DBSK: First Court Hearing on Aug 21

In case you haven’t been keeping up, here is a recap of the last three weeks of Dong Bang Shin Ki news.

The Court Filing and Statement

It was on July 31 when Xiah JunSu, Micky YooChun and Hero JaeJoong
of Dong Bang Shin Ki went to Seoul Central District Court to file an
application for provisional disposition to terminate their exclusive
rights contract with SM Entertainment.

An
article in The Korea Times mentioned the legal document that was
released by the law firm representing the three members. It stated that
their 13 year exclusive contract with SM Entertainment was essentially
an inescapable lifelong contract and claimed that they were not given a
fair share of profit distribution. In addition, after debuting in a
number of countries around Asia, they have been overworked in their
daily schedules and had been given little time to rest.     

“(They)
have had health problems and finally reached their physical limits, but
SM Entertainment continued to send them abroad and plan excessive
activities. Thus, the three members have started to hope they will be
able to continue their careers as they wish, instead of being used as
tools for the agency’s profits,” the statement read.

After a
revision of the contract in February, the members were to be given 0.4
to 1 percent of total album sales. The original contract said that each
of the members would receive 10 million won if the previous album sold
more then 500,000 copies, and would receive nothing if the sales were
under 500,000. 

“The
statement added that the three members tried to communicate with SM
Entertainment, but the agency continually brought up the issue of their
makeup business and avoided further settlements,” said an article in the Korean Times. 

“SM
Entertainment’s attitude made them realize there was no hope in solving
the situation through communication, and the members finally decided to
take legal action to further settle the case.”

Contract Woes

This
13 year long contract would not include the two years for their
