The aspect of the ‘SM takeover war’ became more complicated as the court sided with former SM general producer Lee Soo-man, who requested that Kakao’s capital increase and issuance of convertible bonds be blocked. As Kakao secured about 9.05% of the shares and became the second largest shareholder, Hive, which owns 14.8%, gained an advantage in the takeover battle.
The dispute between SM, which started with a capital of 50 million won in the 1990s and put K-pop on the world stage today, is viewed not only by the logic of stocks and capital but also as an essential point in opening the future of the cultural industry and K-pop. We have summarized the notable points to watch before the takeover until the SM shareholders’ meeting on the 31st of this month.
‘Suman Out’ or ‘Post Suman’
Professor Lee Dong-yeon of the Korea National University of Arts gave a presentation at a forum held on the 3rd by Cultural Solidarity and Seoul National University Asia Center Hallyu Research Center and explained the essence of this situation as “creating the global craze of K-pop.”
“Global developer capital,” which is trying to be realized as capital, collides with pre-modern entertainment production practices.” He saw it as a structural problem in that the outdated governance structure, such as the owner risk of the first generation of entertainment production, including former director Lee, had to be resolved.
The ‘teacher’ system former general manager Lee sets up, Like Planning and similar overseas corporations, to extract profits and decide everything alone is clearly wrong. However, there are many counterarguments that rather than quickly dismantling his kingdom, the best solution should be to revive the K-pop growth that has begun to decline by transforming it into an advanced production system.
In this regard, it was pointed out that SM’s current management’s assertion that if Hive takes over, SM will fall into a sub-label and its monopoly will deepen is overly exaggerated. Seo Jeong-min-gap, a famous music critic, asserted, “Three major labels control two-thirds of the world’s music market, but it is difficult to see them as harming the diversity of music.”
Acquired by Hive or Kakao? Cho Young-
In a presentation, Shin, head of SK Broadband’s management strategy group, said that the domestic music market is rapidly being reorganized from primary intellectual property (IP) to secondary IP, from creation and content to distribution and platform. It was analyzed that this situation hit the car that was switching.
He said three criteria should be used to determine which combination would create more synergy between Hive and Lee or SM management and Kakao. Possession of super IP and new planning ability, can it promote the profitability of the fandom, and is it helpful for global distribution? Looking at the current state, the combination of Hive and SM is reciprocal and highly scalable. In contrast, the combination of Kakao and SM electronic said that it seemed unilaterally favorable to Group leader Cho made the premise that “of course, it can be quite different when it works.”
It was pointed out that ‘SM 3.0’, which the current management is promoting as a response to Hive, has a relatively vague possibility of combining with Kakao and that the fandom’s planning ability to drive the American market, which is essential for increasing secondary IP revenue, seems weak.
K-pop’ exposure’ or monopoly?
Chairman Bang Shi-hook of Hive said in an interview with CNN that K-pop’s global market share is low. “First of all, increasing exposure (exposure) is important. Acquiring several labels in the US to build infrastructure is also a gesture to cope with the signs of K-pop’s decline, and the acquisition of SM is in the same context.”
Thanks to a strong and unique fandom, K-pop looks powerful, such as BTS and Blackpink, etc. going on global tours, but the foundation is fragile. This is a sense of crisis that Professor Lee and other participants in the debate sympathize with.
Chairman Bang’s remarks are to build a structure that can compete with the US or Europe by removing outdated elements and increasing the size. On the other hand, SM is fighting against the evils of monopoly and cultural diversity. Lee Dong-Joon, a Seoul National University’s Asia Center researcher, said, “Whoever acquires it is a monopoly. In the end, serious discussions about what a sustainable K-pop ecosystem will be is urgent.”
In an article, cultural critic Sung Sang-min asked, “Isn’t it possible that ‘K-style dolls’ were created by not thinking about the system, structure, or reproduction path, but only paying attention to the results and appearance?” I was diagnosed with a significant inflection point without being able to do it.”