South Korean entertainment giant SM Entertainment has unveiled its plan to establish a new music publishing arm called Kreation Music Rights.
CEO Jang Cheol Hyuk announced the plan during an investor presentation last week (August 2), coinciding with the release of the company’s second-quarter results.
According to Jang Cheol Hyuk, KMR aims “to become a leading global music publishing company”.
The initiative involves transforming the existing SM Friends subsidiary into Kreation Music Rights to consolidate SM Entertainment’s music publishing activities.
“With the introduction of multi-production center system, securing massive high-quality songs became more important. Therefore, we decided to establish a music publishing subsidiary called Kreation Music Rights,” Jang Cheol Hyuk said.
“With the introduction of multi-production center system, securing massive high-quality songs became more important. Therefore, we decided to establish a music publishing subsidiary called KREATION Music Rights.”
Jang Cheol Hyuk, SM Entertainment
The newly-formed unit is set to complement SM Entertainment’s “multi-production center,” a key part of its SM 3.0 strategy that was unveiled in March.
Comprising five production hubs and one virtual artist production center, the multi-production center allows individual production centers to autonomously manage their own productions and core business functions.
Each center will be led by two directors, with one overseeing production and the other handling management responsibilities.
As part of its strategy, SM Entertainment has recruited additional personnel to enhance production capacity and broaden music coverage within the production center, said CEO Jang Cheol Hyuk.
According to SM, Kreation will play a key role in supporting its multi-production center by amassing a pool of music to provide to its artists.
“From this process, SM will create a virtuous cycle structure, in which the use of publishing subsidiary’s music will lead to enhance profitability of the company,” the CEO said.
The agency aims to capitalize on the growing music publishing business in the global market. Kreation will seek to secure contracts with composers, lyricists, and established music publishing entities worldwide.
Furthermore, Kreation will diversify SM Entertainment’s revenue streams through the internalization of royalties and music sales to external labels or agencies in the future, Jang Cheol Hyuk said.
“The publishing subsidiary will also initiate publishing business from second half of this year,” the executive added.
The new division will merge SM’s global intellectual property and production capabilities with Kakao’s music distribution network and multi-label system.
These efforts are aimed at boosting the company’s revenue amid increasing competition against rival HYBE, the agency behind BTS.
SM is home to K-Pop acts like SUPER JUNIOR, Girls’ Generation, SHINee, EXO, Red Velvet, KANGTA, BoA, TVXQ!, NCT and aespa.
In the second quarter of the year, SM booked 239.8 billion South Korean won (approx. USD $183.8 million) in revenues, up 30% from a year earlier.
This was driven by a 252.3% YoY jump in concert revenue to 20 billion won ($15 million) and a 74.8% surge in revenue within its MD/Licensing unit to 42.3 billion won ($32m), which offset the 18.5% YoY slump in Album/Digital Music revenue.
Music Business Worldwide