HYBE
South Korean K-pop giant HYBE said its net profit basically evaporated in the third quarter and total revenue slipped 2% after after the company earned less from concerts and saw reduced music sales, according to results published on Tuesday (Nov. 5).
HYBE’s net profit for the third quarter was 1.444 billion won ($1.05 million), a figure 98.6% lower than the third quarter of 2023 when the company reported of 99,690 billion won ($72.3 million). Total revenue for the third quarter of 527.9 billion won ($382.6 million).
HYBE’s biggest release of the quarter was the debut album, SIS, from KATSEYE, a six-member girl group formed over the summer as part of The Debut: Dream Academy, which spent two weeks on the Billboard 200, the company said.
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HYBE’s direct revenue — which comes from its recorded music business, concerts, and things where artists are directly involved — fell by 15.5% to 323 billion won ($234 million). Revenue from its recorded music division declined by nearly 19% to 214.5 billion won ($155.5 million), while concert revenue fell nearly 15% to 74 billion won ($53.6 million). Revenue from ads and appearances rose by nearly 10% to 34.5 billion won ($25 million).
HYBE’s business lines that operate independently of their artists — like merchandising and sync licensing — performed much better, with revenue from artist-indirect involvement business lines rising by 32% to nearly 205 billion won ($148.5 million). Revenue from merchandise and licensing song rights rose by nearly 16% to 99 billion won ($71.9 million), contents revenue rose 64% to almost 80 billion won ($58 million) and fan club revenue rose by more than 23% to 26 billion won ($18.8 million).
The company’s operating profit margin saw significant improvement — up 4% — from the first quarter this year to 10.3% for the third quarter. Earnings before interest, taxes, depreciation and amortization (EBITDA), a measure of HYBE’s profit from its operations, fell by 16.4% to 81 billion won ($58.7 million).
HYBE has had an eventful few months. In July, the company appointed Jason Jaesang Lee as its new CEO and announced its “HYBE 2.0” growth strategy, which reorganizes the company, pushes a global expansion and focuses on tech-driven initiatives.
The company has also been embroiled in a dispute with Min Hee-jin, ex-CEO of the company’s label subsidiary ADOR — home to chart-topping girl group NewJeans — regarding HYBE’s claim that Min tried to take control of ADOR and NewJeans.
Min Hee-jin’s mission to be reappointed as CEO of NewJeans’ label ADOR just hit another hurdle. On Tuesday (Oct. 29), a South Korean court dismissed the embattled executive’s application to be reinstated in the position, according to reports from Korea JoongAng Daily and Mael Business Newspaper.
According to a source familiar with the matter, the dismissal means the court ruled in favor of HYBE and terminated the case without a judgment on its merits — essentially not conceding or accepting Min’s filing to begin with.
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Min originally submitted her application for reappointment on Sept. 13. In it, she asked the court to order HYBE’s internal board to re-elect a “new” CEO (a.k.a. herself), arguing that she needed to be in the position in order for NewJeans to continue its activities. However, the court’s latest decision has weakened that argument, the source says. Should Min continue her push to be reinstated as CEO, she will likely need to use a different argument to have any chance of her case moving forward.
For the time being, Min is expected to stay on as an internal director of ADOR. She was replaced as CEO by Kim Ju-young, HYBE’s head HR officer, in August.
“We acknowledge and appreciate the court’s wise ruling,” a representative for HYBE tells Billboard in a statement. “In light of this decision, HYBE is dedicated to normalizing ADOR’s operations, improving our multi-label capabilities, and supporting the activities of our artists.”
The development is the latest event in Min and HYBE’s months-long power struggle over ADOR and its powerhouse act NewJeans that stretches back to April 2024. Following an internal audit of ADOR, HYBE — also home to acts like BTS, Seventeen and Le Sserafim — called for the immediate resignation of Min as CEO, accusing her of trying to hijack the label imprint as well as NewJeans. The conflict has since devolved into a tangled web of he-said-she-saids, multiple lawsuits, and ultimately, Min stepping down from her position on Aug. 27.
Throughout the process, the members of NewJeans have become increasingly involved in the conflict, publicly sharing their support for Min during live performances and in a since-deleted 27-minute YouTube video in which they alleged mistreatment and a toxic work environment at HYBE. Most recently, NewJeans member Hanni, 20, appeared in court to testify to South Korean lawmakers about alleged workplace harassment, saying, “I came to the realization that this wasn’t just a feeling. I was honestly convinced that the company hated us.” During her testimony, she cited instances when she felt HYBE undermined the band and senior managers of the company deliberately ignored her.
