2024-05-17 Newsen Article

Korean original: 하이브 “음반 밀어내기 안 한다, 확인없는 문제제기 심각한 우려” [전문] - 손에 잡히는 뉴스 눈에 보이는 뉴스 - 뉴스엔 

English translation by Grok AI

HYBE Responds to Min Hee-jin's Claims of 'Album Pushout': "Serious Concerns Over Unsubstantiated Allegations" [Full Statement]

May 17, 2024, 14:47:48

[Newsen Reporter Lee Min-ji]

HYBE has refuted claims made by ADOR CEO Min Hee-jin regarding "album pushout."

On May 17, HYBE stated, "Min Hee-jin’s side disclosed a second email sent to HYBE on April 16 in their defense materials. HYBE responded to this email on April 22 with a detailed reply based on accurate facts, including a statement that HYBE does not engage in pushout practices." HYBE has now made this response public.

HYBE further explained, "We confirmed through an audit that the evidence presented by Min Hee-jin’s side was either obtained from pre-recruited collaborators or secured by inducing desired responses. Additionally, we verified through conversations between Min Hee-jin and Vice President L that raising the pushout issue was part of a deliberate plan to seize control of management."

HYBE added, "As revealed in court today, there were discussions such as ‘collecting pushout evidence + preparing for public opinion,’ ‘we don’t care if the Fair Trade Commission investigates or not,’ and ‘we just need headlines.’"

Below is the full text of HYBE’s email response, sent on April 22, to Min Hee-jin’s internal whistleblowing inquiries:

To ADOR CEO Min Hee-jin,

We express regret that, at a critical time when ADOR should be focusing its utmost efforts on ensuring a successful comeback for NewJeans, you have raised unilateral claims through lengthy inquiries on April 3 and 16. In particular, the April 16 inquiry raises suspicions about HYBE’s management, which are unrelated to NewJeans and factually baseless. While these actions are framed as being in the interest of NewJeans, they appear to stem from hidden intentions or motives. Based on the facts uncovered during the preparation of this response, HYBE is convinced that promptly conveying our position is the best way to protect the precious value of NewJeans, and we respond as follows:

1. HYBE does not engage in so-called “album pushout.”

Labels under HYBE do not engage in album pushout. This has been communicated to ADOR multiple times, and it is a fact documented in SNS conversations between HYBE CEO Park Ji-won and Min Hee-jin.

Nevertheless, Min Hee-jin has persistently raised baseless suspicions about the album sales of various artists, both within and outside HYBE, including SEVENTEEN, TOMORROW X TOGETHER, ENHYPEN, LE SSERAFIM, TOZ, ILLIT, IVE, and RIIZE, questioning whether their sales figures are the result of pushout or stockpiling. In particular, regarding ILLIT’s recent album sales, ADOR’s Vice President L00 has repeatedly met with external analysts, stating, “ILLIT’s initial sales seem like pushout. Doesn’t it seem suspicious?” Even when analysts responded that this did not appear to be the case, Vice President L persisted in reiterating these claims.

Min Hee-jin has gone so far as to claim that HYBE proposed pushout to NewJeans to justify her allegations. However, this was merely part of an informal conversation, and as previously explained multiple times, HYBE has officially stated that it does not engage in pushout and operates its business with the clear principle of not pursuing pushout for initial sales competition.

To address the issues raised, HYBE conducted a comprehensive investigation of all albums sold last year, including whether any returns were made through pushout, and we transparently share the findings.

In 2023, HYBE artists released 17 new albums, with total sales of 43.6 million units (including approximately 10 million from Cube). The investigation revealed that there were returns of 70,000 units each for two albums, totaling 140,000 units, which accounts for 0.32% of total album sales. In 2023, a year of fluctuating album sales, demand forecasts were adjusted upward due to strong sales performance. However, changing market conditions led to higher-than-expected errors in demand predictions. In this process, operational staff permitted returns under conditions not specified in contracts, resulting in the aforementioned returns. Upon confirming these return transactions, the company strengthened internal controls to prevent verbal agreements for returns outside established principles, and no additional returns have occurred since.

Similarly, when ADOR released NewJeans’ 2nd EP Get Up, they optimistically planned to produce 3.5 million units, but currently, HYBE holds 1.61 million units in inventory. Such market volatility and unpredictability in demand forecasting are challenges that are difficult to completely avoid in the entertainment industry, despite best efforts.

