Show Me the Money

When they were at the height of their popularity, members of the Korean boy band H.O.T. began to suspect their golden fame was dross. The contracts they had signed with production house SM Entertainment called for each band member to receive royalties of less than 1 for every CD sold; members of other groups were getting 17. Arithmetic revealed the ugly truth: whenever one of their albums reached the magic 1 million-copies-sold milestone, each H.O.T. member could count on payment totaling a paltry $10,000. Heck, U.S. pop diva Mariah Carey earlier this year was paid $28 million by music label EMI to not record four albums. After fruitless renegotiations with SM Entertainment founder Lee Su Man last spring, three of H.O.T.’s five members split from the company, killing the band and breaking the hearts of millions of teenage fans. “We would complain that we never had enough money,” says ex-H.O.T. singer Tony An, “and Lee Su Man would say: ‘I even pay for your gas, what are you complaining about?'”

Next week, the Korea Fair Trade Commission is expected to release results of a three-month investigation into possible collusion by the music industry’s biggest production houses, which are suspected of practices that allegedly limit rivalry and keep CD prices artificially high. “We want free and fair competition,” says Lee Dong Kyu, a spokesperson with the governmental watchdog body. “We want consumers to be able to enjoy high-quality music at low prices.”

But another part of the commission’s probe examines allegations that naive young singers, willing to cut any deal for a shot at fame, are being locked into unfair “slave contracts” that enrich their managers while leaving the stars in relative penury. The issue first gained attention in 1999 when a three-sister act called Hans Band sued its production company, Yedang Entertainment, claiming its contract was grossly unfair and, moreover, it had only been paid $15,000 — a fraction of what it was owed — after two successful albums. Some reports said the popular stars received welfare payments to make ends meet. After suits and countersuits, Yedang agreed to cut two years off the band’s five-year contract.

Industry executives defend the country’s music industry system, under which fledgling singers serve apprenticeships with production companies before going commercial. The firms foot the bill for music and dance training, for stars’ cars, costumes, managers and other expenses. Producers estimate it costs about $400,000 to groom and launch a new performer. Until outlays sunk into the careers of rookies have been amortized, producers are loath to cut them a bigger piece of the pie.

Korea’s big names and big talents aren’t on welfare, of course — most can afford the expensive trappings of the pop star lifestyle. But An says his resentment of his former employer, SM Entertainment, doesn’t stem from greed. An is sore that he was treated like a perishable commodity rather than as a person. If Lee had been willing to address their contract concerns, “we probably wouldn’t have left,” An says sadly. “It was more about the human touch than the money.” Hey guys, you want love, get an agent.