While Min hasn’t yet released an official statement regarding the latest court decision, she’s gone on the record to South Korean media saying that she plans to “go all the way” in her legal pursuit to be reinstated.
Following the court’s decision, ADOR’s internal board again voted against reinstating Min on Wednesday (Oct. 30).
HYBE CEO Lee Jae-Sang has shared a public apology following a partial leak of the company’s internal “Weekly Music Industry Report,” which boasted what some have called disparaging remarks about the K-pop industry, including some young artists.
The letter stemmed from a Thursday (Oct. 24) court hearing regarding the HYBE audit carried out by the South Korean National Assembly’s Culture, Sports, and Tourism Committee. The Korea Herald reported that Democratic Party representative Min Hyung-bae revealed the weekly document during the heart. Reportedly spanning around 18,000 pages, Rep. Min noted that the document contains unverified rumors and at times harsh commentary on very young artists, including minors, with alleged statements including, “They debuted at an age when they’re at their most unattractive” and “Surprisingly, none of them are pretty.”
In response to the leak, a letter by Lee that was posted on the company’s official website on Tuesday (Oct. 29) offers an apology “to the artists, industry stakeholders, and fans” who were upset the the revelations.
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“This document was created as part of a process to retrospectively gather various reactions and public opinions on industry trends and issues,” wrote Lee, clarifying that it was shared only with “a limited number of leaders.” However, he acknowledged that it was “highly inappropriate” for the document to feature “provocative and explicit expressions directed at K-pop artists,” adding, “As the representative of the company, I acknowledge all the mistakes and take full responsibility.”
Lee added that HYBE is “reaching out to each agency individually to offer our apologies directly” and continued, “I am also sincerely extending an official apology to all the artists of HYBE Music Group who have been subjected to criticism due to the company.”
Lee further promised “to establish guidelines and strengthen internal controls to prevent such issues from occurring again” and added that the company has halted the creation of such documents. Near the end, he emphasized HYBE’s dedication to the well-being of all artists and its respect of the fans, committing to reforms aimed at contributing positively to the K-pop industry.
Read the full statement (with translations provided by Soompi) below:
As the CEO of HYBE, I extend my sincere apologies regarding the HYBE monitoring document.
Regarding our monitoring document that was highlighted during the National Assembly’s Culture, Sports, and Tourism Committee audit on October 24, I deeply apologize to the artists, industry stakeholders, and fans.
This document was created as part of a process to retrospectively gather various reactions and public opinions on industry trends and issues. Although it was intended to be shared only with a limited number of leaders to understand market and fan sentiments, the content was highly inappropriate. The document contained provocative and explicit expressions directed at K-pop artists, included personal opinions and evaluations of the author, and was preserved in written form. As the representative of the company, I acknowledge all the mistakes and take full responsibility. I am particularly sorry and distressed about the unfounded suspicions of reverse viral marketing that are not true at all, causing misunderstandings and harm to innocent artists and individuals.
I formally and respectfully apologize to the external artists mentioned in the document who have suffered damage and distress. We are also reaching out to each agency individually to offer our apologies directly. Additionally, I am also sincerely extending an official apology to all the artists of HYBE Music Group who have been subjected to criticism due to the company.
I acknowledge the lack of awareness among the leadership who received the document and, as CEO, I have immediately halted the creation of such monitoring documents. I promise to establish guidelines and strengthen internal controls to prevent such issues from occurring again.
Once again, I apologize to the artists, industry stakeholders, fans, and everyone who loves and supports K-pop for the pain caused by this incident. As the company’s representative, I commit to thorough reflection and self-examination to rectify past mistakes and prioritize the rights of all K-pop artists and respect for fans. We will do our utmost to contribute to the healthy development of the K-pop industry.
Thank you. HYBE CEO Lee Jae-Sang
HYBE has reopened an investigation against Min Hee-jin, the former CEO of its subsidiary label ADOR, with whom the K-pop conglomerate has been in a monthslong legal battle regarding her position at the company.
On Sept. 24, HYBE confirmed to Billboard that ADOR launched an investigation into whether Min improperly interfered in the company’s initial investigation into a sexual harassment claim and violated confidentiality obligations. ADOR also began a re-investigation of an ADOR VP involved in the situation. HYBE declined to comment on how long the investigations have been underway or when they plan to share their findings. Min and a representative tell Billboard she was never formally informed of the investigation through external or internal company means.
Min is pushing back on HYBE’s handling of the case, which was initiated by its sub-label ADOR, which houses NewJeans, calling the company’s internal investigations biased due to an alleged conflict of interest with the executive who replaced her as label CEO overseeing the case.
