Korean Pop Stars Profit More From Foreign Sales

The BBC ran an article this week about the the Korean Wave.  The article was kind enough to not mention how rampant and common it is amongst Koreans to illegally download and file share their favorite KPOP songs and dramas.  However, that is the only explanation I can draw from why Korean music sold in Korea is so cheap, and why it is sold for such a higher price in foreign markets with a lower percentage of the population with high speed broadband internet.

Source:

[...] Bands such as Kara and Super Junior have become household names in much of Asia. They belong to a new hip generation of South Korean artists that has launched the musical genre K-pop. 

Coupled with the success of Korean TV shows and films, they are part of a wider cultural movement here that has become known as Korean wave. [...] 

The number of people who visited South Korea specifically to attend events such as album launches, concerts and awards ceremonies doubled to 34,000 in 2010. [...]

And the fact that K-pop's unique style is attracting foreign fans is something that benefits both the people who visit South Korea and the bands whose music they like. 

That is why Ms Tanaka is stocking up on Korean music in Seoul. A CD that costs 15,000 won in South Korea ($13.81) is four times more expensive in Japan. 

In fact, according to music industry veteran Bernie Cho, K-pop stars do much better financially when they sell their music abroad, rather than just at home. His company, DFSB Kollective, markets and distributes a range of Korean music. 

"If you bought a single on iTunes in the US, you're paying around $1," he says. 

"In Korea, the price was originally 50 cents, it dropped to 12 cents, then it dropped to six cents. And the artists are getting 35% of that - they're making two cents a download." 

To legally download a song in Korea on iTunes, it only costs 6 cents, and the Korean music industry still cannot convince Koreans to legally purchase music instead of illegally file sharing.

According to Mr Cho, many of K-pop's top acts are selling 100,000 or 150,000 albums straight after release. It is an impressive number in any major market. 

"Music is so heavily discounted in Korea that a lot of them are looking to go overseas, or are relying on their popularity to boost their income in other ways, like acting or advertising," he says. 

Indeed, there are not many KPOP stars who just sell music.  All of them are aspiring actors and want endorsement deals because they make so little off of record sales.  They also have very heavy tour schedules and have to promote themselves a ton because live performances is how they get their fans to actually pay for their music.

That diversity of roles is helping to spread their appeal to other countries, as well as to other areas of the South Korean economy. Many tourists who come for the music also buy the clothes and cosmetic brands promoted by Korean stars. 

According to South Korea's Trade and Investment Agency, income from cultural exports like pop music and TV shows has been rising by about 10% a year. In 2008, it was worth almost $2bn. 

The success of the South Korean economy was, for decades, laid at the door of the big "chaebol" or family firms. 

While conglomerates such as Samsung and Hyundai still form the backbone of the country's financial structure, many people now believe that the Korean national brand itself is changing to reflect this new passion for Korean wave. 

Mr Cho cites the English-language websites devoted to Korean wave, which attract more visitors than the Korean-language versions. 

For people under a certain age, all across Asia - and increasingly in Europe and the US too - the South Korea of today is just as likely to be associated with pop music or TV dramas as with cars or microchips.

I still think that Korean pop stars have failed to penetrate any music markets outside of Asia.  Although, I say it is only a matter of time.  Some music agency here is going to figure out the right formula and finally strike it big in the English speaking Western world.

I don't know about you guys, but I think KPOP way more fun and interesting than current American pop stars like Justin Bieber.