Min Hee-jin defined pushout in her statement to HYBE as “unfair practices to artificially inflate sales during the first week of release, or ‘initial sales,’ by placing large orders through distributors or overseas subsidiaries or hastily organizing fan events to boost sales.” By this definition, the sales activities for NewJeans’ Get Up could also be considered pushout.

For instance, the Japanese distributor UMJ initially expressed reluctance to purchase over 90,000 units of the album. However, through negotiations involving ADOR, an additional 60,000 units were sold, totaling 150,000 units to UMJ, which could be considered a large order by ADOR. As a result, the distributor currently holds 110,000 units in inventory. To help move some of this increased volume, ADOR organized an additional fan signing event with all NewJeans members on August 20, 2023, which could be considered a hastily arranged fan event.

Such activities fall under promotional efforts, yet it lacks persuasiveness to argue that they are legitimate when done by NewJeans but constitute pushout when done by other artists.

HYBE expresses serious concern over your actions and intentions in raising the issue of “album pushout,” which is easily misunderstood, without proper verification. If you genuinely believed that pushout is a significant issue within HYBE and the K-pop market, you should have first conducted thorough fact-checking.

2. The UMG contract benefits everyone.

The contract with UMG is a valuable achievement secured after long and arduous strategic negotiations to maximize the interests of HYBE, its artists, and the Weverse community. UMG recognized the stature derived from the extensive catalog of artists under HYBE’s domestic labels, led by BTS, as well as those under HYBE Japan, BMLG, and QC Media under HYBE America. It should be noted that the terms secured would have been impossible to negotiate based solely on the distribution volume of individual labels.

Through this contract, HYBE’s domestic, Japanese, and U.S. labels will benefit from significant reductions in distribution fees. ADOR will also immediately benefit from these reduced fees for albums and music released in 2024. The expected reduction in distribution fees for ADOR this year is close to 5% of related revenue, leading to substantial profitability improvements.

Nevertheless, Min Hee-jin claims that this contract caused NewJeans to lose the opportunity to secure even lower distribution fees in the future. However, this argument is based on the unrealistic assumption that NewJeans’ future value and bargaining power would have enabled better terms with an overseas distributor. We question how an individual label could secure terms more favorable than those HYBE negotiated with UMG and what evidence supports such a claim.

3. ADOR has already benefited significantly from advanced label operations.

Even before their debut, NewJeans had the opportunity to meet with the CEO and executives of a leading global sports brand, which later led to their selection as models. This was possible due to the special support and investment provided by HYBE’s multi-label system before NewJeans’ debut. This is a direct result of advanced label operations.

Despite strict restrictions on Korean artists’ activities in China at the time of NewJeans’ debut, HYBE successfully arranged a special debut promotion for NewJeans on China’s largest music streaming platform. This is another example of NewJeans reaping the benefits of HYBE’s multi-label system. Additionally, NewJeans’ performance at Lollapalooza Chicago in August 2023, just a year after their debut, was made possible by HYBE’s multi-label operational capabilities. For stage preparation, HYBE deployed key personnel from its concert production studio to ensure NewJeans could deliver their best performance. Furthermore, during the production of NewJeans’ second mini-album, the management consulting team actively assisted with the purchasing process, resulting in cost savings of 1 billion KRW and increased operating profits for ADOR.

While Min Hee-jin fully enjoys the practical benefits and efficiencies of the multi-label system, we ask that you cease the contradictory and hypocritical attitude of disparaging colleagues who work together.

Min Hee-jin has unilaterally claimed that Source Music’s contract with a luxury brand should have required ADOR’s consent because it utilized networks learned during NewJeans’ ambassador contract process. However, the contract between the brand and Source Music naturally arose from a friendly relationship formed when the artist attended the brand’s fashion show. Moreover, this brand had already collaborated with BTS’ J-Hope and the entire BTS group as global ambassadors before NewJeans’ Hyein was signed. By the same logic, ADOR should have sought consent from BigHit Music (J-Hope/BTS) before contracting with the brand.

More importantly, it is incomprehensible for a label to question the strategic decisions of the parent company regarding new business ventures. New business initiatives are driven by long-term growth strategies, as is the case with many growth-oriented companies, including HYBE. Today’s HYBE is the result of relentless strategic planning and investment for the future. ADOR and NewJeans are also products of such growth strategies and investments. Criticizing long-term investment and performance-driven decisions without understanding the specifics or taking responsibility is unjust.