Sources tell Billboard that the investigation involves allegations that Min had covered up an incident involving a male VP at ADOR, where a female employee reported feeling harassed and bullied during a work-related dinner.
The controversy dates back to February 2024, when the ADOR VP allegedly pressured a female employee to attend a dinner with a client, claiming it would be beneficial to have a young woman present, according to an internal report shared with Billboard. During the dinner, the VP left abruptly, leaving the employee alone with a client, creating an uncomfortable situation that the report says “seemed orchestrated.” The employee reported the incident to HYBE’s internal compliance system, citing sexual harassment and workplace bullying. While an internal HR investigation was conducted, it ultimately recommended only a stern warning for the VP, as harassment claims could not be definitively proven, with the case dismissed.
Min Hee-jin’s role in the aftermath of this complaint is what has come under scrutiny. According to the report, Min doubted the credibility of the employee’s complaint and organized an all-hands meeting with both the complainant and the accused, violating the company’s standard HR procedures. An audit of the situation added that Min had coached the VP on how to respond to the allegations.
When the Korean tabloid site Dispatch first reported the incident, Min responded to the claims with a media statement and shared information about the employee on her social media, including the employee’s salary. HYBE has said that the employee filed lawsuits for defamation and privacy violations, but a representative for Min tells Billboard she, as well as the VP, are only facing a defamation suit. The rep adds that the VP has also sued the employee for defamation and claimed damages, which had not been previously shared with the media.
At the time, Min stated that the issues stemmed from poor work performance and that the employee left the company after a salary cut. Min tells Billboard the salary information she revealed through an Instagram Story post did not identify the individual and says it was HYBE, not herself, who publicly disclosed the private parties’ identities in media statements throughout their dispute.
In a phone interview last week, Min questioned the legitimacy of HYBE’s ongoing investigations and directly addressed the appointment of Ju Young Kim, ADOR’s new CEO, who replaced her and led the initial investigation that dismissed the harassment claim. During her time as ADOR’s CEO, Min claims she was not in a position to “conceal” sexual harassment cases nor in charge of such decisions.
“The one who actually made a final decision after reviewing all the statements, all the evidence and reporting, is Kim Ju Young, who is currently the CEO of ADOR,” Min says. “She made those final decisions by herself within HR of HYBE, but then later on, she brought up this issue again and accused me with different charges to try to re-open an investigation.”
Min adds, “I have been telling HYBE, ‘If you want to do an investigation or re-investigation, you need to make it formal and official by not having any investigating done by those involved in previous cases. They could hire a third party to investigate, but instead, they’re going into another internal investigation by the same person who actually made the final decision.”
The final results of the audit are expected in the coming days.
HYBE declined to comment on whether the company has spoken with or plans to speak with NewJeans directly, but Billboard learned that the NewJeans members and their parents met ADOR’s current CEO Ju Young Kim on Sept. 24 to solidify each side’s position.
Despite the ongoing investigation, ADOR shared its decision on Sept. 25 to allow Min back to the subsidiary as an internal director and producer for NewJeans, but would not honor the request to reinstate her as its CEO.
“The board has resolved to convene an extraordinary shareholders’ meeting to reappoint Min Hee-jin as an internal director,” ADOR said in an official statement (per The Korea Herald). “However, the board cannot accept the request for her reinstatement as CEO at this time. Min Hee-jin’s role and authority as the producer for NewJeans are fully guaranteed, and further discussions on specific terms will take place in the future.”
Min Hee-jin issued a press statement in Korea rejecting the proposal and requesting again to be reinstated as CEO.
Shares of Spotify rose 8.0% to $365.00 this week to lead all music stocks in a week the Billboard Global Music Index reached a new high and many of its largest components posted mid- to high-single digit gains.
The Swedish music streaming giant was boosted by a report by Pivotal Research Group that increased its price target to $510 from $460 and reiterated its “buy” rating. Spotify’s intraday high of $368.29 on Thursday set a new 52-week high for the stock and was its best mark since Feb. 21, 2021.
Spotify led the 20-company Billboard Global Music Index (BGMI) to a record high 1,873.87, up 4.1% for the week, as ten of the stocks posted gains this week, nine lost value and one was unchanged. After a 4.8% drop the week ending Sept. 6 and stagnating since March, the BGMI has gained 7.4% in the last two weeks and raised its year-to-date gain to 22.2%—more than two percentage points above the gains of the Nasdaq composite (up 19.6%) and the S&P 500 (also up 19.6%).
