about $200 million. SM announced that this growth was due to increased revenue
from the foreign markets of Japan and China. SM Entertainment collected $10 million from China
alone during the second quarter, which was a 110 percent increase compared to the previous year
(Kang 2016).
When entering foreign markets with cultural products, there are several factors one needs to
When it comes to cultural products such as K-pop, it is argued that removing cultural odor is
essential in order for consumers to adopt cultural products. Consumers, who are gradually becoming
more global minded, can then inscribe own personal meaning to these products. It may also create a
shared experience among different cultures, thus, creating a common pan-Asian culture that is
desired by many East Asian consumers. However, some people claim that retaining cultural odor is
necessary in order to differentiate products and connect them to the origin (Chen, 2015).
In order to enter foreign markets, there are four different methods to position one’s products. They
are more commonly known as modes of global market entry: exporting, strategic alliances/joint
ventures, licensing and foreign direct investment (Chen 2015). Korea actively utilizes three of these
strategies today in order to market products aboard. As most of my information is based on SM
Entertainment’s activities, I cannot say that these practices are applied by all agencies, including the
big three. However, since K-pop has had wide success across all the same markets, it may be
assumed that they share a similar approach to the subject matter.
The only strategy not applied by Korean labels is the foreign direct investment. Foraging direct
investment implies that industries open offices or factories directly in target markets in order to
control distribution and production. In order to use this strategy productively, one needs to have good
insight on the local market (Chen 2015). Pelle Lidell briefly explains why SM Entertainment have
decided not to apply this approach:
If you want to enter the Chinese market early, and you do as Warner [Music],
Sony [Music], and so on have done. They open offices in Hong Kong, Shanghai,
Beijing and do you think that will work? You need a big player within who works
on a governmental level…. There are more than sixty cities in China with at least 1
million citizens. To then build an infrastructure as a non Chinese company, it is
impossible.
This is why SM instead focuses on strategic alliances/joint ventures. Lidell goes on explaining:
In this manner, SM enters into a strategic alliance/joint venture with Alibaba. Strategic
alliances/joint ventures take place when two or more firms cooperate by sharing risks and profits so
as to enter international markets. This strategy is implemented by some K-pop agencies in order to
distribute music and find new local talent (Chen 2015). Just as Korean agencies have outsourced
center markets, they actively engage local distributors to distribute their products. Korea has worked
with companies like Alibaba in China and Avex in Japan to disseminate their products overseas (Oh
2013). Today, YouTube is the largest distributor of K-pop and Avex in Japan is the second largest
(Oh & Park 2012). This strategy is also implemented through collaboration between foreign and
local Korean artists. Korean agencies have been arranging collaborations with local stars, especially
with China, as a means to enter its lucrative market (Chen 2015).
The second mode of entry implemented by the Korean music agencies is exportation. Compared
to the collaboration between foreign and local artist mentioned before, it is more common today that
talent agencies recruit young aspirants from other countries, teach their trainees foreign languages,
and promote and export them as a part of a Korean pop act. This method has, according to Chen,
proved to be more organic. Instead of having a contrived collaboration, they construct a globally
targeted K-pop group (Chen 2015).
SM began cultivating idols suitable for target markets since the early 2000s. In order to localize
products, SM started educating trainees in foreign languages. Singing the songs in the local
languages has facilitated certain groups to enter foreign markets, especially in K-pop’s largest
market, Japan (Lee 2014, Chen 2015). As K-pop has continuously grown and spread, they have
contracted foreign artists directly from China, Japan and Thailand, in order to penetrate respective
target market (Parc, Messerlin & Moon 2016). The popular girl group F(x) is a good example of this.
This group consists of five girls with heritages from China, Korea, Taiwan, and the U.S. They were
branded as “the girl group of Asia” and had intentions of becoming a global K-pop group. Another
example that generated much buzz was when JYP Entertainment’s boy band 2PM recruited an
3
As of June 2017, Alibaba had a market value of $360 billion (Jing 2017).
