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.