Monthly Archives: September 2015

Assets

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No, B-Bomb, not that kind of asset!

Kpopalypse has a good post up about understanding why certain business decisions get made in K-Pop, and I wanted to talk about one of the concepts that underlies a lot of decisions that get made not just in the business of K-Pop but in the business of the arts in general.

Kpopalypse’s first example is JYP’s failed attempt to make the Wonder Girls popular in the United States, and how that failure didn’t really hurt JYP because the company had another popular group, 2PM, which it could count on to make money.

K-pop fans are one-eyed and struggle to get with this kind of thinking. JYP on the other hand is looking at it like a business, not like a fangirl scared that their bias group is under threat.

It’s not just fans who struggle to understand these kinds of decisions; it’s artists as well. Which makes sense: Fans pretty much by definition feel personally invested in the success of a particular artist. If you happen to be that particular artist, then you feel REALLY invested.

But in the business world, if you have a stable of talent (be they singers or actors or writers or circus clowns–it really doesn’t matter), what you have is a collection of assets. And because they are assets, you’re going to treat them a little differently–it’s not like you’re not invested in their success, but your approach is going to be a bit more hard-nosed.

What are assets?

Quoth Wikipedia:

In financial accounting, an asset is an economic resource.

What’s an economic resource? Something you have that’s worth money. It could be worth money only if you sell it, but for many people, the really desirable assets are the ones that make you money all the time.

For example, if you own a stock that pays dividends, you get the dividends every quarter. If you own real estate that people rent, you get rental income every month. If you own a taxi medallion, you get the fares people pay to ride in your taxi every day.

Apply that to K-Pop: If you own copyright to a popular song, you get royalty payments every time the song is sold or performed. If you own a label with a popular idol group, you get money from music sales, appearance fees for events and commercials, fan club dues, and admission fees to fan meetings. You also typically get a cut of the monies that group members get for doing things that your label doesn’t cover, like acting. If you’re a touch dodgy, even your failures are valuable assets.

That last example, although extreme, shows how much economic interests can differ between a label and its talent. It’s pretty much never in an artist’s interest to fail, but the failure of an individual artist can be no big deal to a label.

Even if the label is completely ethical in the way they treat their talent, that disconnect exists. Let’s say you run Stringently Moral Records, a company lauded throughout K-Pop for its fair and just treatment of artists. You have seven active groups. Two of your groups are wildly successful, and they earn 80% of your revenues. Your least successful group accounts for 0.2% of your revenues.

Where are you going to put your time, energy, and money?

If you answered, “Into the least successful group! If only I really gave them a chance, real chance, they could make it big time!” then you obviously have never had to make a payroll. What you’re going to do is to plow those resources into the groups that are currently allowing you to keep the lights on. If the members of your least successful group get frustrated and walk, it’s not the end of the world. But if one of your most popular groups walks, then you’ve got a serious problem.

What often happens to artists who join big labels (or publishers, or whatever) is that if they aren’t really popular right away, they go on the back burner. That makes perfect sense for the label. Even if an artist is successful, but is less successful than someone else in the company, they will almost always get second-class treatment–especially if they’ve been around for a while. A rising star might get pushed more because the company wants to see how far they can go, but if a group is seen as pretty much having tapped their potential market, then they’re going to get less attention. No one wants to waste a gazillion dollars pushing someone who’s always going to be a niche player.

Needless to say, this can be frustrating to fans, and it can be extremely frustrating to artists. This is why artists go indie: They want to be the only asset.

But large companies can offer things that going indie cannot precisely because they have a large stable of assets. A company can parlay its more-popular assets to get exposure for its less-popular ones (Taeyang appears on a Mino song). A younger, less-experienced artist can have opportunities to meet and learn from more-established players. If a company is really clever, they can pit fans of one asset against the other, ensuring that both fanbases shovel even more of their money into the company pocketbook (YG is brilliant).

The main benefit of having many assets from a business perspective is that it reduces risks, because if one asset fails to perform (the Wonder Girls, in Kpopalypse’s example) another can take up the slack (2PM). In investing, this is called diversification, and it’s considered to be very important; one reason YG is so diversified is because it depends on the investing public for money, and it’s a lot harder to attract outside investors if you’re betting the farm on a single group. Even a company like Seven Seasons that isn’t public and that does bet the farm on a single group tries to diversify by promoting solos and sub-units, pushing into the Japanese market, and getting members into non-musical work, like acting, modeling, and variety shows.

Diversification has a lot of ramifications that can confound fans. Kpopalypse talks in his post about how Red Velvet is marketed differently because SM is trying to diversify its groups, and how fans perceive that as Red Velvet being discriminated against. A fan complaint you often hear about YG is that they don’t release music often enough. Meanwhile YG is sure to let investors know that only about a quarter of its revenues come from music sales–they don’t prioritize music sales because they’ve diversified away from that, and now music sales just aren’t that important a source of revenues.