Therefore, in order to further allow Korean acts to penetrate foreign markets, Korean agencies
have to focus on educating trainees in foreign languages such as Chinese and Japanese to enhance
their performance in these primary markets. This method enables K-pop groups to overcome
language and cultural barriers and facilitates their entrance into foreign markets successfully (Chen
2015). Lidell explains that in East Asia, “people do not want Rihanna’s [American pop singer] new
album. They can enjoy the music, but they want to see their own local stars singing in Mandarin,
Korean or Japanese” (P. Lidell, personal communication, April 24, 2017). This would suggest that
the removal of cultural odor is necessary for the widespread dissemination of K-pop. It also implies
that the success of Korean music is due to a cultural hybridity adapted by K-pop.
However, this strategy is unsuitable for the American market. JYP tried to launch one of its most
popular artists, Rain, in the U.S. during the 2000s. Compared to the reception Korean idols received
in Asia, Americans adopted an ethnocentric view, viewing the West as the golden standard. Rain
never managed to establish himself as an artist in the U.S. after he was labeled as unauthentic and
accused of simply mimicking Western music. The cultural difference between how Korea and the
West produce music is too great for K-pop to establish itself in the American mainstream market.
Along with foreign musicians, Americans feel that the music is overly produced and hence, takes on
an artificial quality. The Korean agencies saw music as too much of a product. Even though K-pop
might be a niche, it is very difficult for it to breakthrough in the West (Negus 2015, Salmon 2013).
Chen states that the mode of exportation is the most used method to sell products in foreign
markets by Korean entertainment companies (Chen 2015). 15 percent of all K-pop music revenue is
collected through exportation to foreign markets. Exportation is the traditional B2C strategy. It
allows agencies to sell the products (merchandise, concerts, albums) to their consumers directly in
foreign markets through a local entity (Oh & Park 2012, Chen 2015). However, direct exportation to
local countries is gradually becoming replaced by B2B strategy, including strategic alliances and
licensing, which is the third and last mode of entry (Oh & Park 2012).
This shift from B2C to B2B neither maximizes profit nor guarantees revenue. Instead, it reduces
investment risks for Korean agencies as previously explained (Oh & Park 2012). Licensing implies
that a cooperation allows products to be sold under their brand, yet, it is not run by the cooperation
itself. Instead, companies allow their brand to be used by a local entity and collect license fees (Chen
2015). This appears to be a method that is rapidly gaining traction as agencies collect revenue from
licensing agreements by signing copyright deals with a second party. More of how this is practiced
It is easy to assume that in order to further nurture the growth and success of K-pop, agencies
simply need to launch more bands and produce new music. However, this is not entirely true. Korea
offered cheap music streaming services to combat the problems with illegal downloading. Still today
the prices have been kept low because of the apprehension that illegal downloading will rebound.
Thus, a track collects only $0.25 from subscriptions based services, which has to be divided between
the artists, songwriters, producers, and the agency. One million downloads will not even cover the
cost for a music video and the prevalent fear of piracy has kept the prices down. To make up for the
meager local revenue, the Korean musicians turn their attention to foreign markets in order to make
up for the low domestic income (“Top of the K-Pops” 2012).
In order to generate more revenue from music, the biggest focus in foreign markets is concerts
(Lee 2014). Korean acts sell out venues all over the world today. A clear example of the wide
success of K-pop concerts is when YG Entertainment’s BigBang managed to sell out the 50 000-
seated Tokyo Dome, something which only a handful Japanese acts have ever managed to do (Chen
2015). Also, BigBang’s concert at the Staple Center in Las Vegas 2015 was one of the top ten largest
grossing concerts in the world that year (YG family 2015). The K-pop group H.O.T.’s concert in
Beijing in 1999 is claimed to be the introduction of the exportation of Korean concerts (Chen 2015).
SM alone had over 2.1 million attendees to their concerts between 2010 and 2012 (Lee 2014).
Between 2013 and 2016, over six hundred K-pop concerts were held in Japan. This figure is three
times more than in Korea. During this period, more than 1200 concerts were held outside of Korea.
Most of these concerts were hosted in Japan, China and the U.S. (Benjamin 2016).
Both the domestic and international success of live performances might be a result of the intensive
training and growing demand for visually appealing idols. The synergy between vocal, dance, and
appearance has created large opportunities for live stage performances (Parc, Messerlin & Moon
2016).
