The Fetters brought by Success to Under-modernised Enterprises
The contract they couldn’t refuse as rookies
becomes thorn of contention upon earning fame
In the current entertainment system, where earnings
are not easy to come by, a ‘partnership’ model based on
understanding + distribution guidelines a necessity
The continuing conflicts between idols and their management
Lately, conflicts between famous idol groups like Dong Bang Shin Ki, Super Junior and Kara and their management companies over their exclusive contracts are increasing. The emerging consensus amongst music representatives and industry experts is that rather than blame one side or the other all efforts must be put into improving the industry’s outdated and underdeveloped business structure.
› Why reign in exclusive contracts? It is hardly breaking news that the exclusive contract favoured by the entertainment industry is causing problems. The typical contract is a 10-year long-term contract. Additionally, several of its terms that infringe upon the entertainers’ private life and human rights are also sources for problems. Another problem is the exorbitant penalty/exit fee that entertainers would have to pay to the management company to terminate their contracts, which essentially amounts to a tool for coercion that companies use to bind the entertainer to the company.
However, even given these disadvantageous terms, the majority of rookies sign such contracts without a word of complaint. Because of the fierce competition brought on by an over-supply of rookie artists, they are unable to refuse the terms of the contract. Then, in most cases, when these artists become famous their thoughts change. They start asking for terms and conditions that match their level of fame. Cases where other management companies offer better terms and lure away celebrities are also quite common.
› Why the excessive pre-debut investment? Management companies who handle the careers of singers especially exclaim that long-term contracts, high penalty fees for breach of contract, etc. are necessary to recover the costs invested during the pre-debut days. According to one industry insider, “When a rookie singer releases an album, the promotion costs related to media exposure alone cost at least 100,000 USD and at most 300,000-400,000 USD.” In the case of giant-size management companies, the pre-debut investment costs are even higher. For those who plan to have their charges enter foreign markets, they must also provide, in addition to dance and singing lessons, foreign language lessons, which only increases the time and money needed.
The problem is, even with all the costs invested, the earnings/return are actually hard to come by. Income from appearing on television shows is quite low, and the more one appears on these shows the more the costs for stylists and back dancers increase. Album and digital download sales also don’t bring in much profit. The commercials and endorsement deals that most experienced singers rely on for profit are not so profitable for rookies. One representative of a management company put it this way, “even if a rookie wins no.1 on a music programme, the money gained from this doesn’t amount to much, so for producers, even after 3 or 5 years, it’s hard to make ends meet,” and “aside from the giant entertainment companies, the majority of producers are struggling.”
› The radical solution? In spite of these risks and obstacles, a large number of producers continue to jump into the music business. It’s because of the lure of ‘daebak (explosive success)’ that comes with high-risk high-returns venture enterprises. And given the surplus of singer hopefuls, it’s not easy to improve outdated exclusive contracts or business practices. The emerging consensus amongst experts is that companies must improve their earnings distribution systems and not regard their signed singers as simply money-making machines but rather start gradually moving toward a radically updated model where singers are regarded as ‘partners’.
There are also voices expressing the need to change the current music chart system that is overly reliant on TV broadcasts and to deflate the promotion fees bubble. TV stations mustn’t simply try to comply with the promotion plans of management companies but seek out and give exposure to good quality music; similarly the public must start adopting the habit of looking for good music instead of passively accepting what’s being shown on TV shows. Digital download sites and telecommunication firms must also improve in their earnings distribution policies, and it’s a given that they must settle on a market mechanism that allows them to earn profits solely from distributing music and not from advertisements or special events. Related government agencies and the Fair Trade Commission must also be involved via regulatory and oversight mechanisms to ensure that unfairness/prejudicial activity in either the digital download market or in the content of exclusive contracts is an exception rather than the rule.
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