Korean Music Industry’s “Invisible Hand”

On the Origin of “The Invisible Hand”

Submitted by: Jimmie

When it was revealed late October of last year that the Korean Federation of Pop Culture and Arts Industry (KFPCAI) had sent letters to the three major TV broadcasters as well as cable channels and Internet music portals in Korea requesting that they refrain from broadcasting JYJ and selling their album, “The Beginning,” the foremost question in most Koreans’ mind was, ‘What or who the hell is this KFPCAI?’ Korean DBSK fans managed to secure a copy of the letter and submitted it, along with a request to open a formal investigation into the matter, to the Korean Fair Trade Commission.

The reaction in DBSK’s international fandom reached levels of panic due to international fans’ unfamiliarity with the structural mechanisms of the Kpop industry. And so in the chaotic realm of Twittersphere and the gossip platforms of the Internet, they grabbed any Korean fan that happened to pass by in a desperate attempt to get clear answers. Is this KFC thing a government agency? Does it have an email? How can we contact it and ask them to retract the letter? Korean fans, unable to give a straightforward answer themselves, instead tried to do the next best thing and dropped the email contacts of several related Korean government branches as well as that of the Fair Trade Commission.

If the Korean government didn’t know about the KFPCAI before, it surely does now…for the first time. Because, as it turns out, KFPCAI is NOT a Korean government agency. And if that weren’t enough to put its legitimacy under question, the KFPCAI has none of the indicators of actually existing. It has no website, no email address, no physical address, and, upon calling the Korea Central Operator, it was easy to find out that it doesn’t even have a registered phone number. Finally, it doesn’t appear on Google Maps. What can be found out about it is that it at least has a logo (a rather pretty one) and that it is some sort of union made up of the executives of the leading companies from each sector of the Korean culture industries to protect their collective interests. Undoubtedly, representatives from SM and from the main broadcasts in Korea are members.

This incident involving the KFPCAI and JYJ has forced Korean citizens to come down from the euphoric high of seeing our culture break forth as the Korean Wave back to the reality that not every aspect of this phenomenon will reflect positively on us…that we risk paying greatly if we fail now to correct what should have been corrected years ago.

In the aftermath of the Asian Financial Crisis of 1997, the Korean government extended its comprehensive structural reforms to the Korean culture industry, namely the film and television sectors. These reforms included breaking up traditional monopolies, decentralising operations, democratising the internal structures of management agencies and their investors and setting up a regulatory body in the Korea Creative Contents Agency (KOCCA) to ensure transparency and accountability. However, the Korean music industry was mostly overlooked. At the time, the Kpop industry barely had a structure to reform to begin with. Relative to the Korean film and television, Korean popular music’s history is skin deep. Most experts agree it began in 1993 with the phenomenal introduction of Seo Taiji and Boys, and so by 1997 the industry was only four years old. H.O.T had debuted and was gathering a storm comparable to Seo Taiji’s and SM was well on its way of making a name for itself, but what Korea had at the time was only the foundations of an emerging market.

Thus, in a way, the Korean pop music industry evolved as if the post-crisis reforms never happened, like an island in the greater sea of the cultural content industry. As on another famous island, adaptation and survival of the fittest is daily business here, but unlike the island made famous by Darwin this island is not a utopia of diversity but a dystopia of monotony; the invisible hand is not that coined by Adam Smith, which drives competition to generate system-wide wealth, but one that kills competition and concentrates power.

By now it is common knowledge what are the prime specimens of this sector: what is often referred to as the “Holy Trinity of Kpop”—SM Entertainment, YG Entertainment and JYP Entertainment. Of the three that make up this category, SM Entertainment (SM) is without a doubt the richest, strongest, longest running and has the most industry-wide influence. Its influence and standing uncontested in the music sector, it has started making connections in and bleeding into others: “SM Entertainment has merged with or bought out several media companies over the past couple of years, including a DVD distributor, a karaoke machine distributor, a music video channel, new media platforms, and more” (Mark James Russell, 158). And this is not including the numerous connections SM is sure to have in the industry through the good, old and wholesomely Confucian hierarchy of college sunbaes and hubaes. The end result is a fascinatingly twisted organism, of which KFPCAI is the most recent manifestation—species: cartelus genus: oligopolis.

