On April 3, Billboard broke the news that Jimin’s track “Like Crazy” reached No. 1 on the Billboard Hot 100 — a first for a solo Korean artist — while his album, FACE, debuted at No. 2 on the Billboard 200. Released by Big Hit Music, one of the labels under Korean entertainment company HYBE, “Like Crazy” currently marks the best performance by a member of K-pop supergroup BTS, whose hiatus announcement last year presented a significant challenge to HYBE’s ability to forge another chart success in the United States. “Like Crazy” reached only No. 11 in South Korea, although FACE topped album charts in South Korea and Japan.
Investors took note of Jimin’s U.S. accomplishments. The following day, HYBE’s share price on Korea Exchange rose as much as 11.4% to 212,500 won ($161) before ending the day at 205,000 won ($155), up 7.5% from the previous day (as of April 17, it had risen 40%). That was the highest closing price since June 10 of last year — three trading days before BTS confirmed it would take a hiatus, worrying investors and sending HYBE’s share price down 28% in a single day. For a company with grand ambitions to build off of the success of BTS, “Like Crazy” was an important validation.
The music industry should take note, too. HYBE did with Jimin what all South Korean music companies are attempting with increasing urgency: ride the wave of K-pop’s global success by expanding outside of Korea and build up operations in the United States, the world’s largest music market. “All the shareholders want to see the ability for them to diversify [their] portfolios,” says Sung Cho, CEO of Chartmetric and newly appointed board member of the pioneering K-pop agency SM Entertainment.
Exporting is what South Korea does best. “After the Korean War, the only way to survive was to export things,” says Cho. Over the last three decades, the success of companies such as Samsung, LG and Hyundai has turned the country of 52 million into a top 10 exporter, according to the World Bank. But in recent years, South Korea has become known not just for its exports of high-tech products and manufactured goods, but as a global entertainment dynamo as well. South Korea’s music business built its economic success into a trade surplus of about $3.1 billion for intellectual property of music and images in 2021, up from $800 million in 2020, according to the country’s Ministry of Culture, Sports and Tourism. The South Korean film Parasite won a 2020 Academy Award for best picture. A year later, Squid Game became the most watched series in Netflix history, a worldwide phenomenon that racked up 1.7 billion viewing hours in its first month.
South Korean music companies have become international powerhouses by drawing on hip-hop, R&B and pop music and selling the K-pop blend of these genres back to fervent fans in the United States, Japan and Europe. But to compete globally with larger companies, the South Korea approach to the music business, and not necessarily the music itself, could be the deciding factor. “We’re seeing not only the export of K-pop bands — the boy bands, the girl bands — we’re starting to see the export of the K-pop business model,” says Bernie Cho, president of DFSB Kollective, a Seoul-based artist and label services agency. SM Entertainment founder Lee Soo-man coined the term “cultural technology” in the ’90s for his system of producing K-pop and promoting it worldwide. Other K-pop companies have adopted a similarly disciplined, systematic approach to finding, developing and promoting musicians.
The widespread music-business anxiety about the death of artist development doesn’t apply to South Korea. Western labels fight bidding wars over viral artists with instantaneous popularity or favor proven artists and catalogs, leaving the task of building an audience to artists themselves or independent labels. In contrast, K-pop companies spend years recruiting and rehearsing talent, as well as giving artists instruction in a specific approach to the music business. “Combing through social media platforms like TikTok may give us a chance to sign artists who are technically proficient as music producers or performers, but we demand more from our artists,” says HYBE CEO Jiwon Park in an email to Billboard. That means trainees work with HYBE’s training and development department to “internalize the values of autonomy and responsibility” so they can navigate the expectations put on them.
To learn the U.S. market, South Korean companies have partnered with U.S. labels to distribute, market and promote their music. HYBE has a joint venture with Universal Music Group’s Geffen Records to create a U.S.-based girl pop group. JYP Entertainment has teamed with UMG’s Republic Records to form the global girl group America2Korea, or A2K. Additionally, Kakao Entertainment’s Starship Entertainment subsidiary has partnered with Sony Music Group’s Columbia Records to co-manage marketing and promotion of the six-member female group IVE in North America.
These U.S.-Korean partnerships have also given domestic labels a chance to learn the K-pop method of A&R. To Glenn Mendlinger, president of Imperial Music, a new division of Republic Records, the JYP partnership has provided insight into “what it is to build a fandom and foster it through immersive packaging and increasing the collectability of the products.” Mendlinger is impressed with JYP’s attention to detail and ability to build storylines for their artists. “That’s why they’re so successful,” he says in an email to Billboard. “The level of care is unparalleled and unrivaled in terms of its intimacy and diligence.”
But more and more, South Korean companies have boots on the ground and control of their destinies in the United States. HYBE is the furthest along in building out its stateside operations. In 2021, it acquired Scooter Braun’s Ithaca Holdings for $1.05 billion and named Braun the CEO of HYBE America, a genre-spanning collection of artist management and record labels that includes SB Projects, Nashville-based Big Machine Label Group and Atlanta hip-hop company Quality Control, which was acquired in February for $300 million. Those deals are “just the beginning,” HYBE chairman Bang Si-hyuk said in a speech in March. He believes building in the United States will give HYBE the “strong network and infrastructure” it needs to “minimize the cost of trial and error” and attain stronger bargaining power and distribution rates relative to local companies.
SM Entertainment, the company behind such groups as NCT 127 and aespa, and Kakao Entertainment have created a U.S. joint venture and plan to acquire a U.S.-based company to expand into hip-hop or R&B, according to SM’s road map made available to investors. Kakao now owns a 40% stake in SM Entertainment, having quelled HYBE’s attempt to buy a commanding stake and control its board of directors following a break with SM founder Lee.
South Korean music companies’ do-it-yourself nature extends to tech platforms, too. While most labels depend on the likes of Meta, Twitter and Fortnite to reach fans, HYBE owns its own social network, Weverse, and JYP and SM have a joint venture with tech company Naver called Beyond LIVE that streams live online concerts. SM also owns a social networking app, Bubble, and its artists will begin building fan communities at HYBE’s Weverse in September. It makes sense in one of the world’s most wired and wireless countries, says Cho of DFSB Kollective. In Korea, “youth culture, pop culture and digital culture are one and the same in many ways.”
For HYBE, Weverse not only diversifies its business but allows it to control how its artists communicate with their fans. With the addition of artists from North America and Japan, Weverse “will serve as a gateway to the fandom market in Asia, North America and the world,” says Park. With enhancements and new services, “Weverse will seek boundless expansion beyond K-pop.”
This story originally appeared in the April 22, 2023, issue of Billboard.
