International
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SEOUL — The bitter battle for control of K-pop’s fabled agency SM Entertainment has spilled out publicly like an episode of HBO’s Succession. K-pop’s largest agency, HYBE — home to boy band BTS — is pitted against the management of SM, which for years was South Korea’s dominant K-pop company. But as SM’s Lee Soo-man sided with HYBE against the company he founded, a corporate shakeup has turned into a battle royale.
SM sought to maintain its independence through a partnership with Kakao, a South Korean internet giant that has acquired several entertainment agencies. In February, Kakao said it would buy a 9.05% stake in SM against the wishes of Lee, SM’s charismatic founder and rock singer-turned-mogul, whose equity in SM allowed him to challenge the purchase in court.
About a week later, Lee — a controversial figure who helped build the K-pop business over the last three decades but has been convicted of embezzlement in the past — privately approached HYBE founder and chairman Bang Si-hyuk, offering to sell about 80% of his SM shares to HYBE, with an option to sell the remaining chunk at a later date, according to a person with direct knowledge of the matter. As a result, HYBE now has a 15.8% stake in SM, making it the company’s largest shareholder.
Since then, the companies have traded almost daily salvos.
After a March 3 provisionary injunction upheld Lee’s court challenge to the Kakao acquisition, Kakao announced it had canceled its investment in SM and launched a tender offer seeking to buy 35% of SM from minority shareholders. HYBE is now appealing to SM shareholders to back its board nominees and vision for the company. SM sees the move as a hostile takeover and is asking shareholders to appoint independent directors. The clock is ticking before a March 31 annual shareholder meeting.
Both HYBE and SM have grand ambitions to expand K-pop and take on the major labels globally. HYBE increased its revenue 125% to 1.78 billion won ($1.41 billion) from 2020 to 2022, largely by acquiring Ithaca Holdings in 2021 for $1.05 billion and giving its founder, Scooter Braun, the reins to its U.S. operations, HYBE America. In February, HYBE America made its first major move, purchasing Atlanta-based hip-hop company Quality Control Music for $300 million.
SM hopes to more than double its 2022 revenue of 850 billion won ($644 million) to 1.8 trillion won ($1.36 billion) by 2025 through a mix of partnerships and acquisitions, which include acquiring a U.S. management company and, by the second half of 2024, launching its first U.S.-based artist. “Our plan is not limited to local activities of Korean artists,” co-CEO Tak Young-jun said in a Feb. 23 video.
The company plans to spend 350 billion won ($266 million) on a music publishing company and 300 billion won ($228 million) to acquire record labels, with two-thirds of that amount ($152 million) targeting U.S. companies “with a solid local network that can support Korean artists’ global expansion and have global production capabilities in genres complementary to SM,” Lee Sung-soo, SM’s chief creative officer and co-CEO, said in the same video.
But minus its powerful founder, SM doesn’t intend to take the world stage with HYBE’s help. It had envisioned Kakao as its preferred partner in a mission — dubbed “SM 3.0” — it has said it will still push forward with in order to expand outside of Korea and build outposts in Japan, Southeast Asia and the Americas.
A HYBE acquisition of a controlling interest in SM could potentially face regulatory scrutiny from South Korea’s Fair Trade Commission since it exceeds 15% of SM’s stock ownership. In 2022, HYBE was behind 26.8% of albums sold in Korea, while SM was behind 19.1%, according to Korea chart company Circle Chart.
As Lee Dominated, SM’s Luster Was Fading
Though few had predicted such a dramatic unraveling, SM was overdue for a transformation. Once the leading K-pop innovator, SM has debuted just one completely new act, Aespa, in the last five years. It continues to operate through a single pipeline with Lee at the helm of artist management and production, while rivals like HYBE and JYP Entertainment have diversified their portfolios, relying on multiple teams that produce more acts with more independence.
SM’s shares have been chronically undervalued, industry observers say, due to an arrangement where the company paid producing fees to a separate entity owned by Lee. SM paid Lee 24 billion won ($18.1 million) in 2021, equivalent to more than a quarter of SM’s operating profit that year. Even in years when SM produced a loss, Lee took home a sizable paycheck.
The board of directors, packed with Lee allies, allowed the practice to continue for years, until Align Partners Capital Management, a private equity firm, led a shareholder revolt last year. Lee, who now holds about 3% of SM shares, appears headed out the door. HYBE and SM say his role will be reduced if not completely phased out.
“It’s hard to put up a resistance in Korean culture,” Lee Changhwan, CEO of Align Partners, says about the difficulty in over-riding a founder and company’s biggest shareholder. “The governance structure has to go through fundamental changes.”
South Korean stocks are often undervalued, analysts say, since some companies can seem to be managed for the benefit of founders and families to the detriment of general shareholders. Still, in the HYBE-SM power struggle, SM shareholders appear to have won either way: The March 7 share price of 149,700 won ($113.84) is up over 116% since SM announced it would terminate Lee’s contract on Oct. 14.
