Kakao Corp, the South Korean internet giant, has resolved the dispute over the management rights of SM Entertainment, one of the country's largest entertainment companies. The deal paves the way for SM to enter a new era of independence and autonomy, called SM 3.0, which includes a multi-label system and a focus on developing more than 21 active artists and releasing more than 40 albums annually.
Under the new system, rookies and trainees will benefit the most, as SM moves away from its previous "preemptive treatment" of established artists like Boa, TVXQ, Super Junior, and Girls' Generation. Instead, SM plans to focus on the development of new artists with the aim of having more than 400 performances per year by 2025.
The shift to a multi-label system marks a departure from the exclusive production system favored by Lee Soo-man, SM's founder, and former chief producer. The change is designed to boost SM's annual album sales to more than 27 million and compete with rival labels like Hive, JYP Entertainment, and YG Entertainment, which have traditionally released several rookie albums per year.
The move towards a more diverse artist roster and increased album production follows fan criticism of SM's handling of comebacks for artists like Red Velvet and Espa, whose releases were often delayed. With the dispute now resolved, the focus turns to what the future holds for SM artists under the new SM 3.0 system.
SM Entertainment's transition to a multi-label system means increased opportunities for new artists, who can now produce albums more quickly through independent creative activities of internal and external labels. This move is expected to pave the way for the accelerated development of newcomers, with plans to debut new girl groups, boy groups, virtual singers, NCT Tokyo, and Hollywood this year.
Under the previous system, SM had a strong tendency to prioritize established artists, leaving new artists waiting for their turn. However, with the multi-label system, SM can expand its artist roster and increase album production to compete with rival labels in the fiercely competitive South Korean entertainment industry.
It will also be possible to make new and challenging music that deviates from the Lee Soo-man-Yoo Young-jin line. Amid the management dispute, Lee Sung-soo, CEO of SM, revealed that Lee Soo-man instructed Yoo Young-jin to include related lyrics in major songs released by SM to push for the tree planting project, which delayed Espa's comeback. Since this risk has been eliminated in the SM 3.0 era, each team can expect to attempt new ideas and build a clearer world view and music style. NCT and Espa, who declared, "I will trust my company's family under any circumstances," are expected to engage actively in activities within this new SM.
On the other hand, it is also expected that some of "Lee Soo-man's people" may leave. Yoo Young-jin left SM, saying he would follow Lee Soo-man, and Kim Min-jong is likely to leave SM as he declared a white soldier by sending an email defending Lee Soo-man to all SM employees in protest of SM 3.0 vision. Kangta and Boa from H.O.T., who have a special relationship with Lee Soo-man as the first-generation representatives and have been listed as non-registered directors of SM, are also likely to leave SM.
In the case of TVXQ, it is difficult to predict their next move because they have shown strong faith in both Lee Soo-man and SM. However, as U-Know Yunho and Max Chang-min have strong solidarity, the majority opinion is that the two will move together no matter what decision they make.
Super Junior has a special relationship with Lee Soo-man, but it's likely that they will remain with SM. They have been working with SM CEO Tak Young-joon as a manager and artist for a long time and have established a solid trust relationship. Since they have also established their own label, SJ, and are taking their own course, there is little reason for them to leave SM.
The second and third generations are of concern, as most of them have contracts with SM that will end between this year and next year.
Girls' Generation is expected to be divided. Yoona, Yuri, and Taeyeon are said to be satisfied with SM, but Sunny is likely to follow Lee Soo-man's nephew. SHINee is also expected to side with SM, which has gone through some difficult times, although they have also experienced confusion, such as revealing their height anxiety in an incident. EXO and Red Velvet are also about to make a comeback as a whole group, so the chances of them leaving are low.
With this agreement, SM has promised to open the "next level" of the K-pop industry with Kakao. Attention is now focused on the stars who will make the leap to the "next level" with SM.
: What’s Next for their Artists?
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