None of which is to say that groups can’t be badly managed as a result of the asset mindset–it’s just that this mindset is always going to be there. Artists need to be realistic about what signing with Huge-O-Conglom-O-Corp is likely to mean. And fans need to be realistic about their place in all this–remember, a fanbase is just another asset.

Profound analyses of Block B videos

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Commentaries provided by my nieces:

“It’s about a boy and a girl who like each other, and the girl has super powers.”

“That doesn’t even look like real blood.”–older niece

“We only got to see him bite someone once.”–younger niece

“They-they-they’re-they-they’re-THEY HAVE BEAR SUITS!”

“Taeil has a lollipop. I wish I had a lollipop.”

“Who’s the one who thinks he looks like a pirate but really he’s just wearing a dress?”

(Also, U-Kwon had better be ready to discuss why he forgot his bullets. And Park Kyung should be ready to discuss strategies and methods for catching chickens. The girls have ten. They know.)

The obligatory Get-a-Story! post

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I’ve pretty much said all this before, but definitely if you live in or near the cities Block B is going to come visit, don’t be shy about (politely!) contacting your local media. It does work.

And coverage begets coverage: The fact that the Los Angeles Times liked Block B at K-Con makes it more likely that other U.S. outlets will cover them, so feel free to throw their story into your note. I obviously think that One of the most successful melds of Korean hip-hop with boy-band dynamics to come of the scene” is a good pull quote (it’s positive and descriptive), but use your judgement–Billboard has said some nice things, too.

Speaking of Billboardthey once again gave us some love, and in the article they mentioned that Conduct Zero hit #11 on their World Music chart when it came out. That’s nice to know–Conduct Zero wasn’t in the top 10, and I had no idea if it barely missed the cut or if it was waaaaay down.

Holy fuck!

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Well, THIS came with no warning. Jesus!

ETA: OK–I’m going to San Francisco and Los Angeles (and it’s Club Nokia? Don’t get caught out on that walkway, dudes), but they’re on their own in Chicago.

EATA: Just in case you were wondering what this does to BlockB.com:

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Another edit: There’s a picture going around of Club Nokia in L.A. that shows it as fully seated. If you go to the club’s Web site, you’ll see that it can be fully seated, or it can be open-floor standing (although there’s still seating in the balcony)–which was how it was when I was there.

I guess we’ll find out the seating/standing situation when tickets go on sale, but I just wanted people to be aware that it’s not necessarily going to be all seated. And hopefully if it is open-floor standing, everyone will be cool like they were at the Show Me the Money concert.

Profits, revenues, expenses–a refresher on why they matter

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So, Juniel mentioned that, under her contract, she does not get paid unless her label turns a profit–which means that, given the accounting practices common in K-Pop (and many other entertainment fields), she does not get paid, and indeed only goes further into debt.

I thought the netizen response was interesting, because there was actually a clueful one (!!!), by someone claiming to be a lawyer:

16. [+39, -8] I’m a lawyer and rarely ever write internet comments but all this misinformation about contracts is frustrating me so here I go. Juniel is the one who signed the wrong contract in this situation. She signed a contract dividing net profit when she should’ve signed one that divided her sales.

A fair contract would be one where the company agrees to invest their money and the artist agrees to invest their talents together to create sales which are then divided between them. Agreeing to divide net profit instead means that the celebrity won’t receive anything until the company is paid back on their investment.

Both sides need to account for their risks. The company needs to risk their monetary investment not being made back and the celebrity needs to risk the time they’re spending using their talents and not turning a sale for it…..

Greetings, fellow adult! Of course, this comment was not nearly as popular as the one written by Clueless McGee:

11. [+61, -17] Well she doesn’t have to pay for her dorm, food, cosmetic maintenance, and gets free plastic surgery. She has no popularity so the company isn’t turning a profit on her. Isn’t it obvious why she hasn’t been making money yet?

Like, OMG–FREE PLASTIC SURGERY!!!!! I bet Juniel just LOVES all the FREE PLASTIC SURGERY she is forced to undergo, and wouldn’t rather have the money instead, which she could then spend as she sees fit. Clueless McGee forgot to mention that Juniel also does not have to pay for transportation, which of course is always top-notch and totally safe, just like her food and housing most assuredly is. Of course, Juniel will eventually have to pay back her ever-growing debt to the label, so all this FREE!!! stuff isn’t actually free at all, but temporality confounds Clueless McGee.

I’ve talked before about the difference between revenues/sales and profits/earnings, and you see a lot of Clueless McGees out there in regard to this. And that isn’t an accident–you often get stories like this one about how big a particular group or label’s revenues are (and all the fans just pee their pants in delight).