4. Shared Services provide non-discriminatory support to all labels.

You raised suspicions about the release date of a press release announcing the UMG partnership coinciding with NewJeans’ Tokyo Dome fan meeting announcement. Press releases with overseas partners are coordinated in advance, considering time differences, market regulations, and various circumstances, as part of international agreements. On that day alone, nine press releases were issued, meaning seven were related to other labels and artists. However, no other label has made the absurd claim, as Min Hee-jin did, that HYBE released important materials on the same day to undermine their achievements.

In 2023, our communications team produced and distributed 273 press releases for NewJeans alone. Compared to 659 for BigHit Music (covering BTS and eight other teams) and 365 for Pledis Entertainment (covering SEVENTEEN and four other teams), it is difficult to claim that HYBE has neglected PR for NewJeans. Our PR team works tirelessly and impartially to promote all labels and artists.

The claim that IR/press releases did not highlight NewJeans’ growth stems from Min Hee-jin’s insistence on emphasizing only ADOR’s performance. Performance information must be provided in a balanced manner based on data. While NewJeans and ADOR have achieved notable growth, it is also a fact that BTS, SEVENTEEN, and other teams contribute significantly higher revenue. By Min Hee-jin’s logic, these groups should have been highlighted even more prominently. Despite this, Min Hee-jin has persistently demanded one-sided revisions, and our PR team has partially accommodated these requests.

In 2023, our legal team supported ADOR with 655 contract reviews and consultations. Compared to 888 for BigHit Music and 770 for Pledis Entertainment during the same period, the legal support provided to ADOR is far from negligible. Furthermore, in addition to handling typical malicious comment lawsuits for artists, our legal team has actively supported ADOR with lawsuits against malicious comments targeting Min Hee-jin personally, as well as various defamation lawsuits and correction requests to media outlets. No other label or individual within HYBE has received such extensive legal support.

Industry trend reports are internal documents that collect and analyze quantitative metrics like chart performance, as well as subjective consumer reactions and issues, to propose improvements. These reports do not represent HYBE’s stance or evaluation of artists. How these reports are interpreted and utilized is entirely up to each label’s discretion. Given their nature, these reports may include diverse opinions and unfiltered suggestions for improvement, which is their purpose. If only glowing analyses were acceptable, we question how such reports would contribute to ADOR’s growth. Despite this, following Min Hee-jin’s request in early 2023 to refrain from reviewing NewJeans’ content (music, performances, music videos, etc.), qualitative evaluations of NewJeans were excluded. After a subsequent request to completely omit NewJeans from these reports, they have not been included in trend analyses or qualitative evaluations.

5. We cannot agree with claims regarding ethical issues.

The claim of ILLIT’s similarity to NewJeans commits the fallacy of generalizing from specifics. As a recognized expert in the entertainment field, Min Hee-jin’s reliance on internet posts to allege plagiarism is regrettable.

Nevertheless, prior to addressing your issue, we reviewed all internal documents produced by BELIFT LAB and confirmed no intent to imitate NewJeans. Your claims largely rely on internet discussions about similarities, but similarity cannot be established solely based on online chatter. By this logic, controversies over NewJeans’ Cookie lyrics or kal-guksu comments would also be considered factual. While the internet allows for free exchange of ideas, not all such discussions are grounded in fact, a point Min Hee-jin should understand well.

HYBE has never considered marketing that references or compares to NewJeans. A review of press releases issued during ILLIT’s debut shows that neither NewJeans nor any other senior artists were used in ILLIT’s marketing. Comparative marketing with senior artists is a kind of taboo within HYBE.

The only instance of breaking this taboo in HYBE’s PR history was by ADOR. In March 2023, when NewJeans’ Ditto achieved the highest cumulative daily chart No. 1 on Melon, ADOR’s Vice President Shin00 strongly demanded that HYBE PR include a phrase comparing it to “surpassing BTS’ record.” Despite repeated objections and heated arguments from the PR team, ADOR insisted, and the press release ultimately included the phrase, “surpassing BTS’ mega-hit Dynamite (75 times).” This led to numerous articles titled “NewJeans Surpasses BTS.”

