Category Archives: I used to be a business reporter

I guess I should post about this: The SM and Like Planning scandal


Recently news came out that SM Entertainment had been paying large amounts of money to Like Planning, a company owned by Lee Soo Man, who founded SM but left the company in 2010.

When the news came out, SM shares took a dive, and there’s been a lot of back-and-forth about what that means and if the company is doomed to collapse into ashes, or alternately is a perfect entity run by benign divine beings.

So, I’m going to put in my former-business reporter two cents. First, though, I should note that I have no special insider knowledge of SM’s situation, or even not-so-special knowledge of Korean securities law.

What it appears SM did is something that actually happens quite a bit, and it’s important to be aware of it if you ever plan to invest in stocks: They put the interests of a company insider before the interests of investors.

This happens all the time, and in fact is one of the great conundrums of corporate management: How do you prevent the people inside the company from running it to benefit them instead of investors? A lot of common business practices, like awarding shares of stock to upper management, are designed to align management’s personal interests more closely with that of shareholders (and then these practices get abused, and new ones are adopted, and then they get abused…).

This is a particularly thorny issue when a company goes from being a private firm (fewer owners, who likely know each other and may even be related) to being a public company (many, many owners, who have no personal connection to the people running the firm). That is a very difficult transition for companies to make, and it results in all kinds of controversies.

For example, Rupert Murdoch founded News Corp, which was long criticized in corporate governance circles for being dominated by him and his familyGoogle is another example of a company where the founders don’t want to give up control (although at least they don’t seem to be using it as a personal piggy bank). Although they didn’t technically found Archer Daniels Midland, the Andreas family’s domination of that company was quite controversial even before Michael D. Andreas went to jail.

As you can see from the above examples, putting an insider’s interest first isn’t necessarily illegal. It also doesn’t necessarily mean that the company isn’t being run well as a business–it might be quite profitable.

What it does mean is that investors are getting the short end of the stick. SM doesn’t pay cash dividends to investors, and it probably never will because it’s paying enormous amounts of cash to Lee Soo Man instead. In addition, because of the high cost of these payments to Lee, SM’s profits are going down the tubes, meaning that the value of their shares is likely to decrease–which, generally speaking, is not what investors want. (What about the artists and all? Well, stuff like this is why you always want a share of the revenues, not a share of the profits.)

So, it makes total sense for investors to sell their shares in SM, even if they don’t suspect that something illegal happened and aren’t worried that regulators are going to swoop in and shut the company down. The simple fact that this arrangement exists is an announcement to investors that their interests are coming in dead last. If you think of the money SM makes as a pie, it’s just become public knowledge that Lee is getting a huge slice–which means investors are only going to get a small helping of crumbs.

Additionally, this arrangement doesn’t really speak well of SM’s management, even if it’s not some company-killing illegality. The money SM’s management is giving to Lee could instead be used to expand the company or just put aside for a rainy day. It’s a bit like Murdoch’s insistence that his sons be his successors, when there were potentially far more talented executives available–this kind of favoritism doesn’t benefit the bottom line. Investors in public companies aren’t interested in whatever sentimental attachment SM’s management has to Lee–they’re interested in making money, and if that doesn’t appear to be high on SM’s agenda, they will take their money elsewhere.


When the talent end is disconnected from the business end


G.O, formerly of MBLAQ, did a video about digital sajaegi (via Asian Junkie), which I thought was really interesting.

It was mainly interesting to me because of G.O’s interpretation of what he saw, which I would argue is a pretty business-naive interpretation.

He says (and I have no reason not to believe him) that MBLAQ’s staff was told that, for approximately $400,000, they could be guaranteed to chart #1 digitally for a solid month. And then they ran into a member of 2PM, who said that the same thing happened to them, but the price quoted to be #1 for a month was $700,000-$800,000.

Now, isn’t that pricing interesting? After all, 2PM generally charted better than MBLAQ, so why would it cost almost twice as much to get them to #1?


OK, I’m going to ruin the suspense and explain why: IT’S A SCAM. Dude, this is how we know G.O has never dealt with the business end of thing–get offers like this, for fuck’s sake. When people come up to you promising ENORMOUS popularity for your work in exchange for an ENORMOUS sum of money (paid up front, of course), IT’S A SCAM.



Because IT’S A SCAM, instead of charging more for more work, the SCAMMERS are asking for more money from the bigger company because they think that company will be less price sensitive.

Of course, G.O doesn’t think it’s a scam.

But are you going to get $400,000 worth of that stuff? $800,000? Assuming that they even do what they say they’re going to do with your money (which they aren’t, because it’s not like you can take them to court if they don’t), and that it’s as effective as they claim it is?

