Clockwise from left:
Red Velvet, SHINee and
TVXQ!-branded fish
sticks; merch on display
at SMTOWN Coex
Artium in Seoul in 2015;
SuperM’s The First
Mini Album EP covers
featuring the faces of
the band’s members;
a LINE FRIENDS/BT21
pop-up store in Los
Angeles in 2019.Korea filed by the country’s music
giants have climbed 71% since 2015,
cumulatively reaching 656 last year,
according to the Korea Intellectual
Property Office (KIPO). SM
Entertainment alone accounted for
48% of the 4,794 applications filed
over the past 20 years.
The trademark applications,
once focused largely on music- and
entertainment-related ventures, have
diversified to include cosmetics,
clothing, accessories, stationery and
food products, according to KIPO
data. Not all of the merch that is
produced bears an obvious connec-
tion to a K-pop act or band member,
and that’s by design: Lee says fans like
goods that feature subtle, insidery
references to their favorite stars and
groups that are recognizable only by
other true believers. “It’s like sharing
secrets,” he says.
For instance, SM Entertainment
has collaborated with color-matching
company Pantone on a line of blan-
kets, luggage tags and other home
goods in which the connection to an
act is made solely through color: gray
for EXO, peach for Red Velvet and
lime green for NCT 127.
Big Hit Entertainment, the com-
pany behind BTS, has collaborated
with LINE FRIENDS — which first
produced stickers for mobile-phone
texting app Line — to manufacture
the BT21 brand of merch based on
cartoon-style characters that the boy
band created. The characters, which
adorn everything from T-shirts to
bathmats, do not actually resemble
BTS members, but fans know the
correlations: J-Hope’s character is
Mang, a dancing creature wearing a
pony mask; a gray-and-white robot
named Van represents the BTS fan
base, known as ARMY (an acronymfor Adorable Representative MC for
Youth). When a plush Cooky doll
(a rabbit designed by BTS member
Jungkook) was found abandoned after
one of the August 2019 Hong Kong
political protests, it became an image
associated with the rebellion.
As merchandising efforts have
significantly increased, so too
have the bottom lines of the trio of
publicly listed K-pop companies
known as the “Big Three” — SM
Entertainment, JYP Entertainment
and YG Entertainment. According to
SM’s 2018 investor relations report,approximately 25% of its revenue of
$516 million that year (612.2 billion
won) came from sources reported
as “other,” including merch and
fan clubs. That same year, YG’s
“goods and other products” category
accounted for 14% of a total revenue
of $241 million (285.8 billion won),
according to its 2018 investor
relations report, while a company
representative says that JYP’s
merch sales constituted 10% to 15%of overall revenue of $105 million
(124.8 billion won).
Now there’s potential for even
more growth as these companies that
create, develop and manage K-pop
acts look for partnerships outside of
South Korea. In November 2019, SM
Entertainment struck a deal with U.S.-
based Creative Artists Agency that
is expected to generate film, TV and
branding opportunities stateside and
internationally. But as the companies’
constant output of K-pop merch
explodes, they risk alienating fans by
excluding those whose pockets are
not deep enough to keep up.
In the early 2010s, it became the
norm for K-pop groups to release
multiple versions of an album, each
featuring different exclusive photos.
SuperM’s The 1st Mini Album EP ar-
rived last October with seven variants
(one for each member of the group)
in addition to the standard cover that
blended the individual variants. These
multiple covers don’t just cater to
fans’ individual loyalties — they can
also boost sales and chart position.
SuperM’s EP debuted at No. 1 on the
Billboard 200, and of the 290,000
copies (physical and digital) that it has
sold as of Feb. 4, 102,000 of those CDs
were variants, according to Nielsen
Music/MRC Data.
“When you usually buy a CD, it’s
assumed you’re buying a plastic disc
that happens to have a booklet,” says
Bernie Cho, head of Korean music
export agency DFSB Kollective. “In
Korea, with a lot of the big releases,
it’s almost the other way around: You
are buying an elaborate book that
just happens to have a CD.” To gain
entry to many autograph signings
and fan club-only events in South
Korea, people will buy hundreds,
sometimes thousands, of albumspriced at $15 to $20 apiece. Each
comes with a lottery number that, if
chosen, provides access to the event
— so the more albums purchased, the
greater the chances of getting past
the velvet rope.
And there are plenty of even more
exorbitant forms of K-pop fandom.
Kang Yuri, a 17-year-old EXO follower
who lives in the city of Ansan outside
Seoul, says that weekly TV programs
featuring K-pop stars often require
attendees to bring specific pieces of
merch — as many as eight, including
CDs and light sticks — if they wish to
join the studio audience, even if they
have purchased tickets to the show.
“[The bands] upload on the official fan
cafe [portal site] what items you need
to bring if you want to get in,” says
Yuri. “No items? No entry.”
The additional price of admission
makes for good TV, when audience
shots reveal a band’s fans waving light
sticks or other swag for the cameras.
And it’s also considered a way of
identifying fellow hardcore fans — or
at least those who can afford to buy
all of the requisite merch. But it’s this
type of treatment (along with the poor
quality of some of the merch that is
marketed) that has some grousing that
K-pop marketers see them as human
ATMs without financial limitations,
despite the fact that many of them are
tweens and teens.
“Companies are out to make as
much money as possible by any means
necessary in the shortest amount
of time,” says 32-year-old Virginia-
based K-pop fan Jessica C., a follower
of K-pop singer IU. “If that means
throwing a collectible photo card
inside of a wallet that costs $1 to make
and marking it up to $15, they will put
it out on the market. They know there
are fans that will purchase it.”For K-pop
enthusiasts with
limited incomes,
the cost of
keeping current
with the latest
in fan gear can
be exorbitant.
STICKS: SM BRAND MARKETING. PILLOWS: HAN MYUNG-GU/WIREIMAGE. BT21: WALTER CICCHETTI/ALAMY STOCK PHOTO. KIM: RAPHAEL RASHID.46 BILLBOARD • MARCH 28, 20207fea_kpop [P]_27818950.indd 46 3/24/20 7:44 PM