ALL ABOUT EXO [CLOSED]

Article: #AlwaysSuportLuhan (2)

[NEWS] EXCLUSIVE: Insiders' perspectives into the conflict between Luhan and SM Entertainment

In light of now Luhan's potential departure from EXO and SM Entertainment, allkpop has gotten into touch with insiders in the Korean entertainment industry in an attempt to shed some light on the baffling situation. Both Luhan and SM Entertainment are not providing a lot of details, and whatever they do say, seem to be in conflict with each other.

One industry rep revealed, "He is leaving because there is a problem with the distribution of revenue, but that problem is not related to distribution with the company, rather that there is a high number of members [in EXO]. Considering his level of recognition right now, he can promote in China with an even better environment and conditions, so he's trying to leave even if he needs to file a lawsuit. From [SM Entertainment]'s perspective, it is absurd. If there is no profit compared to the money invested, that is likewise a problem. It's a profit that is proportional to their level of recognition and popularity, but considering there are a lot of [members], there has been a ton of money invested in them and a lot of expenses, so there is considerable damage from [SME]'s perspective." The rep suggested that the reason the Chinese members were leaving first was that, unlike a native Korean, they would be protected back in their homeland and would be less likely to run into the entertainment industry; hence, they could freely sue, leave the country, and promote in their homeland. Meanwhile, it could be hard for certain aspects of Korean law to touch them as they are Chinese citizens.

A second rep revealed their thoughts on not just SM and its artists but the status of the Kpop scene overall to give an idea about how money could be distributed between the agency and artist, and why idols may choose to leave after having signed the contract.

The rep stated, "Currently, the revenue system margin is lower than expected for music agencies. Fundamentally, one singing group, the cost of on/off-line marketing, and if you especially include sajaegi and illegal music and albums to achieve first place [that some agencies can apply], [the cost] can reach hundreds of millions of KRW (millions of dollars).

The contracts that reflect the fair clause will split the profit 6:4 (60% to company 40% to artist) for about 3 years, and then afterwards it will be adjusted to 5:5. The Fair Trade Commission also found this to be the most reasonable after conducting a research on actual conditions.

There are more male idols from a foreign background who enter into a contract dispute than male idols from a Korean background. Once male idols with a big fandom win #1, they are able to bring so many on to their side. They start losing their original rookie mindset of desperately wanting to just make their debut, and instead start to think that their contract's profit distribution ratio is unreasonable compared to their busy schedule and the lack of income coming in initially.

[Once this period passes] there is hardly a case when someone files to get out of their contract after 7 years into it. This is because they finally begin to receive the income they think is fair.

This is why I think because some of these idols are young, they've made a rather hasty decision."

Thus, the rep seems to be indicating that if idols do stick around for the length of their contract, especially for at least the initial 3 years, they're able to start receiving much more income as the company starts making back their investment and the profit distribution becomes split evenly 5:5 instead of 6:4 during the initial 3 or so years. This is why the insider believes young idols may make hasty decisions early on into their contracts, but why the idols who've been around for longer end up sticking it out for the duration of their contract because they start receiving a different profit ratio after the initial years.