Yet, Min Hee-jin continues to claim that HYBE imitates NewJeans and exploits their popularity. We would like to ask Min Hee-jin: Do you truly believe that all rookie groups debuting after NewJeans—RIIZE, TOZ, ILLIT—are mere copies of NewJeans? Furthermore, after joining HYBE, Min Hee-jin has repeatedly claimed to those around her that BTS was created by copying her. Do you genuinely believe this, and does this belief remain unchanged?

Recently, ADOR’s Vice President L00 called a news outlet’s editor-in-chief late at night to protest an article titled “Rookie Girl Group ILLIT Surpasses NewJeans’ Achievements,” causing a commotion that HYBE’s PR team had to address. Moreover, Min Hee-jin’s side has repeatedly demanded that PR revise headlines and articles, even for reports based on objective performance metrics of ILLIT and NewJeans, not press releases.

Demanding the promotion of NewJeans’ achievements even at the cost of breaking internal taboos while objecting to media articles based on factual performance metrics that show others surpassing NewJeans lacks consistency and defies common sense.

Min Hee-jin’s claims about the separation process from Source Music are also based on her distorted interpretation. NewJeans did not become HYBE’s first girl group not because HYBE failed to keep a promise. At the time, Min Hee-jin insisted on taking full responsibility for creating the team and debuting them under her separate label. Respecting her opinion, HYBE transferred the members to ADOR despite Source Music’s objections, provided 16 billion KRW in funding, and enabled NewJeans’ debut in the manner Min Hee-jin desired. This process of company division and contract transfers inevitably delayed NewJeans’ debut, independent of HYBE’s intentions.

Min Hee-jin herself has acknowledged this process. In an interview published on March 24, 2022, she stated that the girl group project was proceeding under her plan, with the third quarter of 2022 set as the launch timeline. She said, “A rushed debut would place a heavy burden on young members. Not wanting to rush anyone, we set the third quarter of 2022 as a reasonable launch time.” This interview, published two months before LE SSERAFIM’s debut (May 2, 2022), shows that Min Hee-jin had ample time to promote the new girl group.

Thus, Min Hee-jin’s claims about the separation from Source Music starkly contrast with the understanding of HYBE and Source Music members, who are well aware of the extensive support and concessions provided for ADOR’s success.

We ask about your intentions in sending a confrontational email, compiling issues that could have been resolved through internal communication, as if there were serious problems with HYBE’s multi-label system.

At this critical time, with NewJeans’ new album comeback and Tokyo Dome performance approaching, HYBE believes protecting NewJeans’ IP is the utmost priority. We initially viewed Min Hee-jin’s claims as another instance of tantrums or unreasonable demands and sought to respond diligently. However, we have uncovered evidence that her issues are being used as a deliberate means to seize control of ADOR’s management, and her business execution and decision-making exhibit serious flaws as a manager. We have no choice but to respond firmly to this.

Indeed, Min Hee-jin has continuously nitpicked, raised issues, and expressed dissatisfaction, building a pretext to seize ADOR’s management rights. Despite receiving trainees cast by Source Music, trained by HYBE T&D, capital, and talent to establish the company, and extensive support for the artist’s successful activities, she has repeatedly made unreasonable demands, only to raise new complaints when those are met.

Compensation is no exception. Despite agreed-upon compensation terms at ADOR’s founding, Min Hee-jin demanded additional compensation after NewJeans’ debut. After careful consideration, HYBE sold 20% of ADOR’s shares to Min Hee-jin and others, creating a structure where ADOR’s management could hold shares and operate the company, and granted a put option for further compensation. Despite receiving some of the highest compensation among HYBE members, Min Hee-jin continued to demand additional compensation. In last month’s performance negotiations, she demanded three times the performance bonus of HYBE’s CEO without any basis, resorting to profanity and abusive language that is difficult to repeat.

While pressuring HYBE with excessive compensation demands, Min Hee-jin and ADOR’s management have consistently explored ways to force HYBE, the majority shareholder, to sell its ADOR shares and recruit external investors, demonstrating a clear intent and execution to covertly seize control from the majority shareholder. While secretly engaging in such activities externally, the sudden raising of baseless issues through emails internally leads us to suspect ulterior motives.

Once again, we express deep regret over your factually baseless unilateral claims and inform you that we will take all necessary legal actions against those involved in the attempt to illegally seize management rights.

Newsen Lee Min-ji oing@