HYBE
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Justin Bieber‘s and Scooter Braun’s success has been inextricably intertwined since 2008 when Braun discovered the then-13-year-old singer on YouTube, got him signed to Usher’s record label and became his manager. Braun made Bieber’s career, and vice versa, and their once-flourishing business relationship was arguably the catalyst for Braun adding Ariana Grande, Demi Lovato, J Balvin, Idina Menzel and many others to the management roster at his SB Projects, and the subsequent sale of its parent company Ithaca Holdings to Korean K-pop entertainment giant HYBE for $1.06 billion in April 2021 and his appointment as HYBE America’s CEO that followed.
But since then, Braun has moved his focus away from his management business and onto growing HYBE, shepherding massive deals like its $300 million purchase of hip-hop company Quality Control in February. That shift is one factor that’s had Bieber actively looking at how he might extract himself from that relationship with the help of his new music lawyer, David Lande, and prompting Braun’s other star clients to exit as well, sources tell Billboard. Grande is also planning to part with Braun on friendly terms, more because she’s “excited to go in a different direction” and because she’s “outgrown him” than because of his C-suite distractions, a source close to her says: “It’s time for something new.” Menzel, Balvin and Lovato departed earlier this year, on good terms as well, sources say.
But even for the world’s biggest superstars, leaving your manager is easier said than done — and Bieber and his lawyer are still exploring all their options, sources tell Billboard, with a full split not guaranteed. Bieber’s latest moves have included firing his agency, CAA, and hiring a new music lawyer — Lande at Ziffren Brittenham — to replace Aaron Rosenberg, whom Braun had helped hire. (Michael Rhodes, a partner at the Cooley law firm remains Bieber’s general counsel.)
Lande, these sources say, has been looking at how to extricate Bieber from the management agreement with Braun, but there’s a major complication: Bieber is still under contract for about four more years, following a series of amendments to their deal made three years ago, sources say, and standard management contracts tend to favor the manager. To get out entirely free of obligations, an artist must often show that their manager breached the agreement — which generally includes acting outside of an artist’s best interests, such as financial impropriety like siphoning funds. And only in the most extreme examples does a manager being unavailable or unreachable count. (Were that the case, Braun’s team at SB projects would likely give him significant cover: Braun’s lieutenant, Allison Kaye, has been running management as president of SB Projects since 2016.) Sometimes there are performance metrics, but given Bieber and Braun’s stature in the industry, that’s unlikely, music lawyers say.
“If you’re talking about a case where the artist is just no longer content with their current manager and wants to get out of their management deal, they have a high bar to clear,” says entertainment attorney Larry Katz. “The only chance an artist would have is if they can demonstrate a well-documented pattern of failure by the manager.”
That said, many managers and lawyers agree that it is not in anyone’s best interest to hold an artist in a contract against their will. “Slavery is not a thing,” says one manager.
A scenario like this usually results in the artist and manager striking a new deal that involves a lump sum paid to the manager; a commission on future monies made from deals in which the manager was involved; a sunset clause that gives the manager a gradually decreasing percentage of earnings from such deals — or, likely, a combination of these.
Perhaps because of these complications, sources familiar with some of Bieber’s business dealings say he is focused on resolving his predicament with Braun and would not begin a serious search for new management until that objective is completed — or may not seek a new manager at all.
Otherwise, Bieber would need to shoulder the cost of paying two managers until his agreement with Braun either expired or was dissolved.
A new manager would also face limited options for finding new income opportunities. Bieber is still under a recording contract with Def Jam as he currently works on his seventh studio album, meaning there’s no new multi-million-dollar label deal on the immediate horizon. He also sold his publishing, artist royalties from his master recordings and neighboring rights to Hipgnosis for over $200 million earlier this year. And he remains under contract with AEG Presents, which has promoted his concerts since his inaugural My World Tour in 2010.
