Anti-graft law still affects performance industry

By Yun Suh-young

This Thursday, Sept. 28, marks exactly one year since the anti-graft law, widely known as the "Kim Young-ran law," came into effect.

The law has had some positive impact on general society, as people have been avoiding sending expensive gifts to those who are subject to the law (teachers, government officials, politicians and journalists) and reduced after-work dinners which could lead to burdensome bills.

Yet, the downside still exists, especially in the classical performance industry which heavily relies on corporate sponsorships.

Since the law took effect, companies have been laying low in terms of spending, cautious of being targeted as violators. Of the categories they reduced spending on, sponsorship of performances is one, worrying those in the industry.

Until the law took effect, performances were generally funded by corporations that acted as cultural patrons and donated money in return for tickets. However, since the law's enactment, such sponsorships have plummeted.

According to a report by the Korea Mecenat Association on a survey conducted on 686 member companies this year from March to June, the number of companies that donated last year has dropped by 18.4 percent from 609 in 2015 to 497 in 2016. The number of donations made by companies has also dropped by 5.3 percent from 1,545 in 2015 to 1,463 in 2016. This was analyzed to be largely affected by the anti-graft law as well as the fraud related to Mir Foundation, which was supposed to be using money for cultural purposes but turned out to be otherwise.

The industry is desperate for corporate sponsorships. Insiders say the classical and fine arts industries are "ones that need the most amount of support by companies or the government."

For production companies of classical performances, inviting top orchestras to the country has become more difficult than before, because it costs them at least 1 billion won ($88,500) to put on a popular orchestra concert for two days. It is impossible for the producers to complement the cost with ticket sales, because in order to meet the breakeven point of 500 million won ($44,250) per day, they would have to sell the tickets at 200,000 won ($177) per seat for all 2,500 seats. Because of this financial limitation, they have received sponsorship from companies and in turn provided 30 to 50 percent of the sponsored amount in tickets, which the companies used for inviting clients or partners.

However, due to fears those who receive the tickets may become subject to the law, companies have halted providing tickets in general, which means they have halted sponsorship.

"Korean audiences won't be able to see the world’s top-class orchestras in Korea because of this," said an industry official who requested anonymity.

This is why production companies are increasingly looking to hire lesser-known, smaller orchestras which are good value for money. They're also transforming their marketing strategies, from corporate sales to individual customer sales, directly promoting to the public on social media.

Industry experts say changes are necessary to reduce excessive distribution of free tickets and reducing free-riding audience members as well as selling expensive tickets for top performances. They also agree the law may have a positive impact, yet the financial impact on the industry still looms large.