The money were talking about isn’t chump change in the industry, either. Team Pinky recently guesstimated that it costs on average $1 million to debut a K-Pop group, so if you said yes to these people, you’d be bumping up your costs by 40-80%.

Yes, of course these people are out there–people like this are always out there. Obviously sometimes people do pay for digital sajaegi. But look at the case of someone who likely did: Nilo. Was he #1 for a month? NO. Was he able to avoid getting caught? NO. Is he getting his money’s worth? Probably not.

If Nilo is the poster boy for your fabulous chart-manipulation system, YOU’RE RUNNING A SCAM!

[deep breath]

OK, I’m getting a little overwrought here, but that’s because it really bothers me when people try to present scams as normal business practices. That’s like raising your daughter to believe that once she starts work, she’ll have to suck cock to get a promotion, because that’s just standard corporate procedure and what all successful women do.

So, why does G.O believe that sajaegi is everywhere?


Oh, honey–that’s the industry. Massive ups and downs, a dislocation between fan support and overall popularity–the first thing happened because you worked in the arts, the second thing happened because you worked in K-Pop. There’s no massive sajaegi-based conspiracy needed to explain all that.

BigHit and big hype


When I first read that BigHit had had a real gangbusters 2017, my thoughts were, “Good for them! It’s no surprise considering how well BTS has been doing! Awesome!”

But then I started coming across a lot of very enthusiastic (and occasionally financially illiterate) fan translations, and I started to think, Whoa, I’d better do a post about all this.

Here’s the thing: BigHit is planning on becoming a public company, with an initial public offering (IPO) planned for next year. (If you don’t know the difference between a private company and a public company, look here. If you don’t know the difference between revenues and profits, coughcoughPannChoacoughcough, look here.) I was a business reporter during the dot-com boom–believe me, I have seen many IPOs get hyped to fucking moon, and that’s what’s happening here.

Why is it happening? Given the Korean media‘s penchant for printing anything that gets it clicks, it could be pumping up BigHit for that reason alone. But the important thing to remember about IPOs is that they are often an exit strategy for the original investors in the company, and that the original investors plus the banks that handle the IPO want to sell all the shares they have for offer at a good price. That means that right now, we are in the middle of a marketing campaign to sell shares of BigHit to a larger circle of investors.

That’s just how IPOs operate, and there’s nothing inherently wrong with it. What troubles me is the combination of IPO hype and K-Pop fans who are younger and obviously very inexperienced as investors. Remember, good investors have 1. clear financial goals, 2. realistic strategies to meet those goals, and 3. the discipline to stick to those strategies and work the plan.

Not a reason to invest. I’m sad about that, too.

The good news is, there’s actually quite a bit of financial information out there about BigHit, because shares are being traded over the counter. The bad news is…how accurate is this information? In the United States, being an unlisted security means that you don’t have to comply with all those pesky SEC regulations–you know, the ones that protect investors from fraud.

Now, as BigHit nears its IPO date, it is going to have to dot its Is and cross its Ts and get in compliance with stricter accounting standards. But we’re not there yet, which is why breathlessly comparing its results to those of actual public companies is a little naive. BigHit doesn’t have to play by the same rules as a public company, and if reporters are currently getting information about BigHit from anyone with an interest in seeing the IPO go well…you start to see the conflict of interest there. (And don’t get all excited because the people hyping the company are being called economists. The kind of economists who hype companies are the kind of economists who work for the banks that handle IPOs.)

Where does this get especially naive?

Yeah. That 35% (!!!) profit margin sure is impressive, isn’t it?

Of course, BigHit does not yet have to comply with the costs of being a public company (which are considerable), but the main thing there is that seven-year contract timeline: BTS debuted in 2013. BigHit will go public in 2019.

One year after the company goes public, BTS’ contract will be up for renewal.

You want to know a secret about BigHit’s $23 million net profit? It is coming out of the pockets of the members of BTS. They are the ones earning that money, and under their current contracts, they are just letting it go again. They may well decide not to do that any more when their contracts come up for renewal. A six figure salary may seem like a lot–until you realize that your company is running a fucking eight-figure profit off your labor!

The downside of a company hyping a profit margin is that, generally speaking, the talent can read (and hire lawyers) just as well as the investing public. Of course, thanks to this IPO, by 2020 the members’ contract demands will no longer be the problem of BigHit’s original investors–a very fortuitous bit of timing there.

But of course there’s always Option B: Hold a firm line against those BTS punks, so that various members or even the entire group walks!

Ah-ha-ha-ha-ha-ha! Oh my God, can you even imagine! HA! HA! HA!

Yeah, this is the long-term problem with BigHit: They are not diversified. Like, at all.

This graphic made me cackle:

Gee, why did YG have such a slump in its operating income last year? Because BigBang didn’t release a new album in 2017. Investors have long complained about YG’s reliance on BigBang to make money, and the company’s stock reliably takes a beating whenever investors worry about BigBang’s members going into the military or a member has a scandal.

