A Case Study on K-Pop : The Hip Hype Reality of the Korean Wave
The Asia Society Korea Center’s Monthly Luncheon returned on Tuesday with a fascinating insight into Korean pop music from President of DFSB Kollective, Bernie Cho. Mr. Cho specializes in providing digital media, marketing and distribution solutions to over 350 Korean Pop music artists and was kind enough to speak at the Korea Center on “A Case Study on K-Pop: The Hip Hype Reality of the Korean Wave”. Mr. Cho first came to Korea in 1993 with the goal of pursuing his graduate studies at Yonsei University, however through a chance meeting at a Seoul nightclub ended up working on the launch of Korea’s first music channel and his career in the music industry began. His talk focused on how the successes of the Korean music industry have stemmed from the frustrations those within the business have faced and how through diversification and glocalization they were able to flip these challenges and turn them into opportunities.
Mr. Cho explained how in 1993 the Korean music industry was very different to the one we see today; 70% of music in the country was international pop music with Korean trot and country music making up the other 30%. Fast forward to 2002 and K-Pop, as it was now known, accounted for 70% of the market and Korean artist BoA was dominating the charts both in Korea and Japan. Today, Korea is ranked as the 8th largest music market in the world, was the first country in the world where digital sales outsold physical records and is the 4th largest net music exporter behind the U.S, U.K and Sweden. Mr. Cho talked about how these accolades came as a result of hard work and sweat born out of frustrations that the Korean music industry constantly faced.
Korea is the most wired nation in the world where cell phone penetration stands at 110% and the country is experiencing the digital age. Yet the digital music stores and services are dominated by Korean providers where overseas services such as iTunes and Spotify are even prohibited. Mr. Cho explained how the problem lies in the price that these Korean portals charge for downloads; at 9 cent a song, which is 16 times cheaper than in the U.S and 32 times cheaper than in Japan, a lob sided market has formed where a song made in Korea can make 23% more profit when sold overseas. Because of these market conditions, the Korean music industry has had to diversify and look at other opportunities to make money.
One opportunity lies in the overseas market where Korea has seen over 60% growth in exports over the past 5 years. Mr. Cho gave the example of Psy and his worldwide hit Gangnam Style as a benefit of tapping into the overseas marketplace. In Korea, the song had 3.6 million digital downloads and over 40 million streams, yet earned Psy only $61,000 compared to the $2.7million he earned from roughly the same number of downloads and streams outside of Korea. S.M Entertainment and YG Entertainment, two of Korea’s biggest music companies only produce 20-30% of revenue from music sales in Korea; more than 50% comes from overseas.
So why has Korea been so successful in the overseas market? Mr. Cho puts this down to “glocalization”. The early 2000’s saw a shift from Korean made music for domestic consumption to Korean made music marketed for international consumption. Today we even see music made by Koreans but written, recorded and performed in countries such as the U.S and Sweden. Three factors have helped with this “glocalization”; the bilingual music being produced, multicultural K-Pop groups with international members and a boom in K-Pop fan sites that dominate online portals.
Through the domestic challenges that those in the industry faced, Korean entrepreneurs were forced to explore other avenues to generate profit, of which the overseas market played a huge role. Mr. Cho summarized his talk by saying that without the influence of these Korean music entrepreneurs, the “Korean Wave’ could well have turned into a “Korean Tsunami” and we would not have the booming industry we have today.