The feud between K-pop powerhouse Hybe and Min Hee-jin, the CEO of its subsidiary Ador, is probably one of the most controversial cases in the world of K-pop to have grabbed attention not only at home but also abroad in recent years.

As music critics continue to discuss the latest developments, it is still not certain what sparked the very public fight between the influential music producers. Yet, most experts agree that there are more fundamental issues at play and that the K-pop industry is going through growing pains.

Globalization and its impact

It was not long ago that K-pop began to be recognized around the world, especially in the US and other countries in the West.

Music critics typically point to the emergence of legendary boy band Seo Taiji and Boys about 30 years ago as the beginning of K-pop. In the 1990s, Korean music labels were often established and managed by one person, be it a star music producer or retired veteran singer. The label's focus was limited to the domestic market and the management system was not so sophisticated.

Over time, the emergence of the internet and social media have changed the entire paradigm of the K-pop industry.

Korean musicians began to turn their eyes overseas, particularly to neighboring Japan, and music producers like Lee Su-man, Park Jin-young and Yang Hyun-suk, all former musicians themselves, established SM Entertainment, JYP Entertainment and YG Entertainment, respectively. The “three major entertainment companies in Korea” began systematically nurturing K-pop bands and "manufacturing" boy bands and girl groups, later exporting them to other Asian countries.

“Thirty years of the K-pop industry that grew on ‘success-oriented and consequential evaluation’ has boomeranged. As business strategy centered on K-pop groups’ intellectual property became important, major companies turned their eyes to fostering K-pop bands under the multilabel system rather than relying on a one-person management structure,” Lee Jong-im, a professor at Seoul National University of Science & Technology, said during an open debate on the Hybe-Ador conflict in Seoul on Friday.

“There are criticisms that Hybe is running its music labels based on short-term goals, regarding its musicians only as a business object and instigating severe competition between individual subsidiaries under its roof,” Lee added.

Vertical integration of K-pop labels

The prevalent view among industry observers is that the multilabel system is an important factor in the Hybe-Ador incident. Hybe currently has 11 subsidiaries under its multilabel system, each of which is given independent managerial rights. But, because they are all under the Hybe umbrella, the music labels are driven to compete with one another as they each aim to achieve notable outcomes, resulting in zero collaboration among them.

Due to the uniqueness of the genre, there are also limitations to expanding the musical scope of K-pop. The standardized formula employed in creating a successful K-pop group in terms of performance, music and fashion cannot be changed radically due to K-pop fans' strong, unwavering preferences.

Regardless of the similarity or lack of scalability of the content, K-pop labels need to keep producing continuously. Hybe’s desire to have a multilabel system is motivated not only by the pragmatic business logic of risk management, but also by the need to churn out intellectual property to sustain revenue and its iconic value.

“The problem with the Hybe-Ador conflict is not so much the multilabel system itself, but rather the fact that the subsidiaries are vertically integrated within the parent company's management structure and the lack of collaboration between the subsidiaries due to the exclusive independence of their content,” said Lee Dong-yeun, a professor at Korea National University of Arts, on Friday.

Problems with the multilabel system were also raised by Min, who, in a statement released April 16 said that K-pop powerhouse Hybe lacks an understanding of the multilabel system and had not prepared sufficiently for its adoption.

Growing pains

Unlike Universal Music Group, Sony Music and Warner Music Group, which have developed their own multilabel systems over a longer period of time, K-pop entertainment companies grew their business structures rapidly over some 30 years. The responsibility for the feud between Hybe and Min cannot be ascribed solely to the parent company or its subsidiary's CEO.

Pop music critic Kim Do-heon says it is a conflict in the division of roles and performance of company executives in the process of making K-pop history.

“Hybe failed to adjust to the opinions of executives in establishing the multilabel system in a short period of time. Meanwhile, Min should not downplay the benefits NewJeans and Ador enjoyed under Hybe’s roof, as Ador cannot be seen as a solely independent music label,” Kim said at the debate on Friday. “The K-pop industry is in a period of transition as it expands.”

This is the first in a series of three articles examining the current state of the K-pop industry. --Ed.