A K-Pop Pioneer With A Criminal Past
The 70-year-old Lee, who founded SM in 1995, has been credited with making K-pop what it is today. Inspired by early MTV music videos and New Kids on the Block, which he watched during his master’s degree studies in California in the 1980s, he paved the way for K-pop to win overseas fans with a signature formula of visually striking performance and dance pop.
Lee crafted BoA, the female singer who SM scouted in 1998 when she was 11 years old, into the first K-pop artist to break through in the Japanese market; she went on to sell millions of singles and albums. Groups from TVXQ and Girls’ Generation to EXO and NCT have followed suit with international stardom. In 2000, SM became the first K-pop agency to list its shares publicly.
Even before PSY and BTS became global household names, Lee was lecturing publicly about K-pop conquering the world — and about a future when non-Korean singers would join the fray and be trained and managed by K-pop production teams.
Lee’s artistic vision and drive didn’t make up for the company’s corporate governance problems, however. Shareholders have in recent years slammed SM for losses from non-music businesses such as a winery and restaurants while Lee was still getting his producer’s fees. Several SM acts have seen members leave acrimoniously over what they called harsh training and “slave contracts,” resulting in government intervention, including shorter contracts for K-pop trainees and stars.
In 2002, Lee made headlines when he fled the country to escape prosecution while facing embezzlement allegations. After a brief stay on Interpol’s wanted list, he surrendered to Korean authorities and was convicted for siphoning off 1.15 billion won ($892,000 at the time) in company funds during a recapitalization round, which he used to buy shares in SM. (He served three years of probation, and in 2007 he received a presidential pardon — and then returned to the company.) SM has also paid fines for tax evasion, most recently in 2021.
In recent weeks, Lee Sung-soo, the co-CEO who is also nephew to founder Lee’s late wife, leveled a series of accusations at his uncle, which range from previously undisclosed tax evasion through a shell company based in Hong Kong to making “arbitrary” changes to SM bands’ musical direction to advance his own business interests.
While the elder Lee has not directly addressed the allegations, HYBE has responded that it was unaware of such an arrangement during the deal’s signing. In a statement to Billboard, HYBE says its SM acquisition was made “following research on the corporate fundamentals, including publicly disclosed information about SM.”
Global music piracy crept up in 2022, marking the second straight year it has increased after a period of steady decline, according to a report from MUSO, a U.K. technology company. MUSO, which tracks consumption across websites around the world to “to understand the true picture of digital piracy,” logged more than 15 billion visits to music piracy sites in 2022.
Piracy has been a thorn in the music industry’s side for more than two decades. In recent years, however, the widespread adoption of streaming has led to a steep drop in the types of peer-to-peer and file-sharing behavior that once threatened to bring the music business to its knees.
In a world driven by streaming, rather than downloads or CD sales, the industry is increasingly focused on a different set of issues. Key among them is streaming fraud, which is not driven by fan’s desire to have more music at their fingertips. Instead, this activity often involves bad actors siphoning money away from the music business — by running bot networks that play 31-second white-noise recordings nonstop on Spotify, for example.
Growth in streaming revenues shows signs of slowing, meaning that every dollar that leaks out of the music ecosystem is becoming more important to labels. And MUSO’s report shows that piracy, even if it has faded from headlines, isn’t negligible.
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For example, Justin Bieber‘s songs, albums, or “music bundles” — which could include an entire discography — were illegally downloaded over 1 million times across the peer-to-peer/torrent network in 2022, for example, with more than 40% of those downloads coming from the U.S. MUSO detected more than 950,000 illegal downloads of David Bowie‘s music, more than 780,000 across Bruce Springsteen’s catalog, and more than 750,000 involving Bob Dylan releases.
The U.S. accounts for 7% of all piracy traffic picked up by MUSO, third only behind Iran (15.05%) and India (10.29%). Despite the prevalence of streaming among U.S. listeners, their appetite for piracy far outpaces their peers in other major music markets like the U.K. (1.86% of piracy traffic) and Germany (1.92%). And more than half of all the piracy in the U.S. takes place via stream-ripping, which relies on programs to get around YouTube’s copyright protection and convert audio into MP3s.
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In 2019, the RIAA said it was monitoring more than 200 stream-ripping sites. Labels have taken legal measures to go after some of these: In December 2021, a U.S. judge ordered a pair of Russian sites to pay more than $80 million — $50,000 for each of the 1,618 copyrighted works infringed — in damages. The judge wrote that 1,618 was “likely on the low end of Defendant’s indeterminable number of violations.” Tofig Kurbanov, the owner of the sites, subsequently appealed the ruling.
