Poaching allegations stir controversy in K-pop industry

EXO-CBX / Courtesy of SM Entertainment

"At the crux of everything is 'tampering.'"

K-pop powerhouse SM Entertainment made the statement on June 10, addressing its ongoing dispute with three members of its boy band EXO — Chen, Baekhyun and Xiumin — regarding their exclusive contracts. This is one of the latest allegations of "tampering" in the K-pop industry, where conflicts between labels and singers are not uncommon. Tampering is a sports world term referring to a team's practice of contacting athletes in rival teams to scout them.

SM is currently embroiled in a legal battle with the trio, who formed the sub-unit EXO-CBX in 2016. The singers announced on Friday that they would file a countersuit against SM after the company initiated legal proceedings to enforce the terms of their contract. Currently, SM manages EXO's group-based activities, while INB100, a label established by Baekhyun earlier this year, represents EXO-CBX and each member of the trio individually.

A feud between SM and EXO-CBX erupted in June 2023 when the three sought contract termination, citing SM's lack of transparency in financial settlements as a key issue. The clash seemed to have settled when they announced a few weeks later that they would maintain their contractual relationships. However, tensions resurfaced earlier this month when EXO-CBX accused SM of unfairly demanding a 10-percent share of the sales from their individual activities, alleging that it had not fulfilled its promises regarding music distribution fees.

SM, however, characterized the ongoing squabble as poaching. The label accused rapper MC Mong and Cha Ga-won, chairwoman of the construction company p_Arc, of enticing artists under its contract. MC Mong and Cha are founders of the music production company ONE HUNDRED, which recently acquired INB100 as one of its subsidiaries.

Cha previously denied the allegations, saying MC Mong, Baekhyun and herself are "like a family." She insisted that she simply gave advice to Baekhyun as an acquaintance when he set up his own company.

INB100 also countered SM's claim and threatened to take legal action.

"If artists receive advice from their acquaintances, seniors, juniors and collegaues to discuss their concerns, can we call this tampering?" the label said in a statement. "We ask SM to disclose its standard for tampering."

K-pop girl group Fifty Fifty / Courtesy of Attrakt

Reasons for poaching

Poaching allegations are nothing new in the K-pop universe, which often faces disputes over contract terms and artist management.

Last year, girl group Fifty Fifty filed for an injunction to suspend their contracts with their agency, Attrakt, asserting that it failed to provide sufficient financial data and neglected their health conditions. In response, Attrakt accused producer SIAHN, also known as Ahn Sung-il, of attempting to poach the members from the company. Ahn is the producer behind Fifty Fifty's "Cupid" (2022), a song that propelled the group to enter the Billboard main singles chart just 130 days after its debut.

Spire Entertainment, which launched boy group Omega X in 2021, also lodged a complaint with the antitrust regulator in January, accusing the content company IPQ and its alleged supporter Danal Entertainment of poaching the group's members. Omega X signed an exclusive contract with IPQ in July 2023 following the Seoul Eastern District Court's approval of their injunction against Spire Entertainment that sought contract termination.

Ko Jung-min, a professor at Hongik University's Graduate School of Arts and Cultural Management, suggests that the diversification of revenue streams among K-pop artists has made them more susceptible to poaching.

"For K-pop stars today, selling albums is not the sole way to rack up profits," he told The Korea Times. "There are lucrative platforms like YouTube, so many of them think they can make a fortune on their own even after leaving their managment companies."

He added, "A lot of labels such as SM and JYP Entertainment were run by their founders in the past, who boasted a close-knit bond with their singers. However, the trend has shifted today, with many companies hiring new people to pass on the founders' authority. It seems loose relationships between the new officials and the artists have also prompted the singers to become less loyal to their companies and become more susceptible to tampering attempts by those seeking quick financial opportunities."

Echoing that sentiment, Lee Nam-kyung, the secretay general of the Korea Management Federation (KMF), pointed out that so-called "brokers" can approach K-pop stars with ease under the current system. Founded in 2016, the KMF is an organization composed of the managers and companies in the pop culture field.

"Since a K-pop agency invests a massive amount of money to train and incubate idol trainnees before their debut, the first contract that the two sign is ususally more advantageous for the company," Lee said. According to reports, a label often spends more than 3 billion won ($2.2 million) to launch a K-pop group.

He added, "For the company, this is a way to recoup its initial investment. However, the brokers use this as a pretext to lure singers, telling them there are other agencies that can pay them more."

K-pop boy group Omega X / Courtesy of IPQ

Tricky nature

Poaching, however, is not only hard to define, but also hard to punish.

"If a singer insists that he simply had a talk with his acquaintance over his contractual status, can we view this is as an act of tampering? Even if we can, it is not a piece of cake to prove it legally," Ko explained.

Lee elaborated, "It is also unclear when these artists can start dicussing their contract-related issues with new agencies. Their original companies often want them to remain faithful until the very end, but the artists want to look for other homes beforehand, so that they can shorten the gap."

There are no specific laws to punish poaching, too.

"Tampering is mostly regarded as a violation of contract only," Lee explained. "Its gravity should be highlighted more."

To tackle poaching, the Ministry of Culture, Sports and Tourism unveiled a revised version of the industry's standard contract earlier this month. Initially, when artists move to new agencies, they were prohibited from "reproducing or selling similar content produced by their former companies" for one year. But the ministry extended it to three years to prevent alleged poachers from taking advantage of the singers' established fame right away.

Nevertheless, in the eyes of industry insiders, the revision still has limitations.

"It can provide some assistance, but there is a need for systematic improvements," Lee pointed out. "As I noted, we should specify the time period that the singers are allowed to discuss their contractual issues with others. If something happens before that, then we can raise tampering allegations. I also believe that there should be stronger punishments for poachers."

Ko underscored that industry insiders should grow a stronger sense of ethics.

"Ethics should come before the law," he stressed. "It is true that we need more specific laws to handle tampering, but laws alone will not be enough. That is why I believe the pursuit of fairness and transparency is needed by industry insiders, so that we can build a more favorable business environment together."