The members of EXO Chen-Baek-Xi (Chen, Baekhyun, and Xiumin), who left SM Entertainment to form their own agency, have pointed out SM Entertainment's failure to fulfill its obligations.

Jae Hak Lee, an attorney of LIN's Entertainment & Sports Team, represented EXO Chen-Baek-Xi and their independent agency, INB100, and held an emergency press conference at the Shilla Hotel in Seoul. He claimed that "SM Entertainment has not fulfilled the condition of guaranteeing a 5.5% distribution commission rate for album and digital music sales that it had promised to Chen-Baek-Xi's independent agency, INB100."

Chen-Baek-Xi notified the termination of their exclusive contract with SM Entertainment in June of last year, claiming it was unfair, and the two sides subsequently agreed to limit the management relationship to EXO’s group activities. However, SM Entertainment is demanding 10% of the artists’ individual activity revenues without guaranteeing the agreed upon 5.5% commission rate, which is the standard for Kakao affiliates.

In response, LIN's Jae Hak Lee, as Chen-Baek-Xi's legal representative, announced four demands to SM Entertainment, including: acknowledging that it has defaulted on its obligation to guarantee a 5.5% distribution commission rate for album and digital music sales promised as a condition of signing the agreement dated June 18, 2023; ceasing to demand 10% of the revenues generated by artists under their individual names through INB 100; and immediately providing settlement data for the period after the conclusion of the agreement on June 18, and settlement data and supporting materials for the existing exclusive contract, and said he will actively consider legal actions if the demands are not fulfilled.

At the center of K-culture's global expansion is the entertainment industry, which utilizes various cultural contents. K-pop idols are leading the market expansion through generational changes and advancements, and the sales of agencies are also increasing every year, and Hive, which includes BTS and others, grew its asset size by 440 billion won from last year to 5.25 trillion won in fair assets, becoming the first Korean major entertainment company to enter the "conglomerate" category this year.

The K-pop idol market is most differentiated from the music markets in other countries by its unique "incubation system." The Korean entertainment industry, which is maintained by the tension between the three forces of agencies, artists, and fans, is centered on people and contents, and is therefore exposed to various disputes such as those related to contracts, intellectual property rights, and copyrights. In recent years, YouTube, social media, and AI technology have led to an increase in cases involving malicious commenters and fake news, and disputes to protect the rights of entertainers are also on the rise.

LIN's Entertainment & Sports Team handles all legal issues related to albums and music, movies, videos, dramas, broadcasting, internet, new media, and theaters, including licensing, copyright infringement, antitrust issues, and labor law issues, and provides optimal legal services across the entertainment industry by representing leading K-pop stars, global artists, and large entertainment groups. We also have extensive experience in platform establishment, mergers and acquisitions, contracts, and disputes in foreign locations related to the overseas expansion of Korean contents, so please contact our Entertainment & Sports Team at +82 2 3477 8695 for assistance.

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Seoul Economic Daily
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https://m.entertain.naver.com/article/011/0004351234