And YG is about a thousand times more diversified than BigHit. Jesus.

Does this mean that BTS and/or BigHit don’t have a bright future? Not at all! But it does means that you might want to hold off on sinking your retirement savings into BigHit’s IPO, even if you really love Suga a whole, whole bunch.

Is it true that Block B has lost all its fans?


One notion that has been floating around is that Block B has lost all their Korean fans this past year, and that this has had a! huge! impact!

This has become a common enough belief that someone decided to write some fan fiction about it in the comments section of Omona They Didn’t (no, I’m not linking). They included stats supposedly showing the number of fans dropping by two-thirds in recent months–remember, if you’re going to lie, do it with numbers, since most people are too fucking lazy to look them up!

I have no idea where those stats came from (you honestly think they provided a source?), so I shall rely in my plodding way on the most-commonly reported number that is supposed to indicate the size of a group’s fan base: Daum fan café membership.

I will first note that this is not an uncontroversial measure, because there are groups that don’t really use their fan cafés at all. Block B does, however (although it is closed to non-Korean residents). While I certainly would argue that the size of one’s fan café does not really indicate one’s overall popularity, especially for a non-conventional idol group, I think it’s an OK measure if we’re just trying to figure out how many obsessed people living in Korea have taken the time to log onto a place that identifies itself as a Block B fan café.

I haven’t been keeping a historical record of Block B’s fan café membership (nerd fail!), but other people take note of it from time to time.

Like, in June of 2015, one media outlet produced this:


It compares fan café membership from the end of 2014 to May 27, 2015. It should be noted that during this period Block B as a group released no music in Korea until May 27th itself (when H.E.R. was released), focusing instead on its Japanese and Bastarz debuts. According to this outlet, the group’s fan café membership increased to 140,648 people from 120,989–an increase of 16.2%.

In January 2017, another media outlet produced this:

It tracks the overall change in fan café membership in 2016. During this time Block B released the Blooming Period album. According to this outlet, the group’s fan café membership increased to 143,161 people from 140,980–an increase of 1.5%.

Note that, assuming the data from both outlets can be trusted, in the period between May 27, 2015–the very day H.E.R. was released–and January 1, 2016, Block B’s fan café membership increased to 140,980 people from 140,648, an increase of 0.2%.

Then we hit the nerd jackpot: The blog KPop Count started doing a monthly fan café tally in August 2017!

From the end of 2016 to August 3, 2017, the count went to 141,024 people from 143,161.

In September 5 it went to 140,382.

In October 5 it went to 139,857.

In November 5 it went to 139,649.

In December 5 it went to 139,925.

And in January 5, 2018, it went to 139,684.

On to today! This was taken from Block B’s fan café just now!

Has there been a decline in membership in the past year? Yes! In 2017 (I’m just going to throw in the first five days of January), membership fell from to 139,684 people from 143,161, which is a loss of 2.4% or 3,477 people. And far less than a two-thirds decline.

You’ll also notice that the lion’s share was not lost in recent months, or during Assgate or Other Assgate (the fan café actually gained members during the latter, presumably because of the release of Montage). Instead, about two-thirds of the loss took place between the end of 2016 and August 3, 2017–the period following the release of “Yesterday.”

In other words, about 2,100 fans looked at the fact that P.O was given time off to deal with his mother’s death, said, “Fuck him–what about my needs?” and left the fandom. Presumably to go terrify Wanna One.

This will not shock you, but my feeling about those kinds of fans is that I hope the door did hit them on the ass on the way out.

And more to the point: The ups and downs of the fan café bear comically little correlation with how popular Block B’s music has been. Unless you truly believe in some kind of fan sajaegi, the loss of 3,500 fan café members doesn’t remotely account for one song selling 960,000 fewer downloads than another.

You guys know this is normal, right?


So, yeah, “Don’t Leave” isn’t topping out on the charts, either, after “Shall We Dance” didn’t. Which means BLOCK B IS DOOMED!!! DOOOOOOOOOOMED!!!!!!

You know, just as they have been since Day 1. Dooooooooooooooooooooooooomed. (Because cursed!)

Or maybe ups and downs are a normal thing in a music career? Hence the value of persistence?

It’s honestly kind of funny to me to see the black-and-white thinking kick into gear. Block B has two stadium shows in Korea at the end of this month, and six concerts in Japan after that. “Artist” is still–still–on Gaon (passed 1 million downloads!). I think funeral rites are a tad premature.

And it’s not like other artists don’t deal with this. Taeyang‘s “Eyes Nose Lips” sold 2.3 million downloads; his next single, “Darling,” sold a little more than a tenth of that.

