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

Posted by Joseph Hwang Joseph Hwang 6/16/2024

Structure of an Exclusive Management Agreement for a K-Pop Artist (Standard Form Contract) - Part 3.

Joseph Hwang

* Attention: This article is based on the latest version of the “Standard Form of Exclusive Contract for Musicians (hereinafter referred to as “SFEC,” Notice No. 2024-0021, Ministry of Culture, Sports and Tourism of the Republic of Korea, amended on June 3, 2024).”

** Contract parties: Artist (hereinafter referred to as “Artist”) and artist management company (hereinafter referred to as “Company”)

3. Period of the Contract

“Article 3 (Term and Renewal)

① The term of this Agreement hereby shall be from [mm/dd, year] to [mm/dd, year] ([ ]months, [ ]years).

② The term of the Agreement under Paragraph ① shall not exceed 7 years. However, if the “Management Company” and the “Singer (Artist)” wish to extend the term of the contract, they may do so by written agreement thereto.

③ If the “Singer (Artist)” is unable to provide regular pop culture art services due to any of the following reasons related to the “Singer’s” personal identity during the contract period, the contract period shall be extended by the corresponding period. The specific number of extension days shall be determined by mutual consent between the “Management Company” and the “Singer (Artist).”

1. Military service

2. Pregnancy, childbirth and child care

3. Entrance into graduate school, study abroad

4. Hospitalization, etc., for more than 30 consecutive days for reasons unrelated to pop culture arts service

5. If the Singer is unable to provide pop culture art services due to other reasons for which the Singer is responsible.

④ If necessary, the number of albums to be released within the term of the contract in Paragraph ① hereof may be combined.

⑤ The scope of this Agreement shall be worldwide, including the Republic of Korea.”

“SFEC” stipulates the term of the contract between the Company and the Artist, which cannot exceed 7 (seven) years. Still, the contract shall be renewed only if both parties agree to extend the term of the contract by mutual consent IN WRITING according to their needs (Article 3 Paragraph ②).

This means that the Artist can take the initiative to extend the contract period for the Company when the contract is renewed before the termination of the Agreement.

◈ Why the 7-year contract period?

- Before the era and after the era of TVXQ’s case

In 2009, South Korea’s TVXQ lawsuit became a milestone in K-pop history. TVXQ’s case resonated with an inevitable awakening in Korean society regarding the entertainers’ pain and consideration behind the splendid popularity. It also stimulated the Korean government to set the environment in good condition for the entertainment industry. One of these issues was the contract period of the artist management agreement.

- Apprentice system

Even SM, a big company in the entertainment industry at the time, had a contract period with its artists of 10 to 13 years. After knowing the facts about the Korean entertainment situation, people said it was a ‘slave contract’ because the contract period was too long.

In reality, however, the artist management company had to keep the contract period as long as possible. There are some unique situations in the K-pop industry, especially for idol groups. Firstly, the Company selects the trainees who want to become entertainers through auditions. The selected trainees are educated and trained by the Company’s investment until their debut with the Company’s various costs and expenses under its responsibility. This means that the Company has to bear the risks of the investment. The period of training should be short for 3 years or extended for 10 years more. Almost the selected trainees are 13 or 14-year-old teenagers. This requires that the trainees and the Company endure and overcome the conflicts and disputes among the members as well as accept the changes caused by time over the long term. It’s challenging work for everyone, including the trainees’ parents.

- Compromise

The long-term contract is dangerous for both the Company and the trainee. It hides many risks, including the ability to argue and collide with each other. The longer duration can emphasize and produce more significant issues and problems, even a small possibility. The case of TVXQ is representative of the reality of the current problems caused by the long-term contract.

Therefore, the Korea Fair Trade Commission (KFTC) decided to intervene in these problems and established the “SFEC.” The latest version of the SFEC was made through various amendments.

First of all, the KFTC divided the SFEC as the version of the Artist after training through the period apprentice and the trainee. Next, the KFTC defined the term of the contract between the Company and the Artist in the musician (Singer) version, stating that all the contractors cannot agree to the term of the contract exceeding 7 years under the considerations of the current K-pop situation. After the initial period of 7 years, the Artist has the right to decide to extend the term of the contract with the Company by mutual written consent. If there is no agreement, the contract will be legally terminated.

- It will continue with the issue of the contract period in Part 4. more. -

* Standard contract analysis continues in the series.

** References and Quotations:

https://en.wikipedia.org/wiki/Slave_contract

https://www.thepacer.net/the-new-era-of-k-pop-contracts/

https://www.legalcheek.com/lc-journal-posts/k-pop-and-contract-law/

https://koreajoongangdaily.joins.com/news/2024-06-03/entertainment/kpop/Culture-Ministry-revises-industrys-standard-contract-for-music-artists/2060380

Series Articles

Overview

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

Part 1.

https://www.musicbusiness.co.kr/2024/05/structure-of-exclusive-management_26.html