RIAA chief legal officer Ken Doroshow said at the time that “this litigation sets out vital first principles that should chart a path for further enforcement against foreign stream-rippers and other forms of online piracy that undermine the legitimate market for music.” The ruling, he said, “is a major step forward to protect artists, songwriters, record labels, and consumers from one of the most pernicious forms of online piracy.”
Despite the judgement, MUSO’s data indicates that stream-ripping remains the most prevalent form of piracy in the U.S., accounting for more than half of piracy demand in the country (51.3%). This is well above the global average, which MUSO found to be 33.4%.
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Overall, music piracy has fallen by more than half since 2017, according to MUSO. But the company predicts another small rise in 2023.
“For the Film and TV sectors, MUSO’s data indicate that piracy demand will continue to increase across 2023, as inflationary and economic pressures result in subscriber losses for the various legal streaming services,” the company’s report notes. “This will drive users to illegally stream or download the content they want to watch via piracy sites. MUSO does anticipate seeing a similar uptick in music piracy across 2023,” but one that will be “less marked than [in] other industries.”
The release of Karol G’s Mañana Será Bonito, the fourth studio LP from the Latin music superstar, is already historic. The set earned 94,000 album equivalent units in the United States in the week ending March 2, according to Luminate, making it the Billboard 200 chart’s first all-Spanish language No. 1 by a female artist.
Globally, the set’s 17 songs drew 438.2 million official streams, with 13 of its tracks hitting the March 11-dated Billboard Global 200. Nine of those appear on the Billboard Global Excl. U.S. ranking, including four songs whose releases pre-date the album. All nine rank higher on the Global 200 than on Global Excl. U.S.
It’s rare to see a Colombian artist who performs exclusively in Spanish do better on the Global 200 than the Global Excl. U.S. chart, where the primarily English-language American market is the only difference in methodology.
But based on Karol G’s global chart history, and that of many other major hitmakers of the last few years, the balance between her ranking on Billboard’s global surveys may even out in the weeks to come. Over the 30 months since the global charts launched, a pattern has emerged where an album’s first-week streams will lean much heavier toward domestic activity, before steadying in the weeks that follow.
In the case of Karol G, the spike in U.S. activity is sharp. One week ago, three advance singles from Bonito were on both charts and averaged more than 80% of their streams from outside the U.S. in the week ending Feb. 23 (ahead of the album’s Feb. 24 release), all ranking higher on Global Excl. U.S. than the Global 200.
In the album’s debut week, her 13 new tracks averaged 66% non-U.S. streams, while a couple songs dipped as low as 59% and 57%. Even though her international stream total remains above 50%, the drop from 80% international to 66% in the album’s first week reflects a common listening pattern in America.
Based on streaming activity for practically all major global albums in the charts’ history, the U.S. versus non-U.S. splits will likely return to Karol G’s “normal.”
Drake, Billboard’s top artist of the 2010s, released his long-teased Certified Lover Boy in September 2021. All 21 songs debuted on both lists but averaged at No. 16 on the Global 200 and No. 44 on Global Excl. U.S. in the set’s debut week. Of its combined 1.1 billion streams, just 32% came from outside the U.S., less than half of that week’s average.
Three weeks later, the album’s international streams climbed — though barely — to 34%. Three months after that, they settled at 37%. These changes aren’t drastic, but similar patterns exist for recent hit albums by J. Cole, Future, and Kendrick Lamar.
Those higher-U.S. and lower-international splits are common for hip-hop albums, but their rising trajectory applies to pop artists as well. Taylor Swift’s Midnights averaged 53% of its 973 million first-week streams (for the set’s 13 standard-edition tracks) from outside the U.S. Three weeks later, that share bumped to 56%, and three months later, to 61%.
Even among artists from outside the U.S., first-week streams spike in America. Harry Styles’ Grammy-winning Harry’s House was released last year and scored 620 million streams in its first seven days. Of those, 60% came from outside the U.S., far lower than the 75% of his own years-old hit “Watermelon Sugar.” The opening 60% grew to 66% by week four, and to 69% by month four. The same goes for recent releases by fellow Brits Adele and Ed Sheeran.
These examples, all of which debuted their entire track listings on the Global 200, suggest an urgency from American listeners for first-week listens, while international fans, broadly speaking, are slower to discover new releases. But while the artists mentioned above all follow this pattern, the closest comparison to Karol G’s glass-ceiling moment is the other artist to score major American success with all-Spanish albums.
Bad Bunny dominated 2022 with Un Verano Sin Ti, the album that spawned his biggest U.S. hits to date. The 23-song set debuted with 1.1 billion streams worldwide, 66% of which were from outside the U.S. That number is much closer to that week’s average than the opening week splits for Drake and Swift, but the fact that Bad Bunny was below the average at all, just as Karol G is on her debut week, was surprising. One week prior, he had six globally charting songs, averaging 75%. While the release of his new album generated huge numbers everywhere, the bigger immediate spike in consumption was in America, despite his all-Spanish-language material.
