NewJeans Label Targeted By K-Pop Giant HYBE For 'Breach Of Trust' - Forbes

Topline

A struggle over the popular K-pop act NewJeans erupted this week after Korean entertainment giant HYBE filed a police report accusing the head of its own subsidiary music label of trying to secretly break away to manage NewJeans independently.

Key Facts

HYBE, the entertainment giant known for managing K-pop superstars BTS, announced Monday it would audit subsidiary label ADOR, accusing it of attempting to break away from the company so it can independently manage the girl group NewJeans, who are signed to ADOR.

HYBE also asked ADOR CEO Min Hee-jin to step down and accused the subsidiary of leaking confidential information to secure investors that would help ADOR break away from HYBE.

Min denied the allegations and said in a statement that HYBE is trying to “dismiss” her because she had complained that ILLIT, a K-pop group backed by another HYBE subsidiary that debuted in March, allegedly plagiarized the look, music and choreography of NewJeans.

HYBE announced in a statement Thursday it would file a police report against Min for “breach of trust and other related allegations” based on evidence it says it found during the audit process that purportedly show Min had ordered ADOR executives to pressure HYBE to sell its ADOR shares.

The Korea Times reported Min has an 18% stake in ADOR and other ADOR executives have a 2% stake, while HYBE has an 80% stake (HYBE previously had a 100% stake in ADOR until the end of 2022).

Min again denied that she wanted to break ADOR away from HYBE in a press conference in Seoul on Thursday, stating it’s “not me that turned my back on HYBE, it’s HYBE that betrayed me,” referring to its demand that she resign.

HYBE’s share price has taken a hit amid the label dispute, dropping about 12% since the company announced it would launch an audit of ADOR.

Tangent

The Korea Herald reported, citing industry insiders, that the HYBE and ADOR dispute stems from HYBE’s practice of housing multiple record labels and encouraging competition between their respective artists. HYBE’s multilabel system is unique for the K-pop industry, in which individual agencies typically sign and rely on a few major artists for success—instead of signing them to different subsidiary labels, according to CNBC. The Korean outlet, Korea JoongAng Daily, wrote this is the “defining opportunity for HYBE to demonstrate whether its multilabel system can survive an internal dispute without shattering.”

Key Background

NewJeans debuted in 2022 after being formed by ADOR to success in South Korea, releasing singles “Attention,” “Hype Boy” and their debut EP “New Jeans.” They broke into the U.S. and global music markets the following year with their second EP “Get Up,” which debuted at No. 1 on the Billboard 200 albums chart in the United States, making them the second Korean girl group to top the chart. The International Federation of the Phonographic Industry, which measures streaming and sales figures worldwide, named NewJeans the eighth best-selling artist of 2023.

What To Watch For

Whether the dispute will impact NewJeans’ planned rollout of new music. The group has two single releases scheduled for May, though Korea JoongAng Daily reported the label dispute will not impact their ability to release new music. The group premiered a music video for one of their upcoming singles on Friday amid the label drama.