In K-Pop’s Quest for Global Growth, Korean Fans Feel Cast Aside

In a nightclub in Seoul, the crowd cheered when Harim Choi played some of the latest K-pop hits. But the decade-old songs, like those by 2NE1 and Wonder Girls, seemed to have a special resonance for the partygoers.

“The older songs bring us back to a time when we could simply enjoy the music, when we didn’t have to worry about the business behind it all,” Mr. Choi, a 26-year-old D.J., said.

In recent months, an unusually public and acrimonious corporate feud involving major K-pop companies has captivated die-hard fans, casual listeners, artists and industry figures alike. At the center was SM Entertainment, a K-pop mainstay whose roster of artists includes Girls’ Generation. Circling it were two suitors: Hybe, the company behind BTS, and Kakao, a South Korean technology giant.

Both companies saw the acquisition of SM Entertainment as an opportunity to expand their reach overseas.

After years of growth at home, K-pop’s future now lies outside South Korea. While the genre has fans in almost every corner of the world, the sales of K-pop’s biggest labels account for a tiny sliver of the global music market.

This effort to increase K-pop’s global appeal has excited some Korean fans but has made others feel alienated, raising an uncomfortable question: Does K-pop still need the fans at home?

“There’s a sense that the industry is targeting the West and leaving Korean fans behind,” said Kim Yoon Ho, a 36-year-old fan who lives in Seoul.

Many of today’s biggest K-pop hits are wired for an American audience. This week, “Like Crazy,” a single by the BTS member Jimin, topped the Billboard Hot 100 chart but ranked lower in South Korea.

In a statement, Hybe said its ambitions were always global and that the company “will continue to be committed to bringing content to fans around the world, regardless of culture, religion, gender or geography.” SM Entertainment said it was paying “close attention” to fans everywhere.

One of the first signs of upheaval came in February, when SM Entertainment pushed out its founder, the producer Lee Soo-man, considered the godfather of K-pop, over allegations of financial improprieties. Mr. Lee, 70, denied wrongdoing and sold part of his stake in the company to Hybe, which became the biggest shareholder in SM Entertainment.

“There have been large and small management disputes in the 30 years of K-pop,” said Lee Dong Yeun, a professor at the Korea National University of Arts. “But none as big as this.”

Sensing an opportunity to expand its roster a few months after BTS announced a hiatus, Hybe moved to increase its ownership in SM Entertainment, which has a large fan base in Japan and Southeast Asia. But SM Entertainment saw the overture as hostile and instead proposed a deal with Kakao, whose messaging and payment apps have become crucial infrastructure in South Korea but have had little success overseas.

A deal would help Kakao establish a foothold in the K-pop business and offer a chance to expand abroad, Mr. Lee said. Kakao is trying to tap the South Korean culture wave to build its international business with webtoons, games and music.

Fresh from raising nearly a billion dollars from sovereign wealth funds in Saudi Arabia and Singapore, Kakao offered $962 million for a 35 percent stake in SM Entertainment.

Hybe accused SM Entertainment of “illogical behavior” and sought a court injunction to block a deal with Kakao. SM Entertainment gave employees a 15 percent raise to get them in line behind a merger with Kakao. Dissenters were pushed out.

In the end, Kakao’s deep pockets won out. Last week, it announced it had taken a 40 percent stake in SM Entertainment, whose shares had doubled in value during the takeover battle. In a statement, Kakao said SM Entertainment would make the decisions about artists.

To fans, the maneuvering was a display of how the companies’ profit-driven motives trumped the interests of artists and supporters, with global interests taking priority over local record sales and concerts.

“The fight has created a situation where you can’t just listen to K-pop comfortably,” said Mr. Choi, the D.J. “It’s as if the artists are chess pieces to them.”

Lee Sangmi, 36, a longtime fan of SM Entertainment’s groups, said she was wary that her favorite groups might “have less freedom” after a merger. Kwon Yeyoung, 17, a high school student who runs a YouTube fan channel, said she was waiting to see how album covers, the artists’ fashion, the mood of the concerts and merchandise design would change. Others fear more K-pop songs would be written entirely in English.

The anxiety hasn’t been limited to Korean fans.

“I’m still nervous for Kakao to run the show. I don’t feel like music is their top priority,” said Deena Marshall, 36, who lives in Washington. “Who knows, maybe they’ll surprise us.”

To be sure, some fans expressed excitement about potential innovations. Kakao founded a girl group that exists only in the metaverse and generated more than 20 million views on YouTube.

Before K-pop grew into a multibillion-dollar cultural juggernaut, labels were funded by individual producers. Mr. Lee, a former folk singer, started SM Entertainment in the 1990s with the equivalent of about $38,000. Other powerhouses in the industry, like YG and JYP, had similarly humble beginnings.

In the following decades, the companies courted investors and sold shares to the public. Eventually Kakao and Naver, another big South Korean tech company, also started backing music and video ventures, in part to reach customers overseas.

Among K-pop labels, Hybe has been one of the most successful abroad. In 2021, it bought Ithaca Holdings, which manages Justin Bieber and Ariana Grande, for about $1 billion. In February, it acquired the Atlanta rap label Quality Control Music. These deals have helped Hybe more than double its sales, three-quarters of which now come from outside South Korea.

Overall, about 90 percent of all K-pop listeners live outside South Korea, according to K-Pop Radar, an industry tracker. And as the industry jostles for more fans overseas, some fans say the labels are no longer focusing on what made K-pop so successful.

“A hobby that was supposed to be fun became more of a source of worry,” said Kim Su-yeon, 19, a student in Seoul. “The changes have stressed me out.”

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