by The Fifty Fifty incident has already expanded into a social issue beyond the realm of the K-pop industry. It is unknown how the legal judgment will be, but the public has already decided on this issue. Public opinion does not change even if additional facts or positions are revealed.
There may be individual differences in assessing the current situation, but many controversies are ongoing, and doubts and facts need confirmation outside the courts. Nevertheless, most of the points can be confirmed through court rulings.
Therefore, regardless of legal conclusions, examining related issues in more detail in the context of K-pop is still necessary. The law firm Barun, the legal representative of the members, gave a total of three reasons for termination of the exclusive contract: ‘violation of obligations to faithfully provide settlement data such as the omission of revenue items,’ ‘violation of members’ obligations to manage their physical and mental health,’ and ‘lack of ability to support.’ insisted. From the perspective of the K-pop idol industry, the historical context of the related dispute is examined, and how this case is connected to and different from it.
The name and darkness of the exclusive contract and settlement system Since the standard warranty does not stipulate the agency’s investment costs for raising and managing idols and the risks considered, a conflict of interest between cost recovery and risk bearing may occur in the subsequent settlement stage.
The problem of omission of revenue generation and the existence of the obligation to disclose the details of the settlement were publicized in November 2022 when singer Lee Seung-gi raised a problem with his agency Hook and terminated the contract, saying that the music usage fee was not settled. Because of this, political discussions to protect the rights of celebrities continued. An amendment to the Popular Culture and Arts Industry Development Act, also known as the Lee Seung-gi Act, has been proposed. The bill passed the National Assembly Culture, Sports, and Tourism Committee on April 21, 2023.
The amendment included provisions requiring pop culture and arts planning agencies (entertainment agencies, etc.) to provide accounting details and remuneration to be paid regularly, not only when requested by their artists, but also at least once a year. As a result, expectations were formed that the asymmetry of information, which made it difficult for pop culture artists to demand fair remuneration, would be resolved. In addition, the amendment will likely require more transparency in managing investment funds and profit accounting for small and medium-sized agencies.
Usually, the settlement issue is not raised at the beginning of an idol’s activities. One of the main reasons public opinion toward Fifty Fifty is not reasonable is that it needed to be more timely rather than raising the settlement issue itself.
From the point of view of profit, it seems irrational for Fifty Fifty, which has been infrequent in domestic activities, to raise an issue at this point. It is also the basis for the criticism that 55 Fifty, which needed more domestic activities, avoided years of profit-generating activities that existing large agencies endure. It is not normal to ask for payment even though it has only been seven months since its debut.
Usually, exclusive contracts are based on a settlement ratio that fluctuates depending on the situation at the time of signing and the contract period. However, because of the more evident settlement method, profits may be omitted, or costs may be excessively charged.
In some cases, the contractual rights are transferred without the consent of the contracting parties, or the settlement ratio is distorted due to financial investment joint venture agreements. Such problems can cause cracks in mutual trust between agencies and idols. In the case of Fifty Fifty, what Fifty Fifty demands from the agency is a settlement, that is, confirmation of the source of the investment money, not payment.
In this case, it is essential to clarify how much the investment was. This is because the agency can calculate the expenses to be offset from the profits when the actual settlement is carried out later.
