Structure of an Exclusive Management Agreement for a K-Pop Artist (Standard Form Contract)

Posted by Joseph Hwang Joseph Hwang 5/25/2024

Structure of an Exclusive Management Agreement for a K-Pop Artist (Standard Form Contract) - Overview

Joseph Hwang

Before the entertainment industry system, which was recently established in South Korea, disputes caused by unfair contracts between entertainers and their business managers (owners) had been going on continuously. The Korean government wanted to improve these scourges, and the “Korea Fair Trade Commission (KFTC)” finally introduced a standard form of exclusive contract (two types of forms, one for a musician and another for an actor/actress) between them on July 6, 2009, which was the first time in South Korea. But it was not mandatory. As a result, the industry had not adopted the standard form of exclusive contract except for a few well-known entertainment companies. And some disputes and quarrels were not at an end, some cases were brought to court, there was some social noise.

First of all, the dispute between the idol group “TVXQ” and “SM,” their exclusive artist management company, in 2007 triggered the need to establish a standard form of contract between artists and their management companies in the entertainment industry in South Korea.

The “SM” is an essential and significant artist management company in the history of the entertainment business in South Korea. It did it first because SM tried to be the only entertainment company listed on the Korean stock market. It officially accepted and systematized the education and training system for the trainees who wanted to debut as professional artists. They strived to debut their exclusive contracted trainees who had been educated by their own system step by step, and they showed the results to the public, expanding on board outside of South Korea. This fact is so meaningful.

The National Assembly of the Republic of Korea legislated and announced the “Popular Culture And Arts Industry Development Act” on July 29, 2014, to protect and promote famous Korean artists’ and business stakeholders’ rights and interests and develop the popular culture industry. The Korean government is enforcing it now.

This Act requires the “Ministry of Culture, Sports and Tourism,” one of the Korean administrative departments, to formulate and distribute Standard Form Contracts in entertainment, media, broadcasting, and the arts under Article 8.

Thus, through several additions and modifications, the “Ministry of Culture, Sports and Tourism,” inserted and certified administrative logotype to the form of a contract, is announced and distributed to the public. Although this is not yet mandatory, when raising a lawsuit between the artist and the management company, the court will likely refer to the example, whether who is more fair or unfair, breach of contract, default, etc. For this reason, almost all Korean entertainment companies are taking advantage of the standard form of a contract established by the Korean government with the attachment of the written agreement for compensation to reflect something inadequate and lacking in certain situations.

The most important factors of the standard form contract are as follows:

1. Equivalencing of the contract period.

2. Protection of juvenile artists, as many debut artists are almost teenagers (the Standard Form Contract for Apprentices is also separately announced and distributed by the Korean government).

3. Fair profit sharing system between artist and company.

4. Prohibiting and preventing the tampering of artists for breach of contract by other management companies. (This is a hot issue recently.)

* Standard contract analysis continues in the series.

** References and Quotations:

https://dl.nanet.go.kr/SearchDetailView.do?cn=KINX2014096325#none

https://it.chosun.com/news/articleView.html?idxno=2023092102264

https://biz.heraldcorp.com/view.php?ud=20230830000564

https://www.mcst.go.kr/kor/s_data/ordinance/instruction/instructionView.jsp?pSeq=2413

Series Articles

Overview

https://www.musicbusiness.co.kr/2024/05/structure-of-exclusive-management.html

Part 1.