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Stocks generally had a good week after the U.S. Federal Reserve announced on Wednesday a rate cut of half a percentage point, the first time the central bank lowered the overnight borrowing rate since the early days of the COVID-19 pandemic. Investors had expected the Fed’s move, though, and had priced the effect of a rate cut into stock prices. Still, the Nasdaq composite climbed 1.5% to 17,948.32 and the S&P 500 rose 1.4% to 5,702.55. South Korea’s KOSPI composite index improved 0.7% to 2,736.81 and China’s Shanghai Composite Index rose 1.2% to 2,736.81. In the United Kingdom, the FTSE 100 fell 0.5% to 8,229.99.
Warner Music Group gained 4.9% to $30.44. WMG’s Atlantic Music Group laid off about 150 people Thursday as part of a restructuring plan that began in February. The week’s intraday high of $30.88 was WMG’s highest price since reaching $32.34 on July 24. The company also announced in an SEC filing this week it secured a $1.3 billion term loan that will be used to repay an existing loan and pay associated fees and expenses.
Live Nation shares also gained 4.9% to $103.65 and brought its year-to-date improvement to 10.7%. Thursday’s intraday high of $105.42 was its highest mark since April 1 and less than $2 below its 52-week high of $107.24. The concert promoter scored a win in Portland, Ore., this week after the city council upheld an August decision to allow the development of a 3,500-capacity music venue that will be operated by Live Nation.
Two other promoters also posted gains this week. MSG Entertainment, rose 4.6% to $42.16, while CTS Eventim improved 1.2% to 87.90 euros ($98.23). Another live entertainment company, Sphere Entertainment Co., dropped 2.7% to $41.09.
K-pop companies’ modest decline was an improvement from their consistently steep drops in recent weeks. The four South Korean companies had an average loss of 1.2% this week. HYBE fell 2.4%, JYP Entertainment dipped 1.2%, YG Entertainment slipped 0.9% and SM Entertainment lost 0.2%. After surging in previous years, the quartet has an average year-to-date loss of 40.4%.
Universal Music Group fell 3.6% to 22.75 euros ($25.42) following its Capital Markets Day on Tuesday. Analysts generally felt UMG set reachable financial targets and presented a believable roadmap about its strategy for the next four years. The Amsterdam-listed company laid out a strategy to achieve 8% to 10% cumulative annual growth rate (CAGR) for its subscription revenue and above 7% CAGR for total revenue.
Music streamer LiveOne had the biggest decline of the week, dropping 6.1% to $1.38. That put shares of LiveOne into the red for 2024 with a 1.4% year-to-date loss.
09/12/2024
A tense war of words and a slew of lawsuits have ensued as the K-pop giant and CEO tangle for control of the popular girl group NewJeans.
09/12/2024
During the months-long feud between HYBE and NewJeans creative director and former ADOR CEO Min Hee-jin, the Billboard 200-topping girl group has largely remained silent. But early Wednesday morning (Sept. 11), group members Minji, Hanni, Danielle, Haerin and Hyein made their voices heard.
In a since-deleted post on their Twitter account, the group shared a YouTube link that led to a livestream on a no-longer accessible YouTube account named “nwjeans.” During the livestream, the five members spoke for about 30 minutes in Korean and English about their situation, expressing anxiety over their professional futures, worries about continuing to work under HYBE and revealing previously unheard stories.
Apologizing for the “sudden meeting,” all five members of the K-pop girl group sat in a nondescript room with notebooks, papers and iPads during the livestream. The youngest NewJeans member, Hyein, 18, spoke first, explaining that staff members they trusted (presumably also under or previously under the HYBE/ADOR umbrella) helped set up the location and stream but that it was the quintet’s choice to speak out.
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After that, Haerin noted that media coverage revolving around NewJeans’ situation became invasive when their private medical records and videos from their days as HYBE trainees leaked on the internet — four of the five NewJeans members were minors under the age of 18 when they debuted in July 2022 — but that when the group, alongside Min and their parents, raised concerns to ADOR parent company HYBE, the K-pop giant took no action.
One of the most talked about moments online among K-pop fans came early in the broadcast, when Hanni shared a story about a time when, while at the HYBE building to get her hair and makeup done, an unnamed HYBE LABELS group passed her with a manager. According to the Vietnamese-Australian singer, after initially greeting one another, the manager told the members of the other group to “ignore her.”
During the livestream, NewJeans members also expressed worries about the ADOR label’s inner workings following Min’s ouster as CEO.