This is what happens. It’s not because the public gives a fuck about some fandom drama or because the exact same company that was in charge when the hits were released suddenly ran out of mojo.

It is normal for this industry. Hits are very unpredictable (I know some musicians who had a song become a hit entirely by accident). Whenever people ask, “Why isn’t this a hit?” I wonder just how many hit songs they themselves have produced–it’s kind of like asking why someone hasn’t been struck by lightning, or thinking that people can win the lottery just by, you know, wanting to.

Needless to say, the unpredictability of hits is and always has been a serious challenge to everyone in the industry. Music labels diversify in order to even out that revenue flow. That’s why, even though Block B has got a comeback and a concert going on, B-Bomb’s doing a play, Park Kyung is plugging away on Problematic Men, and U-Kwon’s doing a Japanese/Korean TV show.

Because Block B is more diversified, that actually takes the pressure off for each and every music release to be some monster hit. They’re established now–it’s not like when they released “Nalina” or even “Very Good.” And while I realize that it’s not uncommon for K-Pop groups to get neglected by their label if things slow down, turning a lull into a career-killer, that’s just very unlikely to happen to Block B–especially now.

In other words–I don’t think this is worth getting weepy about. Just enjoy the music–it’s good, and it’s going to keep on happening.



“Artist” recently hit the 900K mark in downloads (yes, it’s still on the chart, and while it’s been bouncing up and down, this week it was at #57), and with one thing and another, I decided that I might as well generate a list of Zico’s download sales.

I only counted sales from 2013 onward, because if you look at the annual Gaon charts before that year, there was obviously some big change in the digital download market between 2012 and 2013 (I’m guessing the same change that made it possible to actually make money off downloads), so the numbers aren’t really comparable. I counted songs that Zico wrote, even if they were for other artists, and I stuck with songs that sold more than 100,000 downloads, just for my own convenience.

1,786,878 “Boys and Girls”

1,573,331 “I Am You, You Are Me”

1,535,923 “Her”

1,251,908 “Fear”

1,179,652 “Eureka”

976,110 “Flower Way”

959,948 “I Luv It”

917,576 “Artist”

913,927 “Toy”

827,623 “It Was Love” (Luna version)

762,975 “Okey Dokey”

717,231 “Bermuda Triangle”

699,580 “Turtle Ship”

681,537 “Jackpot”

637,697 “Zero For Conduct”

622,063 “She’s a Baby”

557,273 “Yozm Gang”

535,031 “Very Good”

529,850 “A Few Years Later”

437,354 “Fanxy Child”

404,462 “Red Sun”

391,358  “Say Yes or No”

348,049 “moneyflow”

339,779 “Unordinary Girl”

295,986 “Be the Light”

293,617 “Tough Cookie”

265,774 “Where U At”

258,544 “By My Side”

254,153 “It Was Love” (Taeil version)

240,175 “Search”

203,942 “Anti”

202,995 “Day”

191,850 “Pride and Prejudice”

165,891 “Well Done”

150,647 “Shall We Dance”

137,393 “Veni Vidi Vici”

135,551 “Turtle Ship (Remix)”

A rough total gets approximately 22 million downloads of Zico songs in Korea in the past four years, which is quite something considering that the country has a total population of about 50 million people!

Let’s quant this out


I wanted to take a moment to, as much as I can, attempt to quantify the impact of Block B’s various promotions on traffic to–while not a perfect measure by any means, hopefully traffic there is a semi-decent proxy of interest in Block B from English speakers.

Here’s the graph, starting from November 6 (the day before “Shall We Dance” was released) through yesterday:

Obviously, the day of release was a big peak, with 322 visitors. The next day came news reports of the upcoming Seoul concerts, plus the V App stuff got translated into English.

Here’s Block B’s music-show schedule for this comeback:

M Countdown, November 9
Music Bank, November 10
Inkigayo, November 12
Music Bank, November 17
Inkigayo, November 19

So, you are seeing some peaking on an overall downward slope (232 visitors on the 11th; 200 on the 18th) just after Music Bank and just “before” Inkigayo (which airs earlier in the day, and with the time change, I think we can’t really take the given dates at face value). That’s pretty much normal for a comeback.

But what happened on the 23rd? (243 visitors.) The English translation of Block B’s Weekly Idol episode came out. Yup–having things available in English in a timely way makes a big difference.

Why a second bump on the 25th? (208 visitors.) My theory is that it happened because the 23rd was Thanksgiving, which is a major holiday in the United States, so Americans didn’t get around to catching up on Weekly Idol until they finally got home from Aunt Edna’s house and had a few moments to decompress. That’s all I can think of, unless that Jeff Benjamin Tweet had some kind of outsized impact.

This happened too late to count (ETA: but, hey, traffic the next day was 207!), but I think it’s cool, so I’m throwing it in. Good job, kids!