80% of K-Pop’s sales come from Japan
In Korea, a problem has arisen regarding the business of hallyu. Although the country’s reach has has expanded across the globe, profits of the Korean Wave still remain 99% in Asia, and profits even in Korea do not reach high to that extent. Already, there are estimates that the influence of hallyu will end in roughly 5 years, and currently Korea’s “national prestige” is standing at a crossroad.
“3 Times the Olympics”
In March, Korea’s Economic newspaper published a report about how Korea’s hallyu wave effects it’s economy. Factoring in exports like music and dramas, in 2003 profits were 86 million dollars, but jumped to a staggering 220 million dollars in 2008. For K-Pop between 2007 and 2010, it has risen from 189 million dollars to 313 million dollars.
This has had a ripple effect on all of Korea’s industries, crossing over entertainment and culture. In 2012, it’s estimated the car industry brought a result of a 2.7 trillion won increase (about 190 billion yen), and broad industries like games, food, tourism, consumer electronics are seeing an increase in about 12 trillion won. At this rate, it’s estimated that all these industries will rise to 19.8 trillion won in 2015, and 57 trillion won in 2020.
On that note, the problem arises with the high degree of dependence the Korean Wave has on Japan. Although K-Pop has mainlined to the point where concerts are now held in the West, Asia accounts for 99% of K-Pop’s sales, with Japan taking up 80% of it.
According to the Korean Economic Newspaper, when calculating the revenue of the 5-member idol group KARA’s activity in Japan, including character goods and performances, 84% of it is given to the Japanese distributors, a remaining 8% left to Japanese promoters. The final left-over profits for KARA’s entertainment agency is only an 8%, an amount said not be close to enough money.
Oingyu, head of the Hallyu Research Center in Daejeon, Korea points out the main problem hallyu holds is that it is “attaching too much onto Japan” and it’s ongoing “revenue imbalance”. Regarding that circumstance, although Japan is K-Pop’s biggest market in the world, Korean industry cannot directly sell in Japan due to “licensing agreements”.
In Korea, recognition of the revenue imbalance is gaining strength, and although Korea is directly tied up with Japan in the telecommunications industry, and are attempting to find a way around online music selling, the view that it’s “impossible to operate in Japan but ignore Japan’s entertainment distribution network,” as stated by Korean company promoters, has become a popular view.
The final blow to all of this is a poll taken in by a economic newspaper. This February, the paper asked 1,200 people made up of Chinese, Japanese, and Taiwanese people questions regarding hallyu. 62% of people believed hallyu would end within 5 years, and 18% believed hallyu is already ending. Combined, 80% already have negative outlooks on the future of hallyu.
Although Korea wants to break away from Japan’s market as being K-Pop’s singular dependence, if it leaves business will almost cease to exist. It seems even hallyu itself is bringing about a dilemma in Korea.