And although it is slowly being challenged by chaebol that underwent the painful reforms of 1997, such as Samsung’s CJ Entertainment, the Kpop system pioneered by SM still dominates the scene. It is a system that even international Kpop fans by now are well familiar with, where entertainment agencies select a certain number of candidates to train for an average of two years before deciding who among them to debut. Kpop consumers have become so used to this business model that they don’t realise how inefficient it is or how the inefficiencies add up with each new idol group or singer that debuts on the market. Because out of a group of ten or so trainees only one will be judged good enough to debut, that one trainee enters her career shouldering not only the deficit she incurred in training expenses but also that of at least ten others. In addition, given the law of diminishing returns that decreases the chances of success for every new idol group (with each new idol group entering the scene, the chances of the next one succeeding diminishes a little more), the company will have to invest MORE money for a diminished chance of gaining it back. Is it any wonder that in such an environment, signing artists on to unfair contracts is the norm? It is a natural response to systemic inefficiencies.

Therefore, many are siding with SM, arguing that the content of JYJ’s contracts can’t be helped, that the costs incurred through training the trio into high-quality stars require 13 years of penury in JYJ’s salary, exorbitant exit fees, exclusive rights of artists’ songs by the company, etc. However, this in and of itself—a description of the status quo—is NOT a justification of that status quo and should not be taken as such, in the view of this writer. It is but a premise…a thesis, if you will, of which the antithesis is the laws of fair trade and the fundamental principles and rights at work, at both the national and international levels, that this country as a modern democracy is required to uphold. Now, it is up to those who truly love Korea and appreciate Korean culture to come up with the synthesis. The first step would be to extend the structural reforms of the film and TV sectors to that of Korean pop. We owe it to future youths with talent who dream of stardom.

Jeong. Ban. Hap…sang five talented and handsome individuals once. One wonders if they knew then just how prophetic their words would be.

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80 thoughts on “Korean Music Industry’s “Invisible Hand”

  1. First of all I will like to say thanks Jimmie, it’s quite informative. 🙂

    Secondly I want to say that this is an -awesome- piece of writing; I love the clincher, it is especially apt.

  2. Very hard to read, so complicated!
    But it was interesting and yuo bring some many good points!
    The system and the way it works doesn’t justify their contracts
    Uff if things could just go better but the problem is bigger than we think
    Thnk you darling, very interesting and informative

  3. Thanks again to Jimmie for such insightful piece on the kpop industry, :). Especially loved the use of O – 正.反.合!

    I truly hope that the JYJ lawsuits, FTC rulings, and media scrutiny will lead to some structural reform but cannot bring myself to expect much in terms of actual substantive change. Perhaps my deep skepticism regarding deep structural change that is painful for concentrated interests w/ high per capita stakes (i.e. SM, JYP, YG) is colored by my experience as an American where national political culture is so disingenuous and actual political outcomes (if there are any instead of continued gridlock) are consistently inadequate and disillusioning.

    Could you or anyone else comment briefly as to how responsive S. Korean regulatory agencies/gov’t overall generally are? Perhaps Korean regulators and policy makers are not as beholden to corporate interests as American ones? If you want to get bk to me later re this, please email me (it’s Diana, I sent you an thank you email yesterday).

    • I have reason to be hopeful that change will come…The right demographics in Korea have been engaged (the 7080 generation which has greater purchasing and political power, the reporters, the news, and even our President, who is now being bombarded by letters from DBSK5 and JYJ fans); enough is at stake that discussion on this is ripe; the FTC and the court have already ruled in favour of JYJ and been quite public about it; and Korea is a small country with lightspeed connectivity. You are right to be skeptical…none of the necessary reforms will happen overnight, but what is being achieved so far makes me giddy with hope ^^

      • Hi Jimmie. thanks for writing such an informative piece. i hope u realised how much help u have given to us, iCassies^^

        i have a small request..hmm, i’ve been hearing stuffs about homin being boycotted by major dbsk5 fanclubs. I dunno any koreans and the syc comment section is giving me a really hard time. I hope u can let us know the situation in korea now. has Cassiopeia crumbled? is homin being hated? what are the netizens response towards jyj or homin? the stance of the majority of Cassies? are they still keeping the faith?

        one more thing, did u read the post on allkpop about yoochun’s untitled song? the last line on the lyrics trans is ‘but i’m going to turn my back on you, because you have changed’..i rmb when you translated it, such line didnt exist. i’m so heartbroken after junsu’s tweets, what worse is the media which emphasized the 1st two tweets and completely ignored the last two tweets.

