HYBE
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Weverse seems to fly under most of the music industry’s radar despite its strategic importance to its owner, HYBE, the K-pop juggernaut that has successfully leveraged BTS’s success to build an increasingly global, technologically advanced music company.
The social media company’s 10 million monthly active users — 90% of which come from outside South Korea — are few by some standards. TikTok, Instagram and Facebook boast more than 1 billion apiece. But it’s the home turf for artists with some of the most loyal fanbases on the planet. And HYBE is leveraging those acts’ popularity to build a must-visit destination for fans of K-pop and, eventually, other genres, too.
When Jimin, a member of BTS, performed a solo show at Lollapalooza in 2023, it was livestreamed on Weverse. When Jung Kook, another BTS member, hosted an at-home livestream in February, Weverse drew 16 million real-time views. When HYBE group ENHYPEN performed a showcase for its Dark Blood EP, it brought 2.4 million real-time views to the platform.
Artists use Weverse to host live chats with fans to promote new albums and its e-commerce platform to sell merchandise. Last year, Weverse Shop sold over 18 million branded light sticks from K-pop group Seventeen, a handheld device used at the band’s concerts that carries a $64 price tag in the United States.
All of this feels like it’s just the beginning. As K-pop surges in popularity globally, Weverse’s traffic is on the rise. Last year, its average user spent 250 minutes on the platform and visited 10.2 days per month, up from 171 minutes and 9.2 days in 2022. Traffic was up 47% in Africa and 25% in the Middle East. It now has 117 artist communities, including 13 SM Entertainment artists — including Super Junior, Riize and NCT Wish — who joined in September. And as Weverse president Joon Choi explained in an interview with Billboard, the company’s next target is the United States.
Do artists bring their fans to Weverse, or do they tap into the passionate user base you have?
That happens in both ways. Existing Weverse users contributed a lot to the new community of the SM Entertainment artists. But, at the same time, we could clearly see the new user registration spike right after SM artists joined Weverse. So, we’re very happy with this kind of migration. It happened with no hassle.
What about adding artists from the United States to Weverse? Many artists under the HYBE umbrella could be potentially added to the platform to reach new fans.
That’s still in discussion. I think we can come up with more exciting news in the near future.
Weverse has an office in Los Angeles [in Santa Monica]. What are you doing to build Weverse and build the brand in the United States?
The first thing is we are aggressively hiring people who would serve the basic functions including commerce functions, as well as artist support. In terms of raising and improving market awareness, I think that’s something we will be more aggressively working on in 2024. So, as we gain the momentum from new artists and North American artists joining and creating communities on Weverse in America, we will aggressively work on raising the market awareness this year.
Fandom is a word that has become more commonplace as K-pop has grown more popular. I think it’s also a tough word to define properly. How do you define fandom?
I think there are multiple segments — or I would say cohorts — among users of our services. Starting from light listeners, and then we would have more active listeners, we would probably consider them being monthly subscribers to Spotify or Apple, they will be probably the more active listener. And then on top of that there must be a cohort that is more engaged. And those will be probably concertgoers or those people who actively purchase albums of these particular artists. From that particular cohort or user segment, we will probably call them fans. As their engagement level goes up, and they become more active in their fan activities, they will be considered the most dedicated or enthusiastic fans. When you think about any business, you think about the framework of the user acquisition funnel from the very top to the bottom. When it goes to the very bottom, the core of the users, there are users or fans who are ready to purchase whatever the artist is offering. So, from the very bottom to the top, Weverse climbs up to the light users.
What specifically does Weverse do to help serve artists’ superfans better than other social platforms or a streaming platform like Spotify?
Before Weverse, the superfan experience was scattered here and there. You buy merch here, you go to the concert, and you get together in some places. Those experiences were all scattered around. But I think Weverse was the first service to get everything together in the best, [most] convenient way. Number two would be global. To go global, we really value the importance of translation. So, we provide real-time translation in 15 languages.
How does how does Weverse make money? Is it advertising? Is it taking a percentage of sales?
When it comes to advertising, we don’t have it yet, but we are working on it. So, we’re going to launch our advertising service this year. And before that, basically we get a revenue share from album sales, merch sales or any kind of digital value provided to the fans.
I’ve noticed a lot of merchandise for sale. How do you fulfill those orders? Do you have partners in different countries to help?
When it comes to a commerce system, we built everything in-house except for the fulfillment side. Obviously, we have international fulfillment partners. We have warehouses in Korea, Japan and the U.S. — in Carson, south of L.A. So, we get orders from more than 200 countries around the world. We ship everywhere.
You sell CDs, correct, and digital downloads?
Correct.
Do fans in Korea still buy CDs and download albums and tracks in high numbers?