Besides concerts, agencies frequently arrange fan meetings as a method to introduce new acts into
foreign markets. These events, compared to concerts, are usually smaller in number of attendance,
ranging from a few hundred to some thousands of fans. Fan meetings are used to soft launch music
acts and have been especially successful for SM entertainment (Chen 2015, Lee 2014). As these fan
The final method of maximizing revenue from music is album releases in physical format. With
the technological advancements of digitalized music and mobile platform providers leading the
circulation of recorded music, it is widely argued that music albums are being replaced by playlists
on mobile platforms (Negus 2015). The focus is shifting toward releasing singles instead of full-
length albums (Guttenberg 2013). However, even though Korea is the leading market for digital
music, physical albums sales have surprisingly increased over the past decade. In 2012, Korea saw
for the first time in four consecutive years, a decline in music revenues. This was because of the
collapse of the Korean social network site Cyworld. However, unlike the global market’s negative
trend in the sale of music in physical format, the Korean market saw growth in that year in physical
sales and has been doing so since. (“The Curious Case of the South Korean Music Market” 2013,
“Key Recording Industry Trends in 2014” 2015). The Korean way of selling physical albums is to
package the albums as merchandises. They release several versions of an album, all which makes for
attractive collectibles for the fans (Lindvall 2013b).
Why do Koreans sell so well? Because they package their albums as something the
fans would want. They understand their fans, something which Western labels do
not…. It is very consumer friendly. They cater to their fans. That is why they keep
selling a large amount of physical albums. Because they identify the consumers’
needs and requests…. It is because of their way of packaging (P. Lidell, personal
communication, April 24, 2017).
K-pop albums are unlike the traditional CDs that are commonly released. The music is instead
bundled with everything from collectible photo cards to photo books, all packed in a luxurious
package. Moreover, they release several versions of each album. In 2013, Girls’ Generation and
Kara, released multiple versions of one album, each featuring a different member as the cover. Girls’
Generation had in 2013 nine members, and it is typical for an album from the group to be released in
at least five versions. Since albums have become desirable collectible items, fans often buy all the
various albums (Sanchez 2017b, Lindvall 2011, Lindvall 2013a, P. Lidell personal communication
However, in order to further maximize profits, Korean agencies began diversifying their business.
The shift to Hallyu 2.0 signified the diversification of Korean cultural products. Thanks to the
widespread success of contemporary culture (K-pop), traditional Korean culture (Hangul [Korean
script], Hanshik [Korean food]) has managed to gain attention across the globe (Kim 2015). The aim
for diversifying is to exhaust the company’s own assets thus, maximizing profit from every product.
Agencies try to fully utilize every band and K-pop idol. Today, scholars like Moon-Haeng Lee claim
that what is most interesting about SM entertainment is its diversification model they employ to enter
foreign markets. This is what SM Entertainment refers to as 360 degree business strategy (Lee,
2014). This is also what Lidell told me when he explained the Korea music industry’s success:
We [people who work in the music industry business] wish to capitalize and earn
money from music. How does one do that? It is not as simple as selling music. It is
the whole package all around. They [SM Entertainment] know everything about
this, 360, 100 percent. They do this a lot better than the West (P. Lidell, personal
communication, April 24, 2017).
The three big entertainment industries in Korea are most commonly known for the music and
artists they release. To combat the low streaming revenues from music, agencies implemented the
One Source Multi Use (OSMU) strategy to diversify their business. In order for this strategy to be
implemented, idols have to reach a higher level of stardom.
The original concept behind OSMU was to understand how to utilize various fields and genres
and create additional value for cultural content. The successful implementation of OSMU is the key
to creating a strong brand identity. It also maximizes additional value for cultural products. A brand
identity is cultivated through brand equity and content equity. The brand equity is managed through
active marketing decisions, which are made in order to cultivate a unique image and create a more
favorable and stronger identity among consumers. If this is done successfully, the value of the brand
increases (Kim 2012). I argue that K-pop’s brand identity is cultivated through the localization
process: filling a niche with its unique features and creation of desirable idols.
Content equity is where the OSMU strategy is applied. In order to add further value to a cultural
product, it is exploited in various fields and genres. An example of a well-diversified cultural product
Both SM and YG actively implement the OSMU strategy and diversify their businesses as much
as possible (Lee 2014, YG Entertainment n.d.). According to Lee, SM’s end goal is to export other
various Korean cultural products, such as food, tourism, fashion, and other retail areas through K-
pop.
