K-Pop’s Global Success Didn’t Happen by Accident
In July 2016, the mega-hit “Gangnam Style” by South Korean singer PSY surpassed 2.6 billion views on YouTube. Big Bang, a Korean pop (K-Pop) boy band, earned $44 million in 2015, making it among the highest paid in the industry. Is K-Pop just a passing fad — a matter of a few songs going viral? The answer is no. The global success of K-Pop did not happen by accident, nor is it simply an interesting cultural phenomenon.
K-Pop companies rewrote the playbook for Korea’s music industry. Three factors have made the difference:
Strategic talent management. The main difference between K-Pop and the rest of the music industry is talent management. In the traditional business model, talent is discovered by scouts or through auditions. In the K-Pop model, companies look for kids as young as nine or 10 to groom into the next generation of stars. K-Pop companies source artistic talent all around the world. For example, S.M. Entertainment hosts annual auditions in several countries, from the U.S. to Kazakhstan, and selects a few trainable and marketable individuals out of more than 300,000 applicants.
Training is like boot camp. The trainees, who live together in company-provided dorms, are entered into tournament after tournament with no guarantee that they will actually ever make their professional debut. They practice up to 12 hours a day and take classes in singing, dancing, and acting. They are also taught foreign languages — English, Japanese, Chinese, and Korean for foreigners — to prepare them for K-Pop’s biggest international markets. “Every time the trainee performed a song, it’s got to be perfect,” says Yvonne Yuen, VP of International Marketing for Universal Music. “A trainee goes through the regimen for at least two years before they’re selected to ‘debut’ as an artist. I’m not sure that other countries or other music labels have that patience.”
Customer relationships built via social media. K-Pop entertainment companies are particularly good at using YouTube and other social media to raise awareness of new artists and music, interact with fans, and distribute music at relatively low cost. When the artist Taeyang released his debut solo album, “Solar,” in 2010, his management company, YG Entertainment, spent very little on traditional advertising. Instead, the company blanketed social media in the weeks preceding the album’s release, propelling Solar to number two on the American iTunes R&B sales charts and number one on the Canadian equivalent.
K-Pop fans regularly use social media to give feedback on music and concerts, which allows companies to better gauge the market demand. In May 2011, when tickets to an S.M. Entertainment concert in Paris, featuring such artists as Girl’s Generation, Super Junior, SHINee, DBSK, and f(x), sold out in 15 minutes, fans demanded more European tour dates by organizing a flash mob in front of the Louvre with K-Pop choreography. The company immediately set up an additional European concert, which also sold out under 10 minutes.
Localized product offerings. K-Pop companies have taken steps to better serve their target audiences. Many of the biggest stars, like Girl’s Generation, have released albums in foreign languages such as Japanese and English, leveraging their years of intensive foreign language training. They have applied the idea of customized product offerings to the performers. The most prominent example is S.M. Entertainment’s boy group EXO, which has two versions: EXO-K (‘K’ for Korean) and EXO-M (‘M’ for Mandarin). Each sub-group had six members from each country. They perform the same songs and choreography and wear the same costumes, but EXO-K performs in Korean, whereas EXO-M sings in Mandarin. Imagine ‘Backstreet Boys-S (Spanish)’ in Mexico.
K-Pop entertainment companies demonstrate how to innovate business models by changing the fundamental assumptions of existing ones. Rather than find ready-made talent, K-Pop companies manufacture it. Rather than market performers in a one-way manner, they nurture relationships with customers via social media. And rather than treat the world as one single market, they localize songs and even groups so that they truly resonate.
K-Pop’s Global Success Didn’t Happen by Accident
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