They do both, obviously. Physical albums still do very high volume. And on top of that, Weverse also tries to provide digital/physical experiences together. That’s the reason why we launched Weverse Album last year, which is basically an album without a CD. The album comes with the QR code, then users can download the original high-quality music source and enjoy within Weverse.
What’s more popular in Korea, CDs or vinyl?
CDs. Vinyl is not as popular as in the U.S.
You launched Weverse by Fans, which allows users to customize merchandise. Can you tell me how many artists are using that and what the early results have been?
Currently, Weverse by Fans is in the beta phase. As of now, we have eight Korean artists who are using the Weverse by Fans: TOMORROW X TOGETHER, ENHYPEN, Le Sserafim, NewJeans, BOYNEXTDOOR, XIA, Hwang Min Hyun and Baekho.
Weverse does live streaming, whether it’s live performance or chats with artists. How important is that to Weverse?
Weverse Live is highly important to us. Weverse Live offers many different layers that I would say are different types of livestreaming. With the first one, we might have some special arrangement celebrating or marking an album’s release or album showcase. So, Weverse Live can be used for that. And there can be more instant or casual livestreaming, using the Weverse Live as well. The Lollapalooza performance that BTS member Jimin did last year, that was on Weverse Live as well. Weverse Live offers many different types of livestreaming starting from very large-scale concert streaming to a very casual or instant livestreaming done by individual artists.
I would like to add the three reasons why Weverse Live is of great value and importance to Weverse. First, after we release the service, Weverse Live, the users’ duration [of visit] and also their likelihood of revisiting Weverse have all gone up. So, the retention rate has significantly improved thanks to Weverse Live. And the second reason is that users are very satisfied with the quality of livestreaming services that we offer. They often give us feedback that compared to other major livestreaming services they are highly satisfied with the quality of livestreams that we provide. And the third reason is that Weverse Live has been integrated with live commerce, Weverse Commerce. When an artist or a label decides to do so, we can also turn on Weverse Commerce. That has really helped boost sales.
What might somebody sell with Weverse Commerce? A new album release?
Yes, our albums have been the most frequently sold items using the live commerce feature. Artists and labels prefer selling albums. That was the main item that was sold on live commerce. But, as I mentioned earlier, artists want to add the Weverse by Fans feature as part of the live commerce. So that’s something that we’re working on right now.
Since HYBE owns Weverse, it also owns a lot of data about its fans. How does HYBE leverage that data for either insights or marketing?
As you know, HYBE is a multi-label system. Underneath the multi-label system, each label is actively leveraging the fandom data coming from each community. However, what you need to understand is that within Weverse, there are many artists that are not HYBE artists, right? So, each label is working like a silo — they have access and they leverage the data only within their own community. So that’s what I want to clarify first.
As you know, Weverse is a platform and the neutrality of data and our service’s neutrality has been emphasized from the very beginning. From the early days of Weverse, that was something that we always have emphasized. Maybe because we have emphasized that importance, more than 90% of artists that have joined Weverse are not HYBE artists.
Could you give me insight into the size of the company, where your employees are, where you have offices? How could you describe the size of your footprint?
When we first started Weverse, we started with 50 to 60 people. But as I mentioned earlier, we went through a very compact, rapid growth within the last three or four years. So now we have about 370 people in Korea. So, in total around the world in three headquarters in Pangyo [South Korea], here where I am in Tokyo and Santa Monica, we have a total of about 450 employees. More than half of them are engineering people. I think it’s very hard to find any music company that has this many engineering people in-house. So, I think that was the biggest challenge we’ve been going through and also it has been very successful so far.
Do you expect to grow in 2024?
Yes. I’m very sure. Because, I mean, it has been [an] investment in advance because Weverse has massive traffic and a global scale. That requires a lot of work under the hood, way more than the surface features you can see from the web or app. There are a lot of things underneath that. So, it has been a very heavy lift, and that requires a lot of technological investment and investment.
This interview has been edited for clarity and brevity.
Music stocks mirrored the poor start to 2024 seen in markets around the world, but K-pop giant HYBE bucked the trend with a 7.9% gain to 252,000 won ($191.67) this week. HYBE made the news multiple times during a relatively slow, holiday-shortened week — though none of it was the type of financial news that […]
The Billboard Global Music Index — a diverse collection of 20 publicly traded music companies — finished 2023 up 31.3% as Spotify’s share price alone climbed 138% thanks to cost-cutting and focus on margins. Spotify is the single-largest component of the float-adjusted index and has one of the largest market capitalizations of any music company.
The music index was outperformed by the tech-heavy Nasdaq composite, which gained 43.4% with the help of triple-digit gains from chipmaker Nvidia Corp (+239%) and Meta Platforms (+194%). But the Billboard Global Music Index exceeded some other major indexes: the S&P 500 gained 24.2%, South Korea’s KOSPI composite index grew 18.7% and the FTSE 100 improved 3.8%.