        lastly, (i’m really sorry for bugging you), did u read the reporter’s report about yoochun asking junsu why did he tweet such things..what is the tone of yoochun? was he asking jokingly? when i read the part where junsu left his seat with a stiff expression, my heart died a little. i hope there are no hard feelings btw jyj members, since we alrdy have enough dramas btw jyj and homin.

        thanks Jimmie again^^

      • @aktf
        My next op-ed will address some of those questions in more detail…and I would be highly suspicious of that allkpop translation. I never translated such lyrics and such a position would be inconsistent with JYJ’s commitment to reunite with the other two.

  4. Thank you so much
    Lovely to hear some intelligent discourse on this topic
    Are you affiliated with this blog?
    i was so down because of junsu but this has made me calm
    Hwaiting!!!!!!!!

  5. This piece needs to be translated into Korean and Japanese, more people need to be informed of the backgrounds and status quo of the Korean pop music industry before they formulate their opinions on the lawsuit. While the whole reason we gave a darn in the first place was because we are fans of these young men, what is at stake here is much bigger and much more complicated. People can certainly ignore the lawsuit and continue to support as a pure consumer of their music, but if people are to comment in any degree of seriousness about the lawsuit, then they need basic understanding of the framework and context this issue is in.
    Thank you for writing this, very thought provoking =)

  6. Pingback: The Origin of “The Invisible Hand” « jyj3

  7. Jimmie do you mind if I translate this into Chinese? Also, is there anything iFans can do to advocate for change in that system? It’s really gross.

    • Not at all. Go right ahead^^

      The best thing I think that i-fans can do right now is to educate themselves on the Kpop system and not blindly defend the companies that produce their idols. In my view, before anything else is done, it is CRITICAL for i-fans to be fully informed so they won’t be misled.

  8. Wow, lol i read this before at syc. I hope Jimmie knows her comments is blogged XD She is famous. ❤

    She should seriously make her own blog. or at least a twitter.

  9. Well written. Since I have been studying economics, I understand what you wrote in this post. So thank you for writing a comprehensive post like this. And hopefully, JYJ won’t be suffered anymore from this invisible hand.

  10. Thanks Jimmie…for standing up for our boys!….SM or whatever KFC… dirty and shameless!All Koreans know…all international fans know…but all of us feel so helpless with the ongoing things…reassure myself THE INVISIBLE HAND is ultimately not SM …but GOD!!!

  11. Pingback: Korean Music Industry’s “Invisible Hand” (via The JYJ Files) « A Flame that Flows

  12. Why, here you’re Jimmie…HUG!!. you’re such a darling, giving us so much the latest and great informations. don’t do the disappearing acts again…missed u at SYC. Don’t go anywhere and stay here cause we want to know more about what really happened in korea and you’re one of a few people who brave enough to provide us some info fr korea (many of them crumbled because of bashing drama). At least i want to know that i won’t be in the wrong side.

    Thank you Thejyjfiles. this is my new home now.

  13. I think this is disgusting T__T I didn’t know that the system is this rotten. But will SM get into trouble by creating a fake. I meant all the earlier article mentioned KFPCAI as a govt organisation, right?!

    I’m curious. :p “The invisible hand” that you mentioned, is that “the invisible hand” in Economics (which also is known as “natural forces of demand and supply” and “price mechanism”)?

    And do you mind if I translate this piece to Vietnamese?! ❤ ❤ ❤ 😀

  14. this is my new spot too ^^ hi unnies~~~i’m done with syc….i fully support jyj and i fully support homin mentally and spiritually but i’m sorry homin i cannot give sme any more money to destroy these three boys! never….this is week is been disappointing and full of anger…but i’m calm now i shall spread the jyj love even more! these boys are getting bashed for even the silliest things ><;;; i want korea music industry to change no more slaves contracts! if they want to be known for their music and not only idol groups they should reformat their whole industry…give more chances to singers who can sing like yangpa and awards show should not only be for idols! dear sme i won't let u hurt these three boys no more u can erase their existence to the public or to new tvxq fan but u know erasing existence is easy but erasing memories isn't! i won't let u touch my beautiful memories with dbsk as 5 never! i shall wait for the day they might reunite for now i wish homin best of luck =) and JYJ be strong! junsu ah do u know how much your tweets yesterday hurt me i cried cause of your tweets…our strong junsu has finally broke down but came back up faster than ever =) show the world a better u! do not fear for the future as we are here for all 3 of u!

