K-Pop's Global Gamble: Can It Remove the 'K'?
By Sohee Kim, Jin Wu, and Jeremy C.F. Lin for The Big Take
July 26, 2024
The K-pop industry, a $9.2 billion behemoth, is at a crossroads. Despite its global fan base, it holds a small share of the $130 billion global music market, primarily due to its reliance on physical album sales, a shrinking market segment. With limited growth prospects in South Korea, the industry is embarking on a daring shift: becoming less Korean.
Thousands of K-pop fans, clad in custom T-shirts emblazoned with the names of rookie boy band Riize, thronged the Peacock Theater in Los Angeles for their first US fan-concert. This event, a hybrid of songs and meet-and-greets for new bands, underscores the unwavering devotion of K-pop fans. Emmey Roberts, a college student, estimates spending $2,000 a year on K-pop, while RJ Hernandez, a hospitality worker, claims to spend around $6,000.
The industry's reliance on this fervent fanbase has been its strength, but it's also its vulnerability. The limited number of bands with stadium-filling appeal, like BTS, who are currently on hiatus for mandatory military service, means K-pop's impact on the lucrative concert and streaming markets remains limited.
The solution? Less Korea, more international. Almost half of the K-pop songs released this year feature predominantly English lyrics. This shift, spearheaded by BTS's creator Bang Si-hyuk, who advocates for removing the "K" from K-pop, is a strategic gamble.
Hybe, the agency behind BTS, is debuting Katseye, a US-based girl group performing entirely in English, in a collaboration with Geffen Records. Hybe's rival, SM Entertainment, the powerhouse behind Riize, is also launching idol bands with Western members for the first time.
This internationalization raises crucial questions. Is K-pop's appeal rooted in its empowering messages and catchy tunes, or in its Korean lyrics, cultural references, and distinctive aesthetic? Will overseas fans still embrace it if these elements change?
SM Entertainment believes they can achieve expansion without losing K-pop's essence. Daniel Jang and Dmitry YJ Tak, the company's co-CEOs, argue that K-pop is not a genre but a package deal: group activities, strong fandom, emphasis on stage performance, and diverse member personalities.
Their strategy involves establishing new bands in various regions in partnership with local labels. They've also created KMR, a music publishing company with over 100 producers tasked with crafting music that is both recognizably K-pop and appealing to broader audiences.
This push for internationalization represents a critical turning point for SM Entertainment. Established in 1995, the company created the first generation of K-pop stars, gaining immense popularity in Japan and China. However, by the late 2010s, they faced struggles. Lee Soo-man, the company's founder, was ousted in a boardroom coup in 2023, and internet giant Kakao Corp. acquired SM Entertainment, edging out Hybe. The deal remains controversial, with two Kakao executives under investigation for alleged price-rigging during the acquisition process.
Despite this, SM Entertainment remains focused on becoming the No. 1 K-pop company by 2025. They are launching a UK boy band in partnership with Moon & Back and are currently auditioning members for a Southeast Asia-based band.
The shift is not without risk. Debuting an idol group is a multi-million dollar investment, and the success rate is not guaranteed. The industry's reliance on physical album sales is also waning. While record sales reached an all-time high last year, there are now signs of decline, attributed to the absence of major stars like BTS and Blackpink, and a significant drop in bulk orders from China.
The agencies are looking for new revenue streams and markets. Hybe, SM Entertainment, JYP Entertainment, and YG Entertainment have all seen their shares drop since last June, fuelled by concerns over falling album sales.
SM Entertainment is pinning its hopes on concerts. They aim to increase their annual concert count to over 400 by 2025, up from 80 in 2022. This strategy is not unique to K-pop, but a more frequent concert schedule can also boost streaming as fans listen to a band's music before and after shows, and purchase merchandise.
Streaming is showing encouraging signs as well. Spotify, the global music streaming platform, has seen a 150% increase in K-pop user-generated playlists since 2021, with the US, Brazil, and Mexico leading the growth. Sulinna Ong, Spotify's global head of editorial, believes that more English lyrics will make K-pop more accessible to a wider audience.
The future of K-pop hinges on its fans. While some, like Melissa Naud Oro, appreciate the shift towards English lyrics, others, like Superfan Hernandez, remain hesitant, preferring the Korean roots of their favorite music. The industry's success will depend on whether it can maintain its unique charm and appeal to a global audience while embracing the internationalization strategy.
Ultimately, the gamble K-pop is taking is a high-stakes one. The industry is betting on a new internationalized business model that could be a make or break moment for the idol music genre.
