Three members of the nine-member boy band EXO have reportedly announced they are planning to terminate what they say are “unjust long-term contracts” with K-Pop agency SM Entertainment.
In a statement released by law firm Lin on Thursday (June 1), EXO members Baekhyun, Xiumin, and Chen – whose full names are Byun Baekhyun, Kim Minseok and Kim Jongdae, respectively) alleged they were forced into “slave contracts” of as long as 20 years, and lost faith in SM Entertainment after the company refused repeated requests for detailed breakdowns of its payments to the artists.
The trio also said that “legal action is inevitable” following their announcement that they are terminating their contracts.
SM Entertainment has fired back with a statement of its own, saying it was given “tip-offs” suggesting that a rival business is attempting to sow discord within the company and poach the EXO artists for itself, potentially getting them to sign an agreement in violation of the exclusive agreement they have with SM.
The K-pop giant defended its lengthy contracts with EXO members, saying that these contracts were effectively approved by Korea’s Supreme Court in earlier litigation, and that the EXO members signed a recent extension of those contracts while being represented by “large-scale law firms.”
The company also said that the EXO artists have always had access to detailed breakdowns of their payments, but that it will not distribute copies of those breakdowns to artists, because they could be “unfairly provided to a third party.”
In the statement on behalf of the three EXO artists – published by Korean news site Newsen and translated at Soompi.com – lawyer Lee Jae Hak said Baekhyun, Xiumin and Chen had originally signed 12- or 13-year contracts with SM Entertainment when EXO was formed around 2012, which is “far beyond the seven years determined by the Fair Trade Commission for the standard exclusive contract for for entertainers.”
SM then “pushed for the artists to sign subsequent exclusive contracts once again, resulting in long-term contracts that span over at least 17 to 18 years or more,” the letter stated.
The letter also said that the EXO members attempted seven times since March to obtain “settlement reports” – detailed breakdowns of payments from the company to the artists – and were rebuffed.
“If SM had accurately paid the settlement to the artists, there would have been no reason why they could not provide the settlement reports and settlement basis,” the letter stated.
The letter argued that the EXO members’ contracts should be invalidated on the grounds that there is an imbalance in bargaining power between SM Entertainment and the artists.
It cited a judicial precedent involving another K-pop band, a 2009 lawsuit in which three of the five original members of TVXQ sued SM Entertainment to be let out of their contracts.
In that case, a court ruled provisionally that the lengthy contract terms “excessively infringe[d] on the economic freedom and basic rights of the applicants,” the letter stated.
In a subsequent ruling, “it was determined by the court that subsequent contracts are unfairly signed contracts with defects due to the difference in bargaining power,” the letter stated.
(In the case of TVXQ, the three members left the band, and since around 2010, TVXQ has carried on as a duo.)
‘External forces’ at work?
However, in its own statement, SM Entertainment cited a different legal precedent – that of Hwang Zitao, a former member of EXO who sued SM Entertainment in 2015, arguing that his 10-year contract contained unjust terms and that its length amounted to a constriction on his freedoms.
In 2018, the Supreme Court dismissed Hwang’s appeal of a lower court ruling, and said his contract was valid for its duration through 2022.
Despite the legal victory in that case, “we… signed two annex agreements with the EXO members, including the artists in question, to change the salary rates in favor of the artist,” SM Entertainment said in its statement, as published at Koreaboo.com.
“This was a measure we took to promote the shared growth of our company and artist, even though there was no contractual obligation [on our side].”
SM Entertainment said the lawyer representing the three EXO artists only entered on the scene recently, “and we began receiving tip-offs that there were external forces that were causing our artists to waver.”
SM said they requested that the EXO artists “reassure us that they did not sign any double contract that violates our exclusive contract. Then, the artists’ legal representative … suddenly changed his attitude and halted discussions … and informed us that they would be terminating their exclusive contract with us without any explanation regarding the [potential] double contract.”
A report at Korea’s JoongAng Daily cited a “media report” stating that a rival K-pop agency, Big Planet Made, or BPM Entertainment, received a notification from SM Entertainment alleging that a representative of the company “met with the three EXO members and tried to convince them to join the company.”
BPM reportedly denied any involvement in the matter.
“It’s true that we received a letter from SM, but we are very regretful about [SM Entertainment] involving us when we have no part in their internal situation. Should they continue with the claim, we will take firm legal measures,” BPM said, as quoted at JoongAng.
The conflict marks yet another drama for SM Entertainment, which earlier this year was at the center of a tug-of-war between Korean telecom and media giant Kakao and rival K-pop agency HYBE for control of SM.
Kakao eventually emerged victorious from that battle, with a 39.9% stake in SM Entertainment.
However, in April, South Korea’s financial regulator raided the offices of SM Entertainment in an ongoing probe of Kakao, which the regulator suspects may have manipulated SM Entertainment’s stock price during its fight for control of the company.
SM Entertainment is the second-largest K-pop agency by revenue, behind rival HYBE. Besides EXO and TVXQ, it represents acts including Girls’ Generation, Super Junior, aespa and Kangta.Music Business Worldwide