In reference to ADOR’s new legal battle with Shin Woo-seok, the director of NewJeans’ “Ditto” and “ETA” music videos, Minji said it was “frightening” to see their work compromised. The director has alleged that ADOR targeted him for uploading “director cut” versions of NewJeans music videos and other content, which he claimed to have permission for, on his personal YouTube account.
Following ADOR’s removal of those videos, the label shared a statement on Sept. 4 that it would do its best to “ensure that the deleted NewJeans content can be uploaded to ADOR’s official channel in the future,” as reported by the Korea JoongAng Daily. That report also noted ADOR’s follow-up statement that only the “director cut” music videos were requested for removal — not behind-the-scenes clips starring the members that have racked up millions of views — while claiming it was advertisers who wanted the “director cut” videos removed.
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“Just like that, the content that we released solely for our fans, for our Bunnies, was instantly erased,” Danielle said in English about the incident. “I truly can’t understand why anyone would do this to a group or just anyone in general.”
Minji added that ADOR’s “new management” would keep production and management teams separate, like other HYBE LABELS. Under this arrangement, which saw Min being restricted only to production, and not being part of the discussions around the group’s overall management strategy, the group members said they were apprehensive over how they could continue as the NewJeans in its current form.
“Personally, the way that ADOR used to run was the business management and creative production was not separated…factors that played and worked in harmony with each other,” Hanni said in English. “It was our way of working and it was our CEO’s way of producing NewJeans’ content which a lot of you were able to enjoy and appreciate. But now that she’s no longer CEO, these factors that should have continued to work together in harmony are now being seen as two different areas of work.”
On Aug. 27, HYBE announced that Min would step down as ADOR CEO and shared in a statement to Billboard that ADOR “will restructure to separate its production from management — a multi-label practice that has been standard across all other HYBE labels but was previously not implemented at ADOR.”
Haerin also claimed that NewJeans learned of Min’s dismissal through the news instead of through their company, saying it “made it clear to us that they don’t respect us at all” and led them to feel that statements about HYBE’s plans for NewJeans were empty promises. (In April, HYBE shared a statement with Billboard claiming that the company “will continue to provide attententive [sic] mental and emotional care to the company’s artist NewJeans…the company will meet legal representatives of the respective members as soon as possible to discuss the plan to protect the act.”)
Beyond these specific incidents, the five NewJeans members also spoke at length of their worries about losing their team identity and wariness that HYBE has their best interests in mind while insisting that Min return to work with them.
“Even before debuting as NewJeans and through all of the time that we spent together with Min Hee-jin all of us felt that the music we wanted to make and the kind of world we wanted to build together, our vision, was similar in so many ways,” 19-year-old Danielle said. “Putting our sincere effort into something is only possible because of the people that we’re working with have trust in each other and have that same vision.
“Min Hee-jin is not only the person that produces our music, but someone who makes NewJeans who we are; she discusses even the smallest details with us and explains them in ways that we can understand clearly. NewJeans has a distinct color and tone, and this was created with Min Hee-jin. She is integral to NewJeans’ identity and we all feel that she is irreplaceable.”
Hanni later spoke to HYBE’s alleged directive that Min wrap up all her creative work in the next two months following her dismissal as CEO.
“Like how we have our own and individual thoughts and feelings, we have the choice to choose how we will react to each situation and we are not going to follow HYBE’s every order blindly,” Hanni said in English. “We are more than well aware that this is getting in the way of our work and that we should be treated much much better than how we are right now. And it’s very hard to believe that they are truly sincere about wanting to help us continue, to be able to continue to work with our Min Hee-jin.
“Despite her being in the midst of all this current legal conflict, she’s expected to plan and creatively produce our future endeavors in just only two months, which I personally think makes no sense at all. We don’t want to hear all the empty words of how they’re going to help us continue to work with Min Hee-jin. And all we want is this legal conflict to be resolved and have our working environment returned back to normal the way it was before.”
NewJeans’ eldest member, Minji, 20, ended the livestream with a direct message to HYBE chairman Bang Si-Hyuk, saying, “We hope chairman Bang and HYBE make a wise decision to restore ADOR to its original state by the 25th.”
HYBE has not yet responded to Billboard‘s request for comment about the livestream.
The now five-month-long conflict began in April, when HYBE launched an audit of ADOR and asked Min to step down as CEO. The K-pop giant later reported Min to police, alleging the executive had committed a breach of trust. That led Min to respond by holding an emotionally charged press conference during which she denied claims that she had usurped NewJeans’ management and doubled down on claims that HYBE subsidiary BELIFT LAB had plagiarized NewJeans with its own girl group, ILLIT, and that another HYBE subsidiary, Source Music, had broken its promise to debut NewJeans as its first girl group, among other claims. Min was subsequently sued by both BELIFT and Source for defamation due to those comments, riling up several K-pop fanbases against her.