      • i am i support all 5 but i can’t and won’t give sme a dim no more…..i support homin mentally and spiritually =) i still want the best for them, but with this shitty mess…..with sme strategy to use their artist to bash jyj? can i still keep the faith? what have i been keeping the faith for? to see five again, but that just seem to be a mindless naive dream…with all these stupid obstructions every one of them….please yunho and changmin ah please tell me what u guys feel for jyj now…even if u hate them or still love them i just want to know….i want to move on..but i’m finding it harder cause i love them all five it breaks my heart to see sm artist to bash jyj, to hear nothing from homin, to think everything is ok for homin….i just want a word from them…then mayb i can finally move on….this is not the end from sme…this is just the beginning to mess us up…i do support all 5 =) but reality is bitter and u got to choose sometimes…..and jyj needs me more now…without us fans can they still do music? can they still sing? they’re powerless while homin is being protected by two big powerful companies…and yes mayb homin is sad with all these but they moved on…being the new dbsk…getting new fans…what about the old dbsk? left gone perish…slowing erased from everyone memories but not mine! i won’t let sme take my beautiful memories of five lovely men….never….TT

      • choco, you’re gonna be skinned alive if do this type of comments in SYC.

        By the way, we have same opinion on this matter. It’s really good to know our focus, so we can move on and don’t feel apologetics in every steps taken. Just once in awhile i really love to put hot comments in SYC..damn..i couldn’t resist that am so frustrated there.

      • i want to move on i really want to but in my heart still yearn and love homin…god this is mess up TT and what is sme trying to do to JYJ! what’s next SNSD bash JYJ? Eunhyuk twitted saying junsu is a betrayer?

    • Aww chocogurl must’ve taken a lot for you to break away!!!
      *cyber hug*
      i guess i’m really lucky to be only a post SKKS jyj fan

      • u are ^^ u can move on easily…..i’m glad there’s ppl like u who try to understand if i comment like this in syc i would have been gone in one seconds…..

    • awww *BIG HUG* no wonder I haven’t seen you around on SYC 🙂 🙂 🙂 It must have been hard on you 🙂 🙂

      But now, the good thing is we can together focus and support JYJ with all we have. Seriously what happened today totally killed me inside…

      • hugs you back TT it was a difficult decision but right now i will do anything to help JYJ to win the lawsuit and i want to show it in SME faces that this korean music industry doesn’t need the old practices like slaves contracts anymore!

  15. In this agony mood, i support for what Kcassies decision to pro JYJ. The great TVXQ has lost their identity, so what are we fighting for? Obviously TVXQ HOMIN want fans to choose side for a new fandom as contrast with JYJ who want to get together with all members. Following TVXQ HOMIN act now is like trying to diminish JYJ as the other part of TVXQ.

  16. Very informative writes. I hope this fandom will be as mature as the boys in this painful process. I love Jaejoong, so i’ll follow his tattoo motto : “accuse no man”.
    i stand with you in believing that someday K-Pop industry will be change for a better system.

      • me too! they seriously fast in updates. SYC unnies are like ninjas. but i have a confession….i kinda skip through when i saw TVXQ/HOMIN etc coz it upset me. I cx bring myself to look. so i need a total JYJ post like this one and of course the new heaven JYJ3 ^^

  17. Thank you Jimmie for your informative post. It took me a while to read hahhaha. And I think we all should try to EDUCATE fans about this. Maybe then they’ll understand more about the situation now…

  18. Fantastic essay, Jimmie!

    There’s something that’s bothering me beyond the revelation of this “invisible hand” business.

    In the court injunction that was granted, it states something to the effect that SME is not to hinder JYJ or interfere in their solo activities. But isn’t this blatant interference if in fact representatives/board members/employees of SM are part of this KFPCAI group? I don’t know much about Korean law, but I know that in the US, this would be a huge violation of a court order if, of course, it could be proven that SME was a member of the KFPCAI.

    SM filing their own request for an injunction against JYJ with regard to their Beginning album and the question of management and contracts is one thing. They did that legally and through the proper channels to request relief, no matter how ridiculous and eye-roll worthy it was. But I haven’t seen anyone bring up how this breeches the initial preliminary injunction. Not even JYJ’s attorneys have broached it, at least not that I’m aware of.