SM Entertainment’s main areas of activity, besides music and live performances, are enforcing
the portrait rights of idols as well as merchandising (Lee 2014). Due to the idols’ clean and innocent
image, many K-pop stars are used in various placements, such as commercials, television shows, and
movies (Salmon 2013). SM Entertainment signed copyright deals ensuring revenue for everything
connected with their products but also for picture rights in Japan. In Professors Moon-Haeng Lee’s
article, it is stated that this deal cost SM Entertainment $240 000 but has in time, brought in a total
revenue of about $43.5 million. Notwithstanding, the period of time SM took to generate this profit
margin is not clearly stated. Nonetheless, it cannot be denied that this deal ensures high revenues.
Even if a Korean show featuring contracted idols has subpar ratings, agencies will still make profit
from portrait right royalties because of the idol’s popularity (Lee 2014). Many K-pop idols are thus
also active as actors. In 2015, several members from SM Entertainment’s popular boy-band EXO
featured in movies. At least four members of EXO will appear in Korean films in 2016 (Herman
2016).
Agencies also allow their songs to be showcased in commercials, both domestically and
internationally, in hopes of introducing their music to an international audience. In 2012, TVXQ’s
song “Catch Me” was used as the opening song for the American broadcasting station ABC’s
popular talk show “Live! With Kelly and Michael” (Lee 2014). In a 2014 Microsoft advertisement,
2NE1’s popular song “I AM THE BEST” was used as backtrack promoting Microsoft’s new laptop.
BigBang’s famous song “Fantastic Baby” can be heard in a 2012 episode of the popular American
TV show “Glee”, and it also played throughout the official trailer for the Hollywood movie “Pitch
Perfect 2” (Benjamin 2015b, “K-Pop Song Featured in TV” 2016, KoreanWavesMedia 2014).
It is also very lucrative for companies to collaborate with K-pop stars. By collaborating with K-
pop acts that have large fan bases, such as SM Entertainment’s EXO, or JYP Entertainment’s Twice,
there is basically a minimum amount of sales guaranteed since at least 5 to 10 percent of fans can be
I have been to SPAO [a clothing brand Super Junior is advertising] because I like
SPAO; have bought glasses from the shop 2PM is advertising. Sometimes, I just
visit those stores even though I do not have anything to buy. I just go to see the
posters, pictures, and products at the store (q.b. Oh & Park 2012, p. 390).
Companies also produce merchandise due to K-pop’s large public appeal. By releasing a product
with a popular K-pop group printed on it, its value inevitably rises and these items often sell out
rapidly. The French jewelry and fashion brand, Agatha Paris, managed to sell out an EXO themed
suitcase almost immediately after it was launched, despite the rather steep price of $300. Also, the
Korean electronics company LG collaborated with Twice to launch a Bluetooth speaker, which sold
out within fifty minutes after it went up for pre-orders. For this reason, these popular bands are
valued at approximately $8.7 million each (Sanchez 2017a)
This modern B2B model of sales is what major Korean agencies are applying more frequently
(Oh & Park 2012). However, the B2C model is still heavily applied. What Korean agencies have
started to do is to diversify their businesses to other fields. Both YG and SM are actively expanding
their business. YG has, for example, their own modeling agency, fashion brand, cosmetic brand,
restaurants, and even golf academy. SM has entered the gaming industry, launching phone games.
They also have a travel agency (J.H. Kim 2016). SM Entertainment has entered the television
industry and own their own production company. They create documentary series following idols
from their training days to present day (Lee 2014). More impressively, SM has its own merchandise
store in downtown Seoul where fans can enjoy an EXO Oreo Cheesecake at the cafe, buy chocolate
shaped as their favorite member from Girls’ Generation, dine at luxury restaurants, or take pictures
that looks like one is sitting beside an SM Entertainment idol (Lindvall 2011, SVT 2012, Beansss
2017b). Lidell praised SM’s approach:
It [SM Entertainment] is like a mini Disney. They are building a fan base. I have
never seen better merchandise in the whole world of pop (P. Lidell, personal
communication, April 24, 2017).
This is what appears to make the Korean music industry unique in the world. The diverse fields
that Korean agencies work within allow them to maximize profit through OSMU and consequently
create desirable products for the fans. Lidell emphasized how SM really understands how to reach
out to their customers.