In May, a court ruled that Min could legally stay in her position. But in the past month, a former female ADOR employee accused Min of covering up her reportsof sexual harassment from a male superior. While HYBE’s own internal investigation reportedly concluded that the incidents didn’t constitute harassment, Min allegedly verbally abused the employee for speaking out — a claim that Min has denied, instead alleging that the issue arose from the former employee’s job performance and salary negotiations.
On Aug. 27, HYBE announced that it had appointed an ADOR director with human resources expertise, Ju Young Kim, as the label’s new CEO, and that Min would step down from her role but remain as an in-house director.
HYBE shares benefitted from the company’s dismissal of Min Hee-Jin as CEO of the imprint ADOR, gaining 4.4% in a rare positive week for a stock that has fallen 21.0% in 2024.
Min will continue to produce music for ADOR artist NewJeans, but the label will restructure in order to separate management from production. Turbulence between HYBE and Min dates back to April when HYBE reported Min to the police for breach of trust and other allegations. The company stated that Min “deliberately led the plan to take over management control of the subsidiary” and ordered ADOR’s management to pressure HYBE into selling its shares in the subsidiary. The following month, a court blocked HYBE’s plan to dismiss Min.
The controversy has coincided with a steep decline in HYBE’s share price. HYBE was 230,500 won ($172.33) on April 19, the trading day before HYBE announced it would investigate Min, and had fallen 20.0% to 184,400 won ($137.86) by Friday (Aug. 30). But the HYBE-Min dispute isn’t the only explanation for HYBE’s sluggish stock performance. HYBE’s three main South Korean competitors—SM Entertainment, YG Entertainment and JYP Entertainment—have lost an average of 38.1% this year.
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The 20-company Billboard Global Music index rose 0.2% to 1,832.97, bringing its year-to-date gain to 19.5%. Eleven of the 20 stocks gained this week, while seven lost ground and two were unchanged. Cloud Music, the week’s top music stock, gained 5.2% to 97.70 HKD ($12.53), bringing its year-to-date increase to 8.9%. SiriusXM improved 2.8% to $3.29. Tencent Music Entertainment gained 2.0% to $10.44.
Spotify was effectively unchanged at $342.88 despite Evercore ISI raising its price target on Spotify to $460 from $420. Universal Music Group gained 1.5% to 23.63 euros ($26.14) after Exane BNP Paribas upgraded the stock to “outperform” and a raised its price target to 27.50 euros ($30.42).
While HYBE was among the week’s winners, other K-pop stocks had another off week. JYP Entertainment, purveyor of Stray Kids and TWICE, fell 1.5% to 51,100 won ($38.20). BLACKPINK’s agency YG Entertainment lost 3.8% to 34,150 won ($25.53). And SM Entertainment, home to RIIZE and Vespa, slipped 5.4% to 62,800 won ($46.95).
Stocks were mixed this week as investors await news from the U.S. Federal Reserve that it will cut interest rates in September. In the United States, the Nasdaq fell 0.9% to 17,713.62 and the S&P 500 rose 0.2% to 5,648.40. In the United Kingdom, the FTSE 100 gained 0.6% to 8,376.63. South Korea’s KOSPI composite index dropped 1.0% to 2,674.31. China’s Shanghai Composite Index fell 0.4% to 2,842.21.
Universal Music Group (UMG) reached a strategic agreement with ProRata.ai, a new company that enables generative artificial intelligence platforms to fractionally attribute and compensate content owners. Bill Gross, chairman of technology incubator Idealab Studio — which launched ProRata — will serve as CEO. ProRata’s technology allows generative AI platforms to attribute and share revenues on a per-use basis with content owners while preventing “unreliable content from driving AI answers,” according to a press release. In addition, ProRata is building a consumer AI answer engine set to launch this fall that will feature the company’s attribution technology.
“Current AI answer engines rely on shoplifted, plagiarized content,” Gross, the inventor of the pay-per-click monetization model underlying internet search, said in a statement. “This creates an environment where creators get nothing, and disinformation thrives. ProRata is pro-author, pro-artist and pro-consumer. Our technology allows creators to get credited and compensated while consumers get attributed, accurate answers. This solution will lead to a broader movement across the entire AI industry.”
