When it comes to the business side of the Korean music industry, also known as the K-pop industry, there are two labels that are synonymous for its success. They are SM Entertainment and YG Entertainment. The former was probably the first to attain international recognition with such K-pop acts like Super Junior and Girls’ Generation. They would follow through with new acts that are garnering a lot of attention like EXO and Red Velvet. As for the latter, they are probably sitting on top of the K-pop empire now because of one singer signed on to them, and that is Psy. His hit “Gangnam Style” went viral exposing millions of people to K-pop. Also, their current top groups, Big Bang and 2NE1, are blazing music charts even outside of Korea.
The two aforementioned labels are just the two biggest, making them the most popular. However, there are plenty of other smaller labels that manage well-known K-pop acts as well. For example, Starship Entertainment manages Sistar while MBK Entertainment manages (formerly) T-ARA. Still, just because an entertainment label manages a popular K-pop act, it doesn’t mean they are succeeding. Case in point, CUBE Entertainment suffered a $4.8 million loss in the first half of 2015.
For anyone who is invested in CUBE Entertainment, such a loss is debilitating news. Yet, the label partly blames the situation on their recent acquisition of an unnamed company, as reported by KpopStarz. Ergo, it led to an uptick in costs compared to their revenues.
“It is because when we were acquiring a company, the cost of the acquisition was simply categorized as cost, in the first half of the year we were able to show a margin of 2.3 billion won but after the second acquisition, the margin increased to 3.5 billion.”
Altogether, CUBE Entertainment ended up spending 5.8 billion won for the acquisition of said company, which, exchanged to the U.S. dollar, is about $4.8 million. Apparently, this was all part of a major strategy to transform CUBE Entertainment into a global entertainment company, a move best seen when they became a publicly listed company on the Korea Exchange back in April of 2015. That move in turn made them join the likes of other big agencies like YG Entertainment, SG Entertainment, FNC Entertainment, and JYP Entertainment. Unfortunately for them, the move also received great scrutiny for their profit performance.
There is also an argument that the acquisition of said company stretched thin what CUBE Entertainment could do with their current acts. It should be known they do have some well-known K-pop acts signed to them including 4MINUTE, Apink, and BEAST. However, the one K-pop group they are pushing this year is their rookies Crystal Clear, better known as CLC, as reported by Koreaboo. Making their debut earlier this year, the K-pop group consisting of Seunghee, Yoojin, Seungyeon, Sorn, and Yeeun have done what they can to appeal to K-pop fans. So far, they released two extended plays (EPs), First Love and Question, two collaborations with G.NA and Yoseob of BEAST, and three singles, “Pepe,” “Eighteen,” and “Like.” All this hard work unfortunately did not earn what CUBE Entertainment was hoping for with CLC as mentioned by numerous K-pop fans. Why one of the K-pop fans argue the K-pop group is the reason why CUBE Entertainment is in the red.
“Cube is in deficit for 5.8 billion won!! The reason is because of CLC. They released three albums with no results.”
The K-pop fan’s statement is debatable but it is a fact none of their songs really made an impact compared to other rookie K-pop groups like Red Velvet or Minx. All in all though, CUBE Entertainment can bounce back from this situation. They still have six more months to make a profit. Also, by what they are saying, it seems they expected to lose money this year maybe as an ends to justify the means.
[Featured Image via United Cube Concert Promotions, Post Image via Screen Capture of United Cube Concert]