The problem is, there’s a big difference between the top line (revenues or sales, which are calculated before expenses) and the bottom line (profits or earnings, which are calculated after expenses). When a company wants you to focus on the top line, that’s typically because they don’t want you to pay attention to the bottom line.

Let’s say I run the K-Pop label Sajaegi Entertainment. I issue a press release noting that my label made 200 billion won last year! Wow!

But what I don’t tell you is that I spent 300 billion won to make that 200 billion won (sajaegi is expensive). I am now 100 billion won in the hole, and my creditors are coming after me with bloodhounds and shotguns.

Or, you know, I run SM Entertainment, and I issue press releases about how one group alone made 22 billion won, and about how my company made 287 billion won last year. But I leave out the bit about how my company only had a profit of 6 billion won last year, which is a profit margin of 2 percent, which blows.

In other words, let’s all hope the ladies of Girls’ Generation didn’t make Juniel’s mistake and didn’t contract for a share of the profits instead of a share of the revenues.

Cultural experiences!

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If you drop by BlockB.com, you know that I’m back at home and on the good computer. (Can I take a moment to express my disappointment that the iPad Pro is just a humungous iPad and not a non-crappy version of the craptacular travel notebook/tablet I have? Because if I could buy the same hardware with better software, I would do it in a heartbeat.)

Since luck and Hotwire put me in Los Angeles’ Koreatown, it seemed like a good opportunity to try some Korean things. (Some day I do intend to actually go to Korea, but–and this is the problem with having a perfectionist streak–because I’m slowly but surely learning Korean, I don’t want to go until I can speak it better.)

Since San-E forced me to beat the shit out of my feet, I decided to start with a massage, which (since I really wanted to avoid the “happy ending” sort of place) meant going to a Korean spa. I chose a women’s spa because I figured (and I was right) that whatever robe or clothing they gave me would not be big enough to actually provide decency. This is an issue at the co-ed spa I go to for massages at home, but at least there I’m wearing underwear–the small robe + nudity combination meant that a large number of disinterested strangers got to know my exact philosophy toward pubic-hair maintenance.

The massage itself was my first experience with shiatsu. I have to say: OW. When you hear people talk about a massage therapist “attacking” knots, they are very likely talking about shiatsu. Around Seattle the Swedish approach of kneading is, not surprisingly, dominant, and I’ve had lomi-lomi, where they use the edges of their arms and palms like rolling pins (I didn’t think that would work because they don’t dig into the muscle, but it totally does). In shiatsu, however, they go at you with their knuckles and the points of their fingers like Ty Lee in Avatar.

Sometimes the massage therapist also used rocks–not big rocks that you lie on or that lie on you, but little rocks dug into your body even further than the knuckles and fingers.

Still, while the massage wasn’t the most pleasant experience, my feet and legs felt much better afterwards.

I also ate traditional Korean food in Koreatown, but you can do that pretty much anywhere. What I ate that you can’t eat just anywhere was: Korean pizza!

Yes, there is a Mr. Pizza (two, even!) in Los Angeles–the only ones in the country! Given the reactions some people have had to it, I was expecting something pretty extreme. I ordered a half-and-half–half Potato Gold (yup, that’s a flavor) and half Shrimp Gold. They were on a sweet-potato crust, and the Potato Gold had bacon, corn, and mayonnaise on it, so whoo-hoo! I was ready to be weirded out!

What I got was a pizza where both halves were tasty and made me wonder what got people so upset. I should mention that I do have an open mind when it comes to pizza–traditional Italian is great of course, but I’m happy when people experiment with various flat breads and sauces.

If you’ve had corn meal or polenta pizza crust, you’ve had something that is very close to the Mr. Pizza sweet-potato crust–a little sweeter and crunchier than a wheat crust. Top it with mild cheese, tomatoes. ground beef, corn, and pork fat, and you’ve got the Potato Gold, which is an awful lot like the Mexican pizzas I have had. (If you’re flailing around on the ground, stroking out at the very concept of Mexican pizza, then I am sorry–I am no food purist, and it tastes good. Naan pizza is also yummy. And I make blueberry ice cream pizza for my nephew.) Top it with shrimp and sweet pepper, and you’ve got the more Italian-tasting Shrimp Gold–and no, it doesn’t have a hugely flavorful sauce, but most polenta-and-shrimp Italian dishes are pretty mild because strong flavors overwhelm shrimp.

It was pricey, but a single regular pizza wound up being two meals, so…again, I’m not understanding the agita.

I feel like, in general, this is my issue with purists: They get so focused on something being the “right” way that if there’s the least deviation from what is expected, they lose their shit. And while I think that it’s good to know how a traditional dish is supposed to taste, the key to being a good cook (especially the kind of cook who isn’t a total slave to recipes and can make do with whatever’s in the pantry, in season, or on sale) is understanding how to make different flavors work together regardless of whether the exact combination of ingredients is traditional or not.