[Photo by Yoo Dae-gil = dbeorlf123@ajunews.com]
SM Entertainment and seven other major management agencies have been ordered to correct wrong practices in picking and training young K-pop wannabes as a probe by anti-trust regulators exposed the dark side of South Korea's glamorous K-pop industry.
Based on an inspection that began in December last year, the Fair Trade Commission (FTC) revealed six types of unfair clauses in contracts for trainees of SM, YG, JYP, LOEN, FNC, Cube, Jellyfish Entertainments and DSP Media.
There are about 1,200 trainees who signed up for what critics called a "factory-styled" grooming process for years to become K-pop artists.
Terms of their contracts are different, but some agencies were accused of imposing a penalty of up to 150 million won (130,430 US dollars), which is far higher than their actual investment, for arbitrary termination or breach of deals, the watchdog said Agencies were found to have invested an average of 53 million won each for three years.
Young trainees are often released from their labels unilaterally and without a grace period for ambiguous reasons, and some agencies banned them from signing contracts with other companies for a while even after their contract expired, FTC regulators said.
"The most contentious issue in legal disputes involving trainees ... was found to be the termination of contracts for abstract and ambiguous reasons," Sohn Joong-kyu, an FTC inspector, told reporters.
Trainees have no choice but to sign unfair contracts because many of them are teenagers and have no bargaining power, he said. "Management agencies acknowledged wrong practices and agreed to correct unfair contracts."
"While many trainees are usually minors living under economically poor conditions, entertainment agencies exert their absolute influence over their debut," Sohn said, adding more and more teenagers become trainees thanks to the growing popularity of TV audition shows.
Company officials said the watchdog's order would not bring a drastic change to their business and corporate culture as K-pop groups are usually put under tight control by a team of managers, choreographers and wardrobe assistants after years of training. K-pop groups have to endure tight schedules because agencies cannot recoup their investment only through music sales in South Korea.
"There will be no change in our business," an industry insider told Aju News. "There would be no unexpected situation in handling (trainees)."
Management companies have been dogged by allegations that trainees were forced to sign "slave" or dual contracts. A slave contract was laid bare in 2009 when three members of boy band TVXQ - Jaejoong, Yoochun and Junsu - launched a legal battle against SM Entertainment, insisting their 13-year-contract was too long, too restrictive, and received little profits from their success.
The court ruled in favor of them, prompting entertainment agencies to adopt a "model" contract. Under revised rules, a contract should not exceed seven years. If artists want to quit before their contract expires, they are required to pay a sum calculated from the average profits made from performances and music sales.
Long exclusive contracts have disappeared, but critics say a dual contract has yet to be addressed as many K-pop stars are still battling mistreatment from management agencies, tight schedules, unfair distribution of profits and an exploitation of basic rights.
Lim Chang-won = cwlim34@ajunews.com and Park Sae-jin = swatchsjp@ajunews.com
reporter
Park Sae-jin
swatchsjp@ajunews.com
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