Under that AEG deal, Bieber likely owes the promoter any advances paid for his tours that haven’t been recouped. This would likely include an upfront signing fee paid to AEG to promote Bieber’s tours, as well as a per-show guarantee — some or all of which would be recoupable against the tour’s ticket sales. These financial obligations are usually settled somewhere between the early planning of the tour and while it’s in progress, but Bieber’s situation is more complicated. That’s because he has repeatedly rescheduled or canceled touring plans over the past three years due to the coronavirus pandemic and personal health issues, which could mean that his deal with AEG has yet to recoup its obligations.
Still, sources agree Bieber remains an appealing client, because of the kind of influence that comes with his superstar stature.
As for the status of Bieber and Grande’s relationship with SB Projects, sources close to Braun’s camp say both artists are under contract but are currently working out new deal structures to account for Braun stepping into his larger role as HYBE America CEO. Sources close to Bieber and Grande say they are also working out new deal structures for the many business ventures they undertook while at SB — in preparation for their potential departures.
“It might take several years for Bieber to wrap up whatever deals he has with Braun and SB Projects, but he’s still a very attractive client,” says a major talent agent executive unassociated with the artist. “He’s young, he’s a proven superstar and he’s motivated to work and make money.”
Additional reporting by Dave Brooks and Elias Leight.
Ariana Grande and Demi Lovato have split from manager Scooter Braun. Rihanna & A$AP Rocky have reportedly welcomed their second child together. Justin Timberlake is showing off his acting chops in the trailer for Netflix’s ‘Reptile,’ as *NSYNC is rumored to reunite in ‘Trolls Band Back Together.’ And more! Tetris Kelly:Scooter Braun loses some of […]
Boosted by K-pop’s growing popularity and artists’ return to concert stages, the four publicly traded South Korean music companies — HYBE, SM Entertainment, YG Entertainment and JYP Entertainment — posted average revenue growth of 71% in the second quarter of 2023, according to Billboard’s analysis of their recent earnings reports.
Sky-high growth rates in recent quarters have helped make the K-pop companies a wise investment in 2023: Through Wednesday (Aug. 16), the four share prices increased an average of 63.6% year to date, adding more than $4.7 billion in market capitalization cumulatively to the companies’ stocks. In contrast, stocks of the two largest standalone music companies, Universal Music Group and Warner Music Group, have gained 3.6% and lost 6%, respectively, year-to-date through Tuesday (Aug. 15).
In terms of revenue growth, the leader in the second quarter was JYP Entertainment, home to the groups Stray Kids and Twice. JYP’s revenue grew 124% to 151.7 billion won ($115.2 million), with new albums by Stray Kids, Twice and NMixx driving a 298% increase in physical sales to 74.1 billion won ($56.3 million). Republic Records, JYP’s partner in the United States, accounted for 14.5 billion won ($11 million) of physical sales, or about 20% of the total amount. Elsewhere, JYP’s concert revenue grew 44% year-over-year to a record 14.4 billion won ($10.9 million) while merchandise sales climbed 151% to 21.7 billion won ($16.5 million). Domestic streaming revenue grew 18% to 2.2 billion won ($1.7 million) while overseas streaming revenue jumped 82% to 10.3 billion won ($7.8 million).
YG Entertainment boasts the greatest share price gain among the group at 75.6% year to date. The company behind breakthrough girl group BLACKPINK, YG posted revenue of 158.3 billion won ($120.2 million) in the second quarter, up 108% from the prior-year period.
JYP Entertainment’s operating income grew 88% to 45.6 billion won ($34.6 million) but missed its 51-billion won estimate, causing the company’s share price to fall 8.2% the following day. Although its revenue grew 124% in the quarter, JYP was hurt by what it called a “temporary increase in content product costs.” As a result, its cost of goods sold rose 162% while gross margin percentage — gross profit as a percent of sales — declined 1.6 percentage points to 47.7%.
Expenses also grew faster than revenue at HYBE, where cost of sales grew 25% while sales, general and administrative expenses climbed 32%. HYBE’s operating profit declined 8% as a result, while net income improved 19% despite a 21% growth in revenue. HYBE’s share price declined just 0.9% the day after the results were released; with a 38.9% gain year-to-date, its stock boasts the lowest appreciation of the four K-pop companies.