    Everything is such a mess right now. *sigh*

    On another note, thanks for all of your insightful contributions and efforts. They’re much appreciated!

    • An article I’m looking to translate will address the core of your questions…but I’ll just say for now that a lot is attributed to the Confucian-based, college-alumni network of sunbaes and hubaes. This is a cornerstone of the media cartel in Korea right now. But, the article I will soon translate also indicates it reaches as far up as the court and justice system in Korea.

      • I’m looking forward to it! Thanks!

        Yeah, I can see that influence reflected in a lot of areas, not just the entertainment industry. I’m still keeping my fingers crossed for good news on the 18th!

      • Sorry to everyone who were expecting it, but I’ve been told by a lawyer colleague of mine to not do it as it gives too much information about the ongoing trial…and might jeopardise the outcome. >.<

      • aww @jimmie TT is ok ^^ as long u keep us update on how’s jyj lawsuit with sme >< i'm worried for jyj!

      • No worries! Sounds pretty ominous though. *furrows eyebrows and frowns* Eight days. I’m still crossing my fingers.

  19. Well, I’m not good at English and just understand in some parts

    But it makes me see more clearly what’s Korean music industry’s stucture is like.

    Thank you so much ^^

  20. Just want to say thanks.

    Like I belive: everything has two sides, the good and the bad. We used to see the good surface but forget there always the ugly always exist deep down!

  21. wow i can see lots of SYC readers here….hello there my friends! I miss you guys so much. I guess this place is where we belong since SYC kinda conflicted and some stans are just….you get what i mean. I thought I will never read what Jimmie have to say anymore. Thank god I find this! its so great and critical. this is my new fave place to read. Bookmarking!

  22. Amazing article
    Help me to understand alot more about the situation
    Thanks for translating anf posting this up
    This will be my favorite place to visit from now on ^_^

  23. I just found this website and it has truly made my day.
    Jimmie, you are truly an inspiration to international fans and I know I’m not the only one who is greatful to you. JYJ are so lucky to have you as a fan.
    This post is so wonderful I am re-reading it for the 5th time already.
    Thank you Jimmie, your one of the best things to happen to JYJ fandom in my opinion.

  24. thanks so much Jimmie for the translation ^^
    It’s so good to know what korean music industrys invisible hand mean
    I lol at this ‘What or who the hell is this KFPCAI?’
    That’s right , that’s ridiculous , even this stupid thing , KFPCAI that no one knows but those big three major TV broadcasters as well as cable channels and Internet music portals in Korea accept its request. Again, ridiculous , that’s all I can say, I mean all are excuses.
    thanks Jimmie, I learn many things from you & your translation ^^

  25. Gracias a facebook he encotrado este blog, muchas gracias Jimmie.

    Please I cant translate this article and “JYJ and the Law on the American Agency, Part I | The JYJ Files” to español?

  26. Hi Jimmie! I have been reading through the posts here and I enjoy them a lot. I am glad someone has finally stepped up to make some intelligent discourse on the matter, because as I see it, so many things are at stake that are beyond TVXQ fandom, JYJ, HoMin, etc. People need to understand the implications of this case especially to the young Koreans whose dreams are gonna be realized/crushed within this vicious context if some major changes are not initiated. So many theories and what ifs are circulating and of course we are all entitled to our own decisions on who to support and such, but just like you and all the others here I can’t wait for that day that we can see a positive resolution.

    Second, I hope you can write an article about how the rest of the Korean society is taking all of this. As an international fan, I would like to see where the trend is going (just to have hope, perhaps?).

    For the sake of everything that is just and right, I really do hope JYJ wins the case if only to shatter the omnipotent status of large companies such as SMEnt who have exploited so many kids and will continue to do so if not unchecked.

    Again, thank you!

  27. thanks so much for all these articles, I was wondering how you did manage to find all these informations ? and are you a lawyer/ law student because all that you wrote is so well explained and clear with a lot of references and documentations. I feel like I can really trust what you write because it really looks like you know what you’re talking about unlike some other sites or blogs about JYJ/SM/TVXQ. and you live in korea ? are you fluent in korean ?

  28. Pingback: ‘Bàn tay vô hình’ của nghành công nghiệp âm nhạc Hàn Quốc « 29blueroses

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