By Hudson Lockett
HONG KONG – K-pop may seem to be belting out winning financial tunes, judging purely by some key headline numbers. South Korean pop had a banner year in 2023, with its four largest agencies recording aggregate album sales and streaming revenues of $1.3 billion, per an estimate from Citigroup, a record high. But those same companies, including Hybe and SM Entertainment, have shed a collective 8.6 trillion won ($6.2 billion) in market value since a peak last June.
The most obvious cause would appear to be the long absence from stage and recording studio of BTS, the global face of K-pop, whose members are currently on mandatory military service for at least 18 months. Their hiatus corresponds with another reason for the share price slump: sales of compact discs started to fall mid-year.
‘BTS’s reunion next year won’t fix these issues. That will require embracing music streaming more, smoothing out release schedules disrupted by conscription, and further cultivating overseas markets like the US and Japan.’
For most of the world, the fate of an obsolete, low-fidelity format might prompt a collective shrug. But in South Korea, they’re huge: last year 80% of recorded music sales at label JYP Entertainment, for example, came from physical media, per HSBC. That’s because K-pop fans rush to buy the latest CD from their favourite idol group to boost first-week sales, the main metric of a band’s success.
On top of that, there has been an unwelcome drop-off in album exports to China.
Shipments evaporated in June last year and have yet to fully recover, Korean customs figures show.
BTS is not the only cause, though – their label, industry leader Hybe, had members of the band record solo work to be released during and after their absence. Analysts at HSBC argue the main drag is from inflation, which has forced fans to cut back and is likely to mean the contraction in physical sales in the second half of last year will last to the end of 2024.
Hybe, meanwhile, is hitting some wrong notes elsewhere. Its breakout girl group, NewJeans, is at the center of an ownership row between the company and its sub-label, Ador.
BTS’s reunion next year won’t fix these issues. That will require embracing music streaming more, smoothing out release schedules disrupted by conscription, and further cultivating overseas markets like the US and Japan. Only then can the industry make itself more bulletproof.