Less than a month after the album’s release, the pendulum moved closer to the center, up from 66% to 71% non-U.S. streams. That number remained relatively steady as the album continued to rule various charts. The happy medium between the album’s first week numbers and Bad Bunny’s pre-Verano figures also indicate that while he experienced the same U.S.-heavy first-week spike as virtually every other major pop act, the album may have done some heavy lifting in making him an even bigger star in the U.S. than he had been when he scored the first-ever all-Spanish No. 1 album.
Time will tell how consumption for Mañana Será Bonito will settle in the coming weeks and months, but Bad Bunny’s 2022 may be indicative of her future global prospects. Like Bad Bunny, Karol G scored her biggest Billboard Hot 100 hit yet upon impact, with “TGQ,” with Shakira, debuting at No. 7, leading a heap of debuts further down the U.S.-based chart and a giant domestic streaming total. We can expect international listeners, specifically those in South and Latin America, to close the gap somewhat, although her global star power could continue to rise in all directions.
Abu Dhabi-based music streaming company Anghami says its revenues grew by more than 35% to $48 million in 2022, driven by strong growth in paid subscribers, according to a statement the company released sharing its preliminary unaudited results for last year.
The company says its total number of paying subscribers grew 21% year-over-year to 1.52 million, while the overall number of music streams rose by 20% amid growing demand for Anghami’s music content, roughly 60% of which was Arabic-language in 2022.
“Our ability to provide an exceptional user experience and to deliver the best music and entertainment content in the (Middle East and North Africa) region and beyond is reflected in our strong financial performance in 2022,” Anghami CEO Eddy Maroun said in a statement.
As the most popular streaming platform in one of the fastest-growing streaming markets in the world, Anghami says it will achieve profitability later this year. But the company has faced its first public growing pains in recent months in the form of a lawsuit and regulatory reprimand.
In December, U.S.-based publishing company Reservoir Media and its Middle East partner PopArabia sued Anghami for alleged copyright infringement related to a dozen Western and Arabic songs by artists including Lil Jon and 50 Cent. Anghami has defended its payments to rights holders and called the lawsuit baseless and defamatory.
In January, the Nasdaq market exchange, where Anghami is publicly traded, notified the company that it was in violation of a filing rule requiring Anghami to submit a balance sheet and income statement to support its interim results for the second quarter ending June 30, 2022. The company had only submitted a press release with financial results for the period.
The regulatory flag did not affect Anghami’s listing or ability to trade on the exchange, and Anghami apparently remedied the issue this month by filing unaudited condensed financial statements for the first half of 2022 and 2021.
However, in a Feb. 27 filing, Anghami noted that its independent auditor, Ernst & Young Middle East, resigned this year and has been replaced by Grant Thornton. Ernst & Young audited Anghami’s financials for 2021 and 2022 without issue, but did include paragraphs in each of the year’s reports “regarding substantial doubt about Anghami’s ability to continue as a going concern,” Anghami said in the filing.
Grant Thornton is expected to release an audited version of the company’s full-year 2022 results by mid-April.
Brazilian pop star Anitta is lashing out at Warner Music, saying she regrets signing with the label and would have “auctioned off her organs” to be let out of her contract.
The artist — who had a breakout 2022 with the success of her tri-lingual album Versions of Me, a No. 1 track on the Billboard Global Ex. U.S. chart with “Envolver” and performances at Coachella and the Latin Grammy Awards — went on a Twitter tirade last week when fans prodded her to explain her tortured history with Warner.
When one fan said he wished she could be free of her contract, she responded that “if there was a fine to pay, I would have already auctioned off my organs, no matter how expensive it was to get out. But unfortunately, there isn’t. When you’re young and still don’t know a lot, you need to pay close attention to the things you sign… if you don’t, you could spend a lifetime paying for the mistake.”
A spokesperson for Warner Music declined to comment. Leila Oliveira, Warner Music Brazil’s new president, did not respond to a message from Billboard. Brandon Silverstein, Anitta’s U.S.-based manager, also did not respond to a request for comment.
Meu amor se tivesse uma multa pra pagar eu já tinha leiloado meus órgãos por mais caro q fosse pra sair fora. Mas infelizmente não tem. Qndo a gente é novo e ainda ñ sabe muito tem q prestar muita atenção nas coisas q assina…se não pode passar uma vida inteira pagando pelo erro— Anitta (@Anitta) March 2, 2023
Anitta signed with Warner Music in the U.S. in January 2020 after previously signing with Warner Music Brazil in 2013. Under the U.S. contract, she produced Versions of Me, which was executive produced by Ryan Tedder. Anitta has said she’s required to deliver two more albums for the label to satisfy the contract. (In January 2022, she signed a publishing deal with Sony Music Publishing.)
