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

Posted by Joseph Hwang Joseph Hwang 6/17/2024

Structure of an Exclusive Management Agreement for a K-Pop Artist (Standard Form Contract) - Part 4.

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")

- This article is a continuation of Part 3. -

3. Period of the Contract

The provision of "Article 3" of the SFEC regulates "Term and Renewal" of the contract between the Company and the Artist, in particular, Paragraph ③ stipulates in case of the extension of the contract for the reason due to the Artist's personal identity as followings; (i) Military service (male Artist) (ii) Pregnancy, childbirth and child care (iii) Entrance into graduate school, study abroad (iv) Hospitalization, etc., for more than 30 consecutive days for reasons unrelated to pop culture arts service (v) If the Singer is unable to provide pop culture art services due to other reasons for which the Singer is responsible.

The extension period will follow the corresponding period caused by the Artist, but the specific number of extension days will be determined by mutual consent between the "Management Company" and the "Artist". It means that the Company cannot unilaterally determine the number of days without the Artist's consent, surely the extension period should be agreed upon by mutual consent of both parties.

Paragraph ④ also provides that both parties may regulate the number of albums to be released during the term of the contract. This paragraph is important to the Company because the Company should invest its costs and expenses for the debut of the Artist and the return on the investment should be recouped by the production of the Artist's products and activities. This issue is also on behalf of the Artist. Thus, the production of the Artist's album is not a doubtful condition in the agreement. However, there have been some conflicts regarding this album release in the past K-pop history as follows. That is, the Company had badly used the album release of the Artist holding to the Company or illegally delaying the contract period on behalf of the Company if when the financial state of the Company deteriorated.

◈ Background on K-Pop Contract Period Regulation of 'SFEC'

- The case of the artist "Yangpa"

Traditionally, in the case of a newcomer, the Company has held the negotiating power rather than the Artist. The K-pop market was no exception. The Company had to produce the Artist's album to make a profit during the contract period with the Artist. Therefore, the Company was interested in how many music albums it could make while maintaining with the Artist. This motivation made the Company set up some reference to the number of albums, under this standard, the terms and conditions regarding the effective date of the contract and the termination date were established.

The artist "Yangpa (her real name is 'Lee Eun-jin')" debuted as a solo artist in 1996. Fans well loved her repertoire and she continued to perform. However, there were problems with her management company. One of the problems was the duration of her contract. The agreement between her and the management company provided the counting of the effective date of the contract and the termination date due to the regulation of how many albums were produced and released. In this case, the number of albums contracted specifically was 5 albums.

At that time there were a few other cases like "The albums will be released in total [blank], blah blah blah... after 6 months since the release of the last album, this agreement will be terminated". In this case, when the contracted number of albums is fixed, the termination date would not be closed, which is the problem when the contacted albums are not released. On the contrary, on the side of the Company, there is another problem, whether the Company would be burdened with its obligation to make and release the album no matter to the Artist. If both parties cannot perform this condition of the contract with each other for a long period, since the effectiveness of the contract is valid, nothing planning, producing, releasing, etc., this means the unlimited contract indeed. What a terrible situation!

In the United States, California Labor Code Section 2855, also known as the "Seven Year Rule", limits the length of personal service employment contracts to seven years. This means that a contract for personal service, other than an apprenticeship contract, cannot be enforced against an employee for more than seven years from the start of their service. So this rule is enforceable, even if the specific number of contracted albums has not been fulfilled yet, the contract will be terminated if only without any exceptional options in it.

Anyway, as mentioned above, there were still complex problems in the K-pop industry, the Korean government needed to develop the structure and system of the entertainment business in South Korea, especially the period and renewal of the contract was determined by consensus through the discussions of the entertainment entities including the management companies and the artists.

Correction of the unreasonable is the only way to be sure of progress.

* Standard contract analysis continues in the series.

** References and quotations:

https://news.mt.co.kr/mtview.php?no=2018073009598222169

Seoul Central District Court, Oct. 13, 2005, Decision No. 2005Gahap3125 (Judgement of the first instance)

Seoul High Court, Aug. 17, 2006, Decision No. 2005Na99789 (Judgement of the appellate court)

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

Part 2.