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In his own statement, UMG chairman/CEO Lucian Grainge said, “We are encouraged to see new entrepreneurial innovation set into motion in the Generative AI space guided by objectives that align with our own vision of how this revolutionary technology can be used ethically and positively while rewarding human creativity. Having reached a strategic agreement to help shape their efforts in the music category, we look forward to exploring all the potential ways UMG can work with ProRata to further advance our common goals and values.”
Along with UMG, ProRata has struck early agreements with media publishers including the Financial Times, The Atlantic and Fortune.
In describing the technology, the release reads: “ProRata’s technology analyzes AI output, measures the value of contributing content and calculates proportional compensation. The company uses a proprietary algorithmic approach to score and determine attribution. This attribution method enables copyright holders to share in the upside of generative AI by being credited and compensated for their material on a per-use basis. Unlike music or video streaming, generative AI pay-per-use requires fractional attribution as responses are generated using multiple content sources.”
ProRata is in “advanced discussions” with additional news publishers, authors, and media and entertainment companies. The company’s leadership team and board of directors include executives who have held senior roles at Microsoft, Google and Meta, as well as Michael Lang, the president of Lang Media Group and one of the founders of Hulu. Early investors include Revolution Ventures, Prime Movers Lab and Mayfield.
Immersive technology, media and entertainment company Cosm raised more than $250 million in funding to drive the growth of its “Shared Reality” venues — described in a press release as an “experience that seamlessly bridges the virtual and physical worlds by merging state-of-the-art visuals with the energy and excitement of the crowd and elevated food and beverage service.” The new funding round includes existing investors Steve Winn and Mirasol Capital and first-time investors Avenue Sports Fund led by Marc Lasry, Dan Gilbert‘s ROCK, Baillie Gifford, and David Blitzer‘s Bolt Ventures. Cosm will use the funds to scale, grow its technology and media business units, and speed up the development of more Cosm venues worldwide. The second Cosm venue is slated to open in Dallas later this year, with a third in Atlanta recently announced. “Cosm venues are a new paradigm in live sports, music, and artistic entertainment,” said Chris Evdaimon, investment manager at Baillie Gifford, in a statement. “The mesmerizing viewing experience guarantees the Cosm customer the best seats in the arena and the best viewing angle at any moment of the live event, at an affordable ticket price.”
HYBE Interactive Media (HYBE IM), the interactive media and games division of the storied K-pop company, raised $80 million in a round led by Makers Fund with participation from IMM Investment and parent company HYBE. The funds will be used to expand the company’s games publishing and development efforts, allowing HYBE IM to invest in more games, introduce them in global markets and bolster the division’s in-house development capabilities. HYBE IM’s previously-released titles include Rhythm Hive and BTS Island: In the SEOM. It’s also signed publishing contracts for Macovill’s OZ Re:write and Flint’s RPG Astra: Knights of Veda.
Believe acquired Doğan Music Company, Turkey’s largest independent record label, four years after purchasing a 60% majority stake in the company in 2020; it acquired the remaining 40% of the company for 38.3 million euros ($41.84 million). The transaction is pending approval by the competition regulator.
The U.K. office of Believe signed a global services deal with electronic music brand fabric. Under the agreement, fabric joins the client base of b:electronic, Believe’s electronic music imprint and part of the company’s label & artist solutions division. B:electronic will provide genre specialist label management, video and audience development, editorial and marketing partnerships internationally, and distribution for both catalog and new releases. Fabric’s labels include fabric Originals, fabric Records and Houndstooth, while a new imprint is slated to launch in the near future.
Beatchain partnered with Indian radio network Radio City India to launch Muzartdisco, a digital platform and app that will allow Indian artists to release and promote their music using Beatchain’s A&R tool and artist services platform. Through the platform, artists can also compete for opportunities including studio sessions; mentoring; collaborations with established artists, writers and producers; radio breakout campaigns, social media shoutouts and other opportunities courtesy of Radio City India; and more. Meanwhile, A&R teams using the platform will be able to find artists using a tailored filtering process that makes it easier to find talent that aligns with their mission and niche. According to a press release, Radio India is the country’s leading radio network, boasting a listenership of more than 69 million across 39 cities.
Sports and entertainment collectibles company Panini America partnered with The Rolling Stones to produce the first fully licensed, career-spanning trading card set for the band. Titled Prizm The Rolling Stones, the set will chronicle the Stones’ 60-year recording and touring history, with additional collections to come.