This isn’t the first time Anitta has complained about Warner. She previously swiped at the label for having to pay for music videos out of her own pocket, including for “Gata,” which she said Warner refused to produce a video for when they saw that the song’s performance on streaming platforms was falling below expectations.
“They only invest after it pays off on the internet,” Anitta said in an Instagram livestream in May. “Unfortunately, there are things I can’t get, that’s why I don’t buy millionaire cars, because when I want to do something, I pay for it.” (She says she ultimately got a sponsor to help pay for the video.)
During the same livestream, Anitta also said that Warner only invests in her work after a song goes viral on TikTok. “The label is very tied to TikTok, to what goes viral, and if they don’t get a hit right away, they say ‘later,’” she said.
Anitta’s fans have also criticized Warner for the label’s perceived treatment of the Brazilian singer, with many complaining on Twitter that Warner didn’t give her 2021 single “Girl From Rio” the marketing push it deserved by including it in playlists on streaming services. (The song, which combined bossa nova and trap with English lyrics, dropped rapidly on the charts.)
Anitta has also said that Warner initially resisted the release of “Envolver,” the single that blew up after Anitta’s butt-grinding dance in the song’s video, which she directed, became a global TikTok sensation. “[Warner] said the song wasn’t going anywhere and that I wouldn’t have the sway to release it alone [without a feature on the track],” she said during an Instagram livestream in December.
Late last year, Anitta’s fans began urging her to release a funk remix of “Practice,” which she originally recorded with A$AP Ferg and HARV, but the singer said last week that Warner wouldn’t allow her to. “When I saw that you liked [the remix version] I asked to release it, and it has been a long time,” she wrote to her fans on Twitter. “But things can only be released with their authorization.”
Since Anitta’s tirade last week, fans have organized a #FreeAnitta movement on Twitter. One fan posted a photo depicting the singer sobbing in a jail cell with the Warner Music logo on the wall behind her. Another fan asked her if her harsh comments could damage her relationship with the label.
“Is there a way it could get worse? Hahaha,” she responded.
SM Entertainment shareholders have until the end of the month to weigh two competing visions for the South Korean music company’s future before its annual general meeting on March 31 — one from SM and Korean tech company Kakao and another from K-pop rival HYBE.
Despite SM Entertainment’s announcement Monday that it had canceled plans due to a court injunction to issue new shares and give Kakao a 9.05% stake in the company, making it the leading shareholder, SM and Kakao are pushing forward with their strategy to maintain control. On Tuesday (March 7), Kakao launched a tender offer to buy a 35% stake from SM’s minority shareholders by March 26 and, if successful, could soon own nearly 40% of SM and hold significant voting power.
SM — home to such K-pop acts as NCT 127 and Aespa — has nominated a slate of independent directors and laid out a plan for adding 260 billion won ($200 million) of revenue by 2025 by setting up operations in the U.S., Japan and Southeast Asia, and making acquisitions — including a publishing company — in the coming years, according to a company presentation to shareholders. If the roadmap is successful, SM believes it can double its annual sales from an estimated 770 billion won ($690 billion) in 2023 to 1.5 trillion won ($1.14 billion) in 2025.
Much of SM’s road map stems from its battle with founder Lee Soo-man. In late 2022, an activist investor, Align Partners Capital, convinced SM’s board to appoint a new auditor and terminate a contract with Lee’s production company, Like Planning. Now, SM is attempting to remake itself under revamped corporate governance and a more decentralized organization than Lee’s hierarchical control of artist development.
The current inside directors — including Lee’s nephew, Lee Sung-soo — will resign their positions “in order to take responsibility for the problems of the [Lee Soo-man] system,” the company stated. In their place, SM is recommending its own slate of three executives: CFO Jang Chul-Hyuk; Kim Ji-Won, head of marketing center; and Choi Jung-Min, head of global business center.
To ensure an independent board of directors, SM has proposed the chairperson be one of its outside directors, not one of its own executives. Among the company’s picks for outside directors are Kim Kyu-Shik, president of the Korean Governance Forum; Moon Jungbien, a professor at Korea University that specializes in environmental, social and corporate governance matters; and Sung M. Cho, CEO of music analytics company Chartmetric. For part-time directors, SM recommends Lee Changhwan, the CEO of Align Partners, and Jang Yoon-Joong, Kakao’s global strategy officer.
Lee Chang-hwan
Courtesy of Align Partners
HYBE, home to the wildly popular boy band BTS, has different ambitions for SM’s future. HYBE acquired a 14.8% stake in SM from Lee, the SM founder, on Feb. 22, and an additional 1% through a tender offer, according to a March 6 regulatory filing. It has blasted “the bias and irrationality” of the SM management that approved the Kakao partnership.