Other than Spotify, a handful of major companies had double-digit gains in 2023 that drove the index’s improvement. Universal Music Group finished the year up 14.7%. Concert promoter Live Nation rode a string of record-setting quarters to a 34.2% gain. HYBE, the increasingly diversified K-pop company, rose 34.6%. SM Entertainment, in which HYBE acquired a minority stake in March, gained 20.1%.
A handful of smaller companies also finished the year with big gains. LiveOne gained 117.4%. Reservoir Media improved 19.4%. Chinese music streamer Cloud Music improved 15.8%.
The biggest loser on the Billboard Global Music Index in 2023 was radio broadcaster iHeartMedia, which fell 56.4%. Abu Dhabi-based music streamer Anghami finished 2023 down 34.8%. After a series of large fluctuations in recent months, Anghami ended the year 69% below its high mark for 2023. Hipgnosis Songs Fund, currently undergoing a strategic review after shareholders voted against continuation in October, finished the year down 16.6%.
Sphere Entertainment Co., which split from MSG Entertainment’s live entertainment business back in April, ended 2023 down 24.4%. Most of that decline came before the company opened its flagship venue, Sphere, in Las Vegas on September 29, however. Since U2 opened the venue to widespread acclaim and earned Sphere global media coverage, the stock dropped only 8.5%.
For the week, the index rose 1.1% to 1,534.07. Fourteen of the index’s 20 stocks posted gains this week, four dropped in price and one was unchanged.
LiveOne shares rose 15.7% to $1.40 after the company announced on Friday (Dec. 29) it added 63,000 new paid memberships in December and surpassed 3.5 million total memberships, an increase of 29% year over year. iHeartMedia shares climbed 14.6% to $2.67. Anghami continued its ping-pong trajectory by finishing the week up 16.9%.
12/29/2023
The year saw K-pop companies making mega moves on a global scale, while the catalog market remained hot.
12/29/2023
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In a stunning wrinkle in the fevered battle between Kakao Corp. and HYBE for a controlling stake in K-pop company SM Entertainment, Kakao’s chief investment officer was indicted Monday (Nov. 13) for allegedly manipulating the stock price to ward off HYBE’s rival bid.
Bae Jae-hyun, Kakao’s chief investment officer, will face a trial for violating South Korea’s Capital Markets Act, according to reports. He allegedly inflated the price of SM Entertainment shares by purchasing 240 billion won ($181.3 million) of shares while HYBE, home of K-pop group BTS, was attempting to buy a large stake in the company. Prosecutors also charged Kakao using a provision in the law that allows both a company and its employees to be punished.
The scheme to manipulate SM Entertainment’s share price stemmed from a heated competition between Kakao and HYBE to become the largest shareholder in SM Entertainment — home to such K-pop acts as NCT Dream and Red Velvet — to help rebuild the company after it terminated a production contract with its founder, Lee Soo-man. In February, HYBE acquired a 14.8% stake in the K-pop giant from Lee and attempted to acquire an additional 25% stake through a tender offer at 120,000 won ($92.36) per share. HYBE’s bid was too low, however, and the tender offer gave HYBE less than 1% of outstanding shares.
Bae allegedly acquired SM Entertainment shares to drive up the price above HYBE’s tender offer price, thus thwarting its efforts to obtain a larger stake. On March 6, Kakeo and Kakao Entertainment followed with a tender offer of 150,000 won ($115.46) per share — 25% above HYBE’s tender offer price — and ended up acquiring an additional 25% stake, bringing its ownership of SM Entertainment to 40%. HYBE abandoned its bid to control SM Entertainment on March 13 and announced on March 28 that it would sell nearly half of its stake in SM Entertainment to Kakao for 248.8 billion won ($191.8 million).
Kakao is a South Korean tech conglomerate that owns the country’s dominant chap app, KakaoTalk, and a popular taxi-hailing app, Kakao Mobility, among other products. A subsidiary, Kakao Entertainment, owns Starship Entertainment, home to such K-pop groups as Monsta X, as well as South Korea streaming app Melon. In August, Kakao Entertainment and SM Entertainment revealed their plans to create a North American joint venture by the end of 2023.
The investigation into stock manipulation started soon after Kakao and Kakao Entertainment beat out HYBE for the SM Entertainment stake. South Korean officials raided the offices of Kakao and Kakao Entertainment on April 6 and SM Entertainment’s headquarters on April 18. Bae was arrested for suspected stock manipulation on Oct. 19 before being indicted on Monday. Other executives were suspected of working with Bae to inflate SM Entertainment’s share price, according to a Reuters article at the time of his arrest, but to date no one else has been charged.