AEG Presents partnered with Jacobs Entertainment — a developer, owner and operator of gaming and entertainment facilities — on Globe Iron, a new indoor 1,200-capacity venue in Cleveland that was once home to the Globe Iron Works Foundry built in 1853. AEG, which will operate and exclusively book the venue’s programming, already books and operates two other Cleveland venues: the Agora Theatre and the Jacobs Pavilion.
Indie record label The Programm, led by Peter “S.Y.” Pestano, struck a joint venture with LLC4/Capitol Records to break new artists, starting with Mexican-American rapper NHC Murda 60x. The joint venture will be steered by Orlando Wharton, executive vp at Capitol Music Group, president of Priority Records and CEO of LLC4. NHC Murda 60x and other Programm artists will have the potential to be upstreamed under the deal.
Independent entertainment company Unity 7 Entertainment announced a distribution partnership with Forecast Music Group (The Orchard/Sony), which will provide global distribution, marketing and promotional support for Unity 7’s artist roster. The partnership will kick off with the release of hip-hop artist Alantra’s debut single, “Get It,” which is set to drop on Sept. 5.
AI-powered, ethically-trained music generation company Soundful teamed with SoundCloud and Kaskade on an AI songwriting competition that will offer the winner a chance to perform alongside Kaskade and have their winning track completed and released by Kaskade as a featured artist.
HYBE’s net income dropped 86% in the second quarter of 2024 as total revenue improved 3.1% to a quarterly record of 640 billion won ($482 million), the company announced Tuesday (Aug. 6).
The South Korean K-pop giant breaks its financial results into two main categories: segments with direct artist involvement such as recorded music and concerts, and those with indirect-artist involvement such as fan clubs, licensing and merchandise. In the second quarter, indirect revenue streams grew 17.4% to 217 billion won ($163 million). Direct revenue fell 2.9% to 424 billion won ($319 million) as concerts dropped 8.6% to 144 billion won ($108 million) while recorded music improved 1.5% to 250 billion won ($188 million).
Operating profit—total revenue less cost of sales and operating expenses—dropped 37.4% to 51 billion won ($38 million), a smaller decline than experienced by net income because of a sharp drop in non-operating income. Earnings before interest, taxes, depreciation and amortization (EBITDA), a measure of the company’s cash profit from operations, fell 24.6% to 79 billion won ($59 million).
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Results for the first six months of the year were, across the board, a bit worse than a year earlier. Although total revenue topped 1 trillion won ($741 million) for the second consecutive year, that amount was 2.9% lower than a year earlier. First-half operating profit, net income and EBITDA were also lower than the first half of 2023.
HYBE sold fewer albums in the first half of the year but dominated sales charts in South Korea and Japan. Led by Seventeen’s 4.4 million albums sold in the first half of the year, HYBE had 9 of the top 20 artists ranked by album sales in South Korea. Seventeen’s Best Album ’17 is Right Here’ ranked second in Japanese album sales with 423,000 units while its SEVENTEENTH Heaven: 11th Mini Album ranked No. 6 with 242,000 units. In the U.S., Tomorrow X Together’s Minisode 3: TOMORROW ranked No. 2 in CD sales behind Taylor Swift’s The Tortured Poets Department.
Streaming accounted for 35% of recorded music revenue, up from the first half of 2023. In a first-of-its-kind breakdown of the company’s streaming revenue, HYBE revealed that domestic streaming revenue for HYBE’s labels South Korea was 18 billion won ($18 million), less than half the amount from full-year 2023. (It did not provide first-half streaming revenue figures for those labels’ streaming revenue outside of South Korea). HYBE’s U.S. labels—Big Machine Label Group and Quality Control—also had streaming revenue of 61 billion won in the first half.
Weverse, HYBE’s social media platform, had 9.6 million monthly active users, up from 9.2 million in the first quarter and even with the 9.6 million MAUs a year earlier. Beyond traditional social media functions, Weverse also has an e-commerce element, Weverse Shop, and live streams artist chats and concerts. Ariana Grande joined the platform in July, joining HYBE artists such as BTS and ENHYPEN and non-HYBE acts such as BLACKPINK and NCT-127.
This is a transformational time for the company built on the global success of boy band BTS but now expanding into new markets and initiatives. In July, HYBE named Jason Jaesang Lee as its new CEO to lead its growth strategy that was announced on Aug. 1. Dubbed “HYBE 2.0,” the plan reorganizes the company to drive global expansion and focus on tech-driven initiatives. HYBE Music Group APAC combines its record labels in South Korea and Japan. The Scooter Braun-led HYBE America will bring management to its label operations. Social media platform Weverse will launch a subscription membership tier. HYBE is also accelerating its efforts in gaming, AI, audio and voice technology.