They [SM Entertainment] have the third largest [most subscribed] YouTube
channel. A music label from a relatively small country like Korea. That is not
simply given to you, you create that. They have created that through understanding
their fans. They cater to their fans with right products, music videos, merchandise,
concert tours…. They always serve their fans (P. Lidell, personal communication,
April 24, 2017).
It does seem as if the strategy of the Korean music industry and a large part of its success is due to
their ability to produce desirable products and cater to fans. Every aspect from creating a group, the
music, to the merchandise is all planned out in great detail.
After the financial crisis in Korea during the mid-1990s, the government was intent on rebuilding
the image of Korea. The goal of establishing Korea as a soft power was actively pursued through
financial support and legal changes that enhanced the Korean cultural market. In order rebuild their
economy, Korea’s central government made efforts to enhance their status as a soft power. This laid
the foundation for the first part of the Korean Wave, Hallyu 1.0, in the late 1990s. Across both China
and Japan, middle-aged women started consuming Korean dramas. This fueled the demand for more
Korean products across East Asia, thus, precipitating the second stage of the Korean Wave.
Hallyu 2.0 saw great progress in Korean popular music. This was made possible due to four main
factors. The advancement of technology (most notably the launch of YouTube in 2005), the effort
from the government to keep establishing themselves as a global soft power, the diaspora of Korean
people, and the cultural similarities across East Asia.
The government made significant changes in regulating the Korean copyright, which was
decidedly more flexible before the success of K-pop. It should be noted, however, that the previous
leniency allowed Western music to influence the local market, which played a major part in shaping
the music coming from Korea today. By enforcing strict copyright regulations, Korea managed to
become a leader in music streaming services and while generating sizable revenue.
Without the rise of SNS, K-pop could not have achieved the level of success that it has today. By
simply uploading the music to YouTube for free, entertainment companies in Korea have made their
content easily accessible to the masses. It also facilitates and encourages content sharing.
Additionally, the cultural similarities between countries in East Asia enabled Korean cultural
products to attract consumers from various markets. These countries subscribe to the Confucian
ideology, which is a theme that resonates throughout Korean cultural products. This makes Korean
products especially relatable to the Chinese and Japanese. Moreover, Koreans are the second most
diasporic people. This has helped Korean cultural products to spread across the globe.
What has been important for the further growth of the Korean music industry is the differentiate
their product from global competitors, which is in large part credited to cultural technology, the
blueprint designed by SM Entertainment’s founder Soo-Man Lee, from which K-pop is shaped
today. Furthermore, in recent year, Korean agencies diversifying their business practices into new
fields have been crucial in order be able to successively grow.
Furthermore, what the Korean music industry has done in order to further expand its reach and
influence is to diversify their business into various fields, based on their popular acts. This has been
an important aspect of the agencies’ business management since the revenue collected from
streaming services in Korea is very low.
By shifting from a B2C business to a B2B business, Korean agencies have prioritized safe, stable
and steady profit gain instead of taking risks. This has allowed them to enter foreign markets, which
accounts for 50 percent of SM’s entire revenue today. Agencies apply the OSMU strategy to make
up for the low revenue from streaming music as well as to maximize the profit from their sources.
Though creating licensing agreements with other companies, agencies collect revenue from picture
rights of idols and bands. The Korean music industry has managed to become one of the few
countries in the world to export more music than they import.
The ones behind the unique Korean system are YG Entertainment, JYP Entertainment, and SM
Entertainment, the three main agencies in Korea with the front-runner being SM Entertainment. The
Korean music industry practices a G-L-G system where the localization system is unique to Korea
and the process by which the industry manages differentiate itself.
This practice is shaped by cultural technologies. By signing long-term contracts with young
hopeful aspirants, the idols are nurtured and eventually presented as products. They have to fit a
concept/model that is given to them. Idols always have to live up to a certain standard of the perfect
boy-/girlfriend, to allow fans to live out their fantasies. This prohibits K-pop stars from falling out of
line which is why they undergo rigorous training over a long period of time. A small mistake could
harm the agency financially and cost an idol his or her career. However, young people still sign these
contracts even though they cannot be guaranteed a career or even much money. These contracts are
The focus and near obsession with physical appearance in Korea has also been called into
question. According to several scholars, what gives Korean entertainers an edge is their looks. It has
become very important to look good and today, many Korean idols and trainees undergo plastic
surgery in order to enhance their competitiveness in the industry.