South Korean music company HYBE, home of K-pop giants BTS and Seventeen, has made its first entry into the Latin music sector with the acquisition of Exile Music, the music division of Spanish-language studio Exile Content. HYBE said HYBE Latin America will incorporate K-pop business methods and focus on artist management and talent discovery across […]
The competition is narrowing down in The Debut: Dream Academy, and on Sunday (Nov. 5), the top 10 finalists were revealed. The latest eliminations came after the last of the competition’s three missions ended. The third mission was focused on demonstrating the remaining contestants’ artistry while executing various musical concepts. One group performed Demi Lovato’s “Confident,” […]
Shares of K-pop companies sank this week following news that a member of K-pop ground EXO is leaving SM Entertainment for a different agency. According to reports, D.O. will leave SM Entertainment for a new agency being established by his longtime manager. D.O.’s contract expires in early November, SM Entertainment said in a statement, and the artist “will continue with his EXO activities with SM” but pursue acting and other activities through the new agency.
SM Entertainment shares fell 9% to 113,400 won ($83.93). Shares of YG Entertainment, home of girl group BLACKPINK, dropped 9.3% to 53,700 won ($39.74). Shares of JYP Entertainment, home of Stray Kids and Twice, plummeted 11.1% to 100,900 won ($74.67). HYBE, home to BTS and Tomorrow X Together, fell 8.2% to 224,500 won ($166.15). Shares of Kakao Corp. dropped 9.6% to 39,050 won ($28.90). Kakao and its subsidiary Kakao Entertainment own 40% of SM Entertainment’s common stock. Earlier this year, Kakao Entertainment formed a North American joint venture with SM Entertainment.
With all K-pop stocks moving in synch, investors appear to be concerned that the established agencies could be threatened by upstarts. Because Korean companies have far smaller rosters than publicly traded Western music companies such as Universal Music Group, Warner Music Group and Believe, any one departure can have an outsized impact. When BTS announced it planned to go on hiatus, HYBE’s share price dropped nearly 25% the following day.
Separately, the chief investment officer of Kakao, Bae Jae-hyun, was charged with manipulating SM Entertainment’s stock price in connection with Kakao’s bidding war against HYBE over SM Entertainment in the first quarter of the year. According to Bloomberg, the executive was arrested Thursday for buying 240 billion won ($178 million) worth of SM Entertainment shares in an effort to disrupt HYBE’s tender offer.
Despite the week’s heavy losses, K-pop stocks are among the best performing music stocks in 2023. Through Friday, HYBE, SM Entertainment, YG Entertainment and JYP Entertainment have gained an average of 37.1% year to date. JYP Entertainment leads the four companies with a year-to-date improvement of 48.8%.
The 21-stock Billboard Global Music Index fell 3.1% to 1,313.44, lowering its year-to-date gain to 12.5%. It was the biggest one-week drop for the index since July and just the seventh time this year the index dropped by more than 3% in a week. Losses were widespread and only four of the 21 stocks posted gains.
Stocks generally had a miserable week. In the United States, the Nasdaq composite index fell 3.2% and the S&P 500 declined 2.4%. In the United Kingdom, the FTSE 100 dropped 2.6%. South Korea’s KOSPI composite index sank 3.3%. As the first wave of companies released third-quarter earnings this week, one of the standouts was Netflix. The streaming video giant gained 16.1% on Thursday after announcing it added 9 million subscribers in the quarter and will raise prices in the U.S., U.K. and France.
Anghami was the index’s greatest gainer for the second straight week after increasing 16.6% to $0.96. Last week, shares of the Abu Dhabi-based music streamer jumped 18% after the company received a written notification from the Nasdaq Stock Market on Oct. 12 regarding its closing share price falling below $1.00 for the previous 30 days. On Tuesday, Anghami issued a press release to reveal the Nasdaq Stock Market issued a written notification notifying the company it is not in compliance with the exchange’s requirement that listed companies maintain a minimum market value of $15 million. Anghami fell below the $15 million threshold from Aug. 29 to Oct. 10. Anghami has until April 8, 2024, to regain compliance.
Hipgnosis Songs Fund gained 4.9% to 0.775 GBP ($0.94) this week despite dropping 9.3% on Monday following news the company canceled a planned dividend payment. As the week progressed, the London Stock Exchange-listed company’s stock price steadily increased and was helped by the board of director’s announcement on Thursday of a strategic review to help calm investors’ nerves. After Monday’s decline, the share price rose 15.6% through Friday (Oct. 20) to reach its highest closing price since Oct. 3. At the company’s annual meeting on Oct. 26, shareholders will vote to approve a $440 million catalog sale intended to reduce the share price’s discount to Hipgnosis Songs Fund’s net asset value. Shareholders will also vote on a continuation resolution.