“HYBE has been considering the acquisition of SM for a long time and gave much thought into how the two companies could work together,” Jung Jinsoo, HYBE’s chief legal officer, wrote in a letter to SM shareholders on Thursday.
In the letter, Jung argues HYBE solved two problems when it acquired Lee’s equity. First, HYBE acquired Lee’s shares in two SM subsidiaries: SM Brand Marketing and Dream Maker Entertainment Limited. That solves what Jung called “leakage in SM’s profits” to Lee. Second, HYBE alleges SM still owes Lee fees for three years even though it terminated the Like Planning contract as of Dec. 31.
Jung says HYBE structured the stock purchase agreement so payments to Lee stop “upon the execution of the agreement.” HYBE also added a clause to terminate any transactions from SM to Lee that HYBE did not know about.
While SM sees Kakao as the partner for its transformation into a larger, more global entity, HYBE calls it an “unfair partnership” that would give Kakao permanent and exclusive rights to distribute SM’s music, protect SM’s equity at the expense of other shareholders and create conflict of interests that favor Kakao’s interests. “We believe that these details demonstrate the bias and irrationality of the current SM management who approved such arrangements,” Jung writes.
Beyond SM’s relationship with Kakao, HYBE is concerned with SM’s roadmap to increase the number of artists on its roster by expanding production in Korea and building overseas outposts. Jung is questioning SM leadership’s understanding of the time and resources required to develop and break successful artists.
“It goes without saying but you cannot generate profit in K-pop just by having a longer artist roster,” Jung writes. “What’s important is to nurture artists who are loved by fans and provide a creative environment.”
HYBE has submitted a competing slate of inside director recommendations featuring a handful of HYBE executives: Jung; Lee Jaesang, president of HYBE America; and Lee Jin Hwa, HYBE’s chief of management and planning.
For outside directors, HYBE has recommended Kang Namkyu, managing partner at GAON Law Group; Hong Sounman, professor of public administration at Yonsei University; and Lim Dae Woong, a representative of the United Nations Environment Program Finance Initiative. HYBE’s recommendation for part-time director is Park Byungmoo, managing partner at buyout firm VIG Partners; and Choi Kyu Dam, a former NCSOFT finance executive, for part-time auditor.
SM portrays the battle with HYBE as a fight for its independence from a large company. A HYBE takeover would put its interests over SM’s artists, SM says, and could force SM to downsize or divest assets to meet regulatory approval. What’s more, HYBE might not receive a warm welcome: 85% of SM employees who voted on the workplace app Blind oppose HYBE’s “hostile takeover” and want to “protect the culture diversity of K-pop and the unique identity of SM,” according to SM’s investor presentation.
Ultimately, the two sides have competing visions for a board of directors that will best serve SM shareholders and lead the company. To SM, HYBE’s recommended directors are either tied to Lee, employed by HYBE or hurt shareholder value in their previous corporate tenures. To HYBE, SM’s proposals could result in a board controlled by Align Partners that lacks the experience to expand SM and reach the company’s lofty targets.
“[I]t is questionable whether the current management has a sufficient understanding on these circumstances,” writes HYBE’s Jung.
HYBE’s plan to control competing K-pop company SM Entertainment and thwart a partnership with tech company Kakao took another step forward on Monday when Kakao, responding to a court injunction, announced it had canceled its stock purchase agreement to acquire a 9.05% stake in SM Entertainment.
Last week, the Seoul Eastern District Court granted a provisionary injunction against SM’s plan to issue new shares and convertible bonds. The judge ruled that SM had made its decision without shareholders’ consent. It was a remarkable win for SM’s controversial founder, Lee Soo-man, and for HYBE, the reigning K-pop company and home to boyband BTS.
For weeks, SM’s management has been trying to wrest control of the company from Lee, who has been found guilty of embezzlement and exercised iron-fisted control over the company he founded in 1995. After SM made a deal with Kakao, Lee turned to HYBE, which became SM’s largest shareholder on Feb. 22 after it acquired a 14.8% stake from Lee, whose production contract with SM was canceled as of Dec. 31.
On Monday, HYBE sent a letter to SM demanding that “the current [SM] Board of Directors should fulfill its duty of care and duty of loyalty towards SM and actively exercise the right to terminate the business cooperation agreement, which contains clauses that are disadvantageous to SM and advantageous to Kakao,” according to a statement that described the letter.
With the injunction in place, HYBE also called for SM to exercise its right to withdraw the recommendation of the director candidate nominated by Kakao. SM had put forward Jang Yoon-Joong, Kakao’s global strategy officer, as a part-time director.
SM and HYBE are pushing competing visions for SM’s future before shareholders vote on a new board of directors at SM’s annual general meeting on March 31. SM wants to partner with Kakao – owner of the Melon music streaming service and KakaoTalk messaging service – to better monetize its intellectual property and launch a joint venture in the U.S.