For 2023, Billboard is introducing the R&B/Hip-Hop Power Players’ Choice Award, a peer-voted accolade chosen by Billboard Pro members to honor the executive they believe has made the most impact across the R&B/hip-hop music business over the past year. After three rounds of voting, Billboard Pro members have chosen Pierre “P” Thomas, CEO of Quality Control, to […]
Shares of Cumulus Media gained 9.7% this week, the leading stock in the Billboard Global Music Index and one of only four stocks in the 21-company index to end in positive territory Friday (June 23).
Overall, the Billboard Global Music Index declined 3.5% to 1,287.41 — more than double the 1.4% declines of the S&P 500 and Nasdaq. Music stocks were more in line with the Nasdaq when the overpowering effects of a small number of tech companies are removed, however. That’s because a few powerhouses — such as Microsoft, Apple, Alphabet and Amazon — often account for a large fraction of the Nasdaq’s gains. To that point, QQQE, an exchange-traded fund that gives equal weight to 100 Nasdaq stocks, declined 2.9% this week.
In the United Kingdom, the FTSE 100 declined 2.4%. South Korea’s KOSPI index fell 2.1%. Central banks in England, Turkey and Norway raised interest rates this week. Investors can reasonably expect more rates hikes in the United States, too. Federal Reserve chairman Jerome Powell said on Wednesday the central bank may continue to raise rates — there have been 10 since March 2022 — but “to do so at a more moderate pace.” When central banks raise interest rates, stocks tend to fall because businesses and consumers are expected to cut back on spending and higher rates make bonds relatively more attractive to stock returns.
Cumulus Media improved to $3.40 a week and a half after the company announced it will sell about 1.75 million Class A common shares — nearly 10% of outstanding shares — at $3.25 per share in a modified Dutch auction that closed on June 9. While the sale will gross about $5.7 million, not including fees and expenses, the final result was well below the company’s goal to sell up to $10 million of shares as part of a previously announced $50 million share repurchase plan.
Shares of French music streaming company Deezer gained 3.6% to 2.32 euros ($2.54), bringing the stock’s year-to-date loss to 20.5%. U.S. streaming company LiveOne gained 3.3% to $1.58. Year-to-date, LiveOne has gained 145.3%. The only other company with a week-over-week improvement was South Korea’s HYBE, which improved 1.2% to 301,000 KRW ($236.91).
The other three Korean music companies declined this week: SM Entertainment and YG Entertainment each fell 5.6% and JYP Entertainment dropped 3.5%. Still, K-pop has been a resounding success for investors in 2023. Led by JYP Entertainment’s 93.7% year-to-date gain, the four Korean companies’ stocks have risen an average of TK% in 2023.
One company, Anghami, was unchanged and the index’s other 16 stocks were in negative territory this week. MSG Entertainment had the Billboard Global Music Index’s largest decline after dropping 17.1%. Sphere Entertainment Co., which spun off MSG Entertainment in April, intends to sell part of its 33% stake in MSG Entertainment. The news dropped the live entertainment company’s share price 12.1% on Wednesday. At Friday’s closing price, Sphere Entertainment’s sale of 5.25 million shares would gross about $170 million that could help fund the state-of-the-art Sphere at The Venetian Resort in Las Vegas that’s set to open in September.
HYBE is reportedly in talks with investors to raise around $380 million (500 billion won) to fund acquisitions outside of the South Korean entertainment market, according to a report by Bloomberg. The agency and entertainment company is exploring taking on strategic and financial investments in exchange for equity, the outlet reported Thursday, citing sources who […]
Three HYBE employees could be prosecuted for insider trading in South Korea for allegedly using non-public information about K-pop group BTS’ planned hiatus before the news was given to investors, according to multiple reports out of South Korea. South Korea’s Financial Supervisory Service (FSS), the equivalent of the Securities Exchange Commission in the U.S., […]
South Korea-based music and entertainment company HYBE signed a music distribution deal with Tencent Music Entertainment this week, according to media reports. Reuters, citing an article by the Seoul Economic Daily, reported Tuesday (May 23) that the agreement allows music by BTS, TOMORROW X TOGETHER and other HYBE artists to be streamed on Tencent Music’s platforms. […]
On April 3, Billboard broke the news that Jimin’s track “Like Crazy” reached No. 1 on the Billboard Hot 100 — a first for a solo Korean artist — while his album, FACE, debuted at No. 2 on the Billboard 200. Released by Big Hit Music, one of the labels under Korean entertainment company HYBE, “Like Crazy” currently marks the best performance by a member of K-pop supergroup BTS, whose hiatus announcement last year presented a significant challenge to HYBE’s ability to forge another chart success in the United States. “Like Crazy” reached only No. 11 in South Korea, although FACE topped album charts in South Korea and Japan.