Furthermore, K-pop launches a majority of their acts as groups instead of individuals who both
sing and dance in perfect synchronization. This is why Korean agencies requires producers to write
dance-friendly music, which will be a vital tool when producing captivating music videos. It is not
uncommon for these groups to obtain as many up to twelve members. More than being a guarantee
for an agency to not be too dependent on a single individual, it further allows bands to adhere to their
tight schedules should a member fall ill. Groups may also attract a wider spectrum of audience as the
probability of finding one member appealing increases with the group’s number.
Unique to the Korean industry is how they produce bands specifically targeted towards a market.
Agencies frequently recruit young people from target markets and regularly publish one album in
two different versions. One sung in Korean, and the other in the target market’s local language.
In order to expand to foreign markets, Korean agencies have utilized three modes of entry;
exportation, joint venture/strategic alliances, and licensing. East Asia is the largest consumer of K-
pop. Japan along with China are the target markets.
The main exportation activity is the hosting of concerts. Yet, possibly the most important mode of
entry for the global diffusion of K-pop has been agencies’ collaboration with labels in local markets.
Through establishing strategic alliances with labels in foreign countries, such as Avex in Japan and
Alibaba in China, Korean agencies have managed to tap into the local markets. Agencies allow the
local labels to distribute and collect revenues locally while sharing profit. This is a safe method for
agencies to establish themselves in foreign center markets since they are provided with preexisting
infrastructure to disseminate the products. Ultimately, licensing is gaining traction as Korean
agencies are constantly diversifying and growing. Thanks to a firm copyright law and collaboration
with local entities, agencies can collect revenue from pictorial rights, streaming fees and
merchandise. Popular artistes are commonly casted in various product placements and several idols
frequently star in movies or TV-shows. This ensures collectible revenue, and the amount depends on
the idols popularity. Also, other industries commonly use idols or bands as a means to promote a
To enter foreign markets, especially the Japanese market, the removal of cultural odor has been
essential. Recruiting young talented people from target countries, and also educating trainees to sing
in Mandarin and Japanese, has facilitated acts in establishing themselves in these markets. By
removing the cultural odor, K-pop adapted to local target markets, making it more competitive.
Finally, Scandinavians have been active in the development of K-pop. Through the G-L-G model,
Korea has heavily outsourced center markets in order to create a more accessible and global product.
By collaborating with center markets, K-pop hopes to attain more credibility. Korea invested
extensive resources to outsource Scandinavian music producers and writers because of their large
success on the global scene. The Scandinavian way of writing music conforms to the Korean market
very well. Scandinavians write music with many hooks and have great focus on the melody, which
matches K-pop’s dance and choreography orientated music style.
Sweden belongs to a select group of countries that export more music than they import. With a
history of successful musicians within the global market, SM Entertainment contacted the Swedish
A&R Pelle Lidell who has given numerous hit songs to them. 80 percent of all K-pop is produced
and written by foreigners today, most of whom hail from the U.S., the U.K., and Scandinavia.
Through legal reformations during the 1990s and early 2000s (lifting bans on foreign pop music
and copyright), the foundation of Hallyu, as well as the growth of SNS since 2005, Korean music
managed to develop and reach out to its consumer base today. By the efforts of Soo-Man Lee’s
cultural technology, Korean agencies cultivated idols who resonates with people’s desires. In order
to create quality music, agencies began outsourcing center markets for songwriters and producers.
This is how K-pop has become so successful across many countries. However, a major part of the
Korean music industry’s revenue is due to its diversification method.
As a result of the agencies’ strategy of outsourcing center markets, their unique ways of creating
desirable idols and products, their business diversification strategy, and their active use SNS, the
Korean music industry managed to grow into one of the largest recorded music industries today.
Whether K-pop’s success is due to “cultural hybridity” or the lack of Korean-ness may still be
debated. After analyzing the data of my research and writing this thesis, I lean more to the theory of
Interview questions:
How do you work differently when finding K-pop songs compared with Swedish/American?
You mentioned in previous interviews back in 2014 that you meet many who question Your
cooperation with Asia, why was it so and is it so yet today?
K-pop and Asian music have gained many followers today even in the West. Could this potentially
damage the Western music industry? Are they competing against each other? Is the Korean industry
stealing market value from other countries such as the U.S.?
Would it be possible for the Asian music market to surpass the Western?
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