Called “SM 3.0,” the road map calls for SM to break from the single-producer system maintained by Lee until his removal. Instead, SM wants to develop artists through multiple labels and production centers in Korea, Japan, Southeast and the U.S.
HYBE calls an SM-Kakao tie-up an “unfair partnership” that would give Kakao permanent and exclusive rights to distribute SM’s music, protect SM’s equity at the expense of other shareholders and create conflict of interests that favor Kakao. “We believe that these details demonstrate the bias and irrationality of the current SM management who approved such arrangements,” Jung Jinsoo, HYBE’s chief legal officer, wrote in a letter to SM shareholders on Thursday (March 2).
LONDON — A proposed hike in U.S. visa fees, which could take effect as early as this November, would have a “deeply damaging” effect on touring artists from other countries by more than doubling their costs, says a leading British music industry trade group.
The proposal from U.S. Citizenship and Immigration Services, announced in early January, would raise the rates for O and P visas for working entertainers in the U.S., including musicians playing festivals, concerts or label events.
U.K. Music, which represents the country’s recorded and live music industries, is protesting the fee hike, including a $600 “asylum program fee,” a new charge USCIS has proposed adding for U.S.-based employers, which the U.K. group says would raise total visa fees by more than four times their current levels. The trade group, which says the U.S. visa process is “already long, complex and prohibitively expensive” for many musicians, has asked British officials to lobby against the increases.
“The visa process for U.S. musicians entering the U.K. to work is far simpler and less costly,” the group says in a statement, “and we believe that this should be reciprocated by the U.S.”
Under USCIS’s proposed new rates, a concert promoter who employs an international musician qualifying for an “O” visa to tour the U.S. would pay $1,055, rather than the current fee of $460, an increase of 129% — or 260% with the proposed $600 asylum program fee. For the “P” visa classification for touring musicians, the U.S. employer’s fee would jump from $460 to $1,015, or 121% — plus the $600 fee, which would add up to a 251% spike.
A USCIS spokesperson tells Billboard the increases would not affect musicians themselves, but rather their U.S. employers, including promoters, club owners, labels or festival producers. International artists reps say employers are likely to pass these fee increases onto the artists — and possibly to consumers as higher-priced tickets —making it more challenging to tour crucial American concert venues.
“It leaves our artists in a state of paralysis,” says Courtney Askew-Conti of Verdigris Management, which represents U.K. bands Hot Chip and Jungle, adding that the fee increase “feels like the final nail in the coffin” after Brexit and the COVID-19 pandemic.
The U.S. government is proposing the new fees to allow USCIS to “more fully recover operating costs for the first time in six years” and to “support the administration’s effort to rebuild the legal immigration system,” the agency’s director, Ur M. Jaddou, said in a January statement.
“For artists who are established, it’s an annoyance,” says Michael Lambert, whose management company A Modern Way represents Idlewild, We Were Promised Jetpacks and other Scottish bands. “There will be a lot of artists in that emerging to mid-level stage that just decide that they can’t afford to do it.”
While “some cases might be reasonable, this gigantic increase seems unreasonable,” says Rita Sostrin, a Los Angeles immigration lawyer who represents international artists trying to obtain O and P visas. “It’s just not the right way, to do this broad-brush increase for everyone.”
The USCIS rep stresses that the fee changes are not final, and the comment period is open through March 13. “If organizations have those concerns, that’s what they should be submitting,” the spokesperson says. “This is just a proposed rule.”
U.K. trade groups are particularly concerned about how the changes will affect artists during a period when gas prices, supply-chain issues and other lingering COVID-19 effects are making it challenging for club-and-theatre-level artists to tour international markets, including the U.S.
For U.K. artists, the U.S. is the second-largest touring market after Europe. Even before the proposed price hikes were announced, rising costs were already leading British artists to pull U.S. shows. In April, Mercury Prize-winning rapper Little Simz cancelled an 11-date U.S. tour, citing the financial unviability of the undertaking as an independent artist.
A survey conducted by two other U.K. trade bodies, Music Managers Forum (MMF) and the Featured Artists Coalition (FAC), found that 70% of their members believe the increased visa charges would mean they could no longer afford to tour the U.S.
Avril Lavigne, Lauren Spencer-Smith and Jessie Reyez are among the presenters set for the 2023 Juno Awards, which will air Monday, March 13. Reyez will also perform on the show, as will Nickelback, Tate McRae, Tenille Townes and more.
Lavigne, a nine-time Juno winner, is nominated for five more awards this year. Spencer-Smith is a three-time nominee.
This year’s show, hosted for the second year in a row by actor Simu Liu, will broadcast live from Rogers Place in Edmonton, Alberta.