Investors took note of Jimin’s U.S. accomplishments. The following day, HYBE’s share price on Korea Exchange rose as much as 11.4% to 212,500 won ($161) before ending the day at 205,000 won ($155), up 7.5% from the previous day (as of April 17, it had risen 40%). That was the highest closing price since June 10 of last year — three trading days before BTS confirmed it would take a hiatus, worrying investors and sending HYBE’s share price down 28% in a single day. For a company with grand ambitions to build off of the success of BTS, “Like Crazy” was an important validation.
The music industry should take note, too. HYBE did with Jimin what all South Korean music companies are attempting with increasing urgency: ride the wave of K-pop’s global success by expanding outside of Korea and build up operations in the United States, the world’s largest music market. “All the shareholders want to see the ability for them to diversify [their] portfolios,” says Sung Cho, CEO of Chartmetric and newly appointed board member of the pioneering K-pop agency SM Entertainment.
Exporting is what South Korea does best. “After the Korean War, the only way to survive was to export things,” says Cho. Over the last three decades, the success of companies such as Samsung, LG and Hyundai has turned the country of 52 million into a top 10 exporter, according to the World Bank. But in recent years, South Korea has become known not just for its exports of high-tech products and manufactured goods, but as a global entertainment dynamo as well. South Korea’s music business built its economic success into a trade surplus of about $3.1 billion for intellectual property of music and images in 2021, up from $800 million in 2020, according to the country’s Ministry of Culture, Sports and Tourism. The South Korean film Parasite won a 2020 Academy Award for best picture. A year later, Squid Game became the most watched series in Netflix history, a worldwide phenomenon that racked up 1.7 billion viewing hours in its first month.
South Korean music companies have become international powerhouses by drawing on hip-hop, R&B and pop music and selling the K-pop blend of these genres back to fervent fans in the United States, Japan and Europe. But to compete globally with larger companies, the South Korea approach to the music business, and not necessarily the music itself, could be the deciding factor. “We’re seeing not only the export of K-pop bands — the boy bands, the girl bands — we’re starting to see the export of the K-pop business model,” says Bernie Cho, president of DFSB Kollective, a Seoul-based artist and label services agency. SM Entertainment founder Lee Soo-man coined the term “cultural technology” in the ’90s for his system of producing K-pop and promoting it worldwide. Other K-pop companies have adopted a similarly disciplined, systematic approach to finding, developing and promoting musicians.
The widespread music-business anxiety about the death of artist development doesn’t apply to South Korea. Western labels fight bidding wars over viral artists with instantaneous popularity or favor proven artists and catalogs, leaving the task of building an audience to artists themselves or independent labels. In contrast, K-pop companies spend years recruiting and rehearsing talent, as well as giving artists instruction in a specific approach to the music business. “Combing through social media platforms like TikTok may give us a chance to sign artists who are technically proficient as music producers or performers, but we demand more from our artists,” says HYBE CEO Jiwon Park in an email to Billboard. That means trainees work with HYBE’s training and development department to “internalize the values of autonomy and responsibility” so they can navigate the expectations put on them.
To learn the U.S. market, South Korean companies have partnered with U.S. labels to distribute, market and promote their music. HYBE has a joint venture with Universal Music Group’s Geffen Records to create a U.S.-based girl pop group. JYP Entertainment has teamed with UMG’s Republic Records to form the global girl group America2Korea, or A2K. Additionally, Kakao Entertainment’s Starship Entertainment subsidiary has partnered with Sony Music Group’s Columbia Records to co-manage marketing and promotion of the six-member female group IVE in North America.
