As EXO Baekhyun, Chen, and Xiumin speak up on their “slave contracts” with SM, the grim reality of the Kpop industry also becomes a hot topic.
In the Kpop industry, “slave contracts” refer to long-term and unfair contracts between idols and management agencies. Typically, exclusive contracts in this realm are supposed to last for 6-7 years. However, some companies disregard this and extend the contracts at an unreasonable level.
The sad reality of “slave contract” in the Kpop industry
Awareness of the “slave contract” concept became prominent in 2009, after 3 former members of TVXQ (DBSK) filed a lawsuit against their management company at the time, SM Entertainment. Specifically, Kim Junsu, Kim Jae Joong, and Park Yoo Chun sued SM Entertainment over their excessively long contract and unfair profit distribution.
According to the members, their 13-year contract period was essentially a lifetime commitment. When considering the mandatory military service period, the contract could extend up to 15 years. Therefore, the contract would only end when they retire. Moreover, the penalties for terminating the exclusive contract also put artists at a great disadvantage.
Controversies surrounding this issue lasted for a long time, but ultimately, the court sided with the former TVXQ members. However, it remains a fact that Kim Junsu, Kim Jae Joong, and Park Yoo Chun were severely affected at the peak of their careers, as ongoing legal disputes hindered their image and later activities. Nevertheless, the trio’s victory changed the Korean entertainment industry as a whole, since new regulations and laws, which aim at protecting artists from unfair contracts, were introduced.
In particular, in 2010, the Korea Fair Trade Commission (KFTC) released a new law, requesting that the maximum term for an artist’s contract can only be 7 years. In 2017, KFTC also added clauses that lower the compensation fees paid by the artists in case of early contract terminations.
However, despite the standardization of exclusive contracts, disputes continue to occur in the Kpop industry. These disputes mainly revolve around contract terms and profit distribution between the artists and management companies.
In 2022, nine members of LOONA requested the suspension of their exclusive contracts with Blockberry Creative due to unfair terms. However, only 4 members, Hee Jin, Kim Lip, Jinsoul, and Choerry, won the first lawsuit, allowing them to terminate the contract and pursue independent entertainment activities.
Meanwhile, the 5 remaining members, Haseul, Yeojin, Yves, Olivia Hye, and Gowon, had their claims rejected and continued to operate under Blockberry Creative. This situation pushed the group to the brink of disbandment, causing disappointment among their fan community.
Another dispute occurred between singer-actor Lee Seung Gi and HOOK Entertainment, his former management company. The conflict was first revealed by Dispatch after receiving evidence provided by the artist, wherein HOOK Entertainment was accused of withholding all the profits from Lee Seung Gi’s music activities throughout his 18-year career.
Furthermore, CEO of HOOK, Kwon Jin Young, was accused of abuse and even making death threats against artists. In the end, Seung Gi decided to terminate his exclusive contract, citing the company’s violations of the agreement between the two parties.
Most recently, 3 members of EXO, including Baekhyun, Xiumin, and Chen, unexpectedly spoke out and requested the termination of their contract with SM, just ahead of EXO’s comeback. It is notable that this is far from the first time SM has faced contract disputes with artists.
According to the legal representative of Baekhyun, Xiumin, and Chen, after signing the exclusive contract for 12-13 years as EXO members, the company requested them to extend the contract to 17-18 years, using unreasonable coercion. Moreover, during their activities under SM, the artists only received payments based on unilaterally prepared data by the company. Despite multiple requests for transparent copies of settlement reports, the company maintained the stance of not providing those.
In particular, lawyer Lee Jae Hak, the legal representative of Baekhyun, Xiumin, and Chen, highlighted an unreasonable clause mentioned in SM’s exclusive contract. According to the clause, the company would determine the required album releases during the artists’ activities. If the album release target is not met, the exclusive contract with the artists would automatically extend until the goal is achieved.
The automatic extension of contracts without a maximum time limit has fallen in line with the exploitative nature of a “slave contract.”
In response to the accusations from the artists, SM Entertainment claimed that the three members unilaterally requested for contract termination due to the influence of “external forces”. The management company also emphasized that their biggest goal is to protect EXO and the fans. Therefore, they would take strong action against baseless rumors aimed at dividing and affecting the unity of the group.
However, the majority of fans expressed anger and disappointment with SM’s treatment of their talents and instead showed support for the artists’ contract termination.
The respect for fairness
Experts point out that during the transition from trainees to famous idols, the likelihood of disputes arising due to changing circumstances is high. Therefore, the terms in exclusive contracts for artists need to be improved.
According to cultural critic Jeong Deok Hyeon on Yonhap News, in the stage when trainees are preparing to debut as idols, they may accept long-term contracts of 12-13 years because they are highly dependent on the management company.
However, once artists reach a certain position and have a large fan base, similar to the case of EXO, terminating the contract or leaving the company does not significantly impact their current careers or reputation. On the contrary, for the company, losing their “golden goose” will have a significant impact on their business operations, as well as their image and reputation in the competitive entertainment industry like K-pop.
The critic concludes, “Fairness in business matters is crucial. The success of artists should be fairly rewarded. If this condition is not addressed, they can only improve the situation by leaving the company and pursuing solo activities.”
In reality, artists and management companies have a symbiotic relationship. They exist and develop based on the benefits that each party brings. Success is created through mutual trust and respect. This is believed to be one of the formulas that contributed to BTS’s miracle.
The group’s remarkable career was achieved not only because of the talent and individual charisma of each member but was also partly thanks to Big Hit Entertainment – the management company that supported and accompanied BTS throughout their 13-year journey and continues to be closely connected in the future.