The 2023 Junos will follow the Grammys’ lead and include a spotlight on the 50th anniversary of hip-hop. Kardinal Offishall, who had a top five hit on the Billboard Hot 100 in 2008 with “Dangerous” (featuring Akon), will co-host the celebration with Haviah Mighty, who last year became the first woman to win the Juno Award for rap album/EP of the year.
Performers in the hip-hop segment include four-time Juno winner Choclair, two-time Juno winner Maestro Fresh Wes, 2021 Juno winner TOBi, Toronto rap duo Dream Warriors and hip hop pioneer Michie Mee, with veteran entertainer DJ Mel Boogie spinning. The track was produced by recording artist Rich Kidd.
“The history of hip hop around the world is incredibly rich, with so many distinct voices contributing to the narrative,” Offishall said in a statement. “It’s an honour to be able to help tell this story through a distinctly Canadian lens and celebrate this important cultural milestone at The 2023 Juno Awards.”
Offishall, a four-time Juno winner and Global A&R at Def Jam Records, wrote and produced the segment with writer and actress Jemeni, with involvement from ADVANCE, Canada’s Black Music Business Collective and the Juno Rap Music Advisory Committee.
Actor Ryan Reynolds will make a virtual appearance to honor Nickelback for their contributions to Canadian music. The band is being inducted into the Canadian Music Hall of Fame. Connor McDavid, NHL All-Star and Edmonton Oilers’ captain, will be on hand to honor the band in-person. Nickelback will perform a medley of their hits.
The show will air on Monday, March 13 at 6 PM MT/8 PM ET on CBC TV, CBC Radio One and CBC Music. The show will also stream live on CBC Gem, CBC Listen, globally at CBCMusic.ca/junos, and on CBC Music’s Facebook, Twitter and Youtube pages.
Tickets for the 2023 Juno Awards start at $49 and are available for purchase at www.ticketmaster.ca/junos, by phone and in-person at the Rogers Place box office.
For more information, visit CBCMusic.ca/junos.
Here are all the performers and presenters for the 2023 Juno Awards:
Performers
Alexisonfire
AP Dhillon
Banx & Ranx with Preston Pablo and Rêve
Jessie Reyez
Nickelback
Northern Cree with Aysanabee
Tate McRae
Tenille Townes
50th anniversary of hip-hop segment: Choclair, DJ Mel Boogie, Dream Warriors, Haviah Mighty, Kardinal Offishall, Maestro Fresh Wes, Michie Mee, TOBi.
Presenters
Avril Lavigne
Lauren Spencer-Smith
Andrew Phung
Jessie Reyez
KallMeKris
Pablo Rodriguez
Pierre Kwenders
Tyler Shaw
Nickelback lifetime achievement award segment: Ryan Reynolds, Connor McDavid
Primary Talent International has announced a surprise decoupling with Creative Artists Agency, less than a year after CAA acquired the UK booking agency through a blockbuster $750 million purchase of its parent ICM Presents in June.
ICM Presents bought the 30-year old booking agency in March 2020, just days before international concert touring was suspended for more than a year due to the COVID-19 pandemic. That acquisition — in which Primary would retain its name and office — came just months after ICM Partners sold a minority stake in the agency to private equity firm Crestview Partners.
When ICM acquired Primary Talent, ICM CEO Chris Silbermann noted that the 32-year-old company, with clients including The 1975, The Cure, Lana Del Rey, Noel Gallagher, Jack Harlow, alt-J, Dropkick Murphys and Patti Smith, “greatly enhances our ability to serve our clients on a global scale, through added resources, support and even greater opportunities,” noting the agency’s reputation for being “fiercely independent, which we love about them.”
Silbermann added: “We are honored that they believed we were the right partners to help take their clients and their agency to the next levels of success, while retaining their brand and management identity and philosophy.”
Primary Talent asked for a split from CAA in order to “re-establish Primary’s independent status,” one source tells Billboard. Shortly after closing the ICM deal last year, CAA laid off 105 ICM Presents employees from different parts of the company.
An agreement to terminate the coupling was finalized earlier this year in a deal led by Primary Talent managing partner and CEO Matt Bates along with former ICM founding partner and COO Rick Levy. Veteran agent Ben Winchester will continue to serve as a board member along with Bates and Levy.
As part of the new management configuration, the agency has promoted Primary agents Laetitia Descouens, Sally Dunstone, Martje Kremers and Ed Sellers to partner status. They will be joined by veteran agent Simon Clarkson, who will be based in Los Angeles. The agency, which currently numbers 35 employees, expects to announce additional agents to their growing ranks in the coming weeks.
“The pandemic changed the landscape of the music touring business, and we felt it was beneficial to return to our roots as the UK’s largest independent music talent agency,” said Bates. “Adding to the strength and experience of the original Primary agent team, we are excited to bring aboard the next generation of talented agents to join as founding partners. In this new incarnation, Primary will be even better positioned to support the evolving careers of our artists and guide them wherever needed.”