These U.S.-Korean partnerships have also given domestic labels a chance to learn the K-pop method of A&R. To Glenn Mendlinger, president of Imperial Music, a new division of Republic Records, the JYP partnership has provided insight into “what it is to build a fandom and foster it through immersive packaging and increasing the collectability of the products.” Mendlinger is impressed with JYP’s attention to detail and ability to build storylines for their artists. “That’s why they’re so successful,” he says in an email to Billboard. “The level of care is unparalleled and unrivaled in terms of its intimacy and diligence.”
But more and more, South Korean companies have boots on the ground and control of their destinies in the United States. HYBE is the furthest along in building out its stateside operations. In 2021, it acquired Scooter Braun’s Ithaca Holdings for $1.05 billion and named Braun the CEO of HYBE America, a genre-spanning collection of artist management and record labels that includes SB Projects, Nashville-based Big Machine Label Group and Atlanta hip-hop company Quality Control, which was acquired in February for $300 million. Those deals are “just the beginning,” HYBE chairman Bang Si-hyuk said in a speech in March. He believes building in the United States will give HYBE the “strong network and infrastructure” it needs to “minimize the cost of trial and error” and attain stronger bargaining power and distribution rates relative to local companies.
SM Entertainment, the company behind such groups as NCT 127 and aespa, and Kakao Entertainment have created a U.S. joint venture and plan to acquire a U.S.-based company to expand into hip-hop or R&B, according to SM’s road map made available to investors. Kakao now owns a 40% stake in SM Entertainment, having quelled HYBE’s attempt to buy a commanding stake and control its board of directors following a break with SM founder Lee.
South Korean music companies’ do-it-yourself nature extends to tech platforms, too. While most labels depend on the likes of Meta, Twitter and Fortnite to reach fans, HYBE owns its own social network, Weverse, and JYP and SM have a joint venture with tech company Naver called Beyond LIVE that streams live online concerts. SM also owns a social networking app, Bubble, and its artists will begin building fan communities at HYBE’s Weverse in September. It makes sense in one of the world’s most wired and wireless countries, says Cho of DFSB Kollective. In Korea, “youth culture, pop culture and digital culture are one and the same in many ways.”
For HYBE, Weverse not only diversifies its business but allows it to control how its artists communicate with their fans. With the addition of artists from North America and Japan, Weverse “will serve as a gateway to the fandom market in Asia, North America and the world,” says Park. With enhancements and new services, “Weverse will seek boundless expansion beyond K-pop.”
This story originally appeared in the April 22, 2023, issue of Billboard.
HYBE announced Monday (Sept. 17) that a dozen solo artists and music groups on the SM Entertainment roster will join its global fan community platform, Weverse, in September. Those artists, who have not yet been named, will move to Weverse from SM’s own fan community platform, Kwangya Club.
In addition to connecting with fans via services including Weverse Live, the 12 SM artists will also be featured on the e-commerce platform Weverse Shop, where fans can buy albums and official merchandise.
The Weverse deal derives from a platform partnership struck between HYBE, SM and Kakao Entertainment in March after HYBE fell short of its mission to purchase a controlling stake in SM. HYBE, home to K-pop superstars BTS, was blocked in its efforts by rival bidder Kakao, a South Korean tech company that owns Monsta X‘s label Starship Entertainment and Korean music streaming platform Melon. The battle ended when HYBE agreed to sell its entire SM stake to Kakao; days later, it sold 1.66 million SM shares to Kakao for 248.8 billion won ($191.8 million), amounting to 44% of its total shares in the company and increasing the stake of Kakao Corp. and its subsidiary, Kakao Entertainment, to nearly 40%. HYBE retains an 8.8% stake in SM.
Later in March, SM appointed Jang Cheol-hyuk as the company’s new CEO, succeeding outgoing CEO Lee Sung-soo, and named a new board as the company vowed to improve corporate governance and its production system, which had fallen behind rivals like HYBE in recent years and led to investor scrutiny.
Weverse claims approximately 65 million subscribers across 245 countries and regions globally.