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

Posted by Joseph Hwang Joseph Hwang 7/14/2024

Structure of an Exclusive Management Agreement for a K-Pop Artist (Standard Form Contract) - Part 7.

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”)

***

“Article 6 (General Rights and Obligations of the Artist)

① The “Artist” may at any time express his/her opinion on the management activities of the “Company” carried out in accordance with Articles 2 and 5.

② The “Artist” may request the “Company” to inspect or copy materials (regardless of the type of media, such as documents) related to the Pop Culture Art Service if necessary to fulfill the purpose of this Agreement, and the “Company” shall comply with such request.

③ The “Artist” shall provide the Pop Culture Art Services in good faith by exercising his/her talents and skills to the best of his/her ability in accordance with the exercise of the management rights of the “Company” and the “Artist” shall not refuse to provide the Pop Culture Art Services without a justifiable ground.

④ The “Artist” shall not engage in any act that damages the dignity of the “Artist” as a popular culture artist to the extent that it hinders the Pop Culture Art Services or any act that damages the honor or credibility of the “Company.”

⑤ Notwithstanding the provisions of Article 5, Paragraphs 5 and 6, the “Artist” may refuse to perform if the “Company” makes unreasonable demands on the “Artist”.

⑥ The “Artist” shall not, during the period of this Agreement, without the prior consent of the “Company,” enter into any agreement with a third party that is identical or similar to the terms of this Agreement, thereby causing this Agreement to lose its effectiveness or unreasonably infringing upon the contractual interests of the “Company.”

⑦ The “Artist” may require the “Company” to properly fulfill the contract if the “Company’s” obligations under this contract are not properly fulfilled. However, the “Artist” shall not make unreasonable demands on the “Company” that exceed the purpose of this Agreement.

⑧ If the “Artist” is subjected to sexual harassment or sexual violence by an employee or director of the “Company,” the “Artist” shall notify the “Company” of the fact and may request measures such as the exclusion of the employee or director from work.”

***

“Article 6 of the SFEC sets out the rights and obligations of an “Artist” vis-à-vis a “Company.” The rights of artists have indeed been strengthened after the enactment of the SFEC as compared to before the enactment of the SFEC. Before the enactment of the SFEC, artists were more subordinate to companies and had weaker rights than companies. The Company enters into this contract with the Artist to receive the “Popular Culture Art Services” of the Artist, a fundamental part of the entertainment business. However, the provision of these services by the Artist is a voluntary act. If the Artist refuses to provide the service based on his voluntariness, it is difficult for the Company to replace the Artist’s service. Therefore, to avoid this risk as much as possible, the Company sometimes uses force to coerce the Artist, which has the side effect of violating the Artist’s human rights, and such disputes often lead to the destruction of the relationship between the two parties.

To reconcile these issues, SFEC stipulates in the contract that the Artist has the right to refuse unreasonable requests from the Company while being obligated to comply with the Company’s legitimate requests to provide services.

In particular, the Artist is an irreplaceable “asset” of the Company. If the Artist, as a living person, causes social harm or violates something prohibited by law and is subject to legal punishment, the Company will suffer irreparable damage. Therefore, SFEC stipulates that the Artist should take care of him/herself and prohibits him/her from damaging the Company’s honor or reputation.

It also prevents “sexual offenses” against the Artist, which has always been a problem, and further strengthens the rules that require the Company to remove the employee from the workplace in the event of such an offense. This is a reasonably sensitive issue, and if such an offense occurs, the Artist can demand that the Company unilaterally terminate the contract based on this offense. This is a serious matter that can lead not only to civil damages but also to criminal penalties.

Notably, this revised SFEC clearly defines the issue of “tampering” by an “Artist.” “Tampering” refers to an attempt by an “artist” to secretly transfer an exclusive contract to a competitor of the “management company” without the prior approval of the “company.” This issue became more prominent after the case of the K-pop idol group FIFTY FIFTY, and it can be seen as a result of the contract reflecting the situation that has been criticized as an immoral social problem.

One of the essential provisions of this clause is that it guarantees the Artist’s right to access the Company’s materials. This is important to the Artist because the Company receives the Artist’s earnings on the Artist’s behalf, and the Company is obligated to share the earnings between the Artist and the Company after deducting the Artist’s “direct costs and expenses” initially incurred as a result of the Artist’s activities. In other words, the Artist and the Company are in a partnership. Therefore, the Company must transparently disclose to the Artist the income generated by the Artist and the costs and expenses directly incurred by the Company for the Artist’s activities; then, if the Company fails to disclose or misrepresents the information, it will cause serious and significant legal problems. Almost all complaints and breakdowns in relationships between artists and companies arise from this issue. The Artist is worse than the Company in receiving and distributing income. If the Artist requests to inspect or copy the Company’s materials and the Company refuses without justifiable grounds, this can be a reasonably serious reason for termination from the Artist’s perspective. In the past, companies have often denied artists’ requests to inspect or copy materials because they are “trade secrets,” thus, the SFEC clarifies this issue with the amendment and complements and provides a more substantial legal basis for transparency.

* Standard contract analysis continues in the series.

** References and Quotations:

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.

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

Part 2.

https://www.musicbusiness.co.kr/2024/06/structure-of-exclusive-management.html

Part 3.

https://www.musicbusiness.co.kr/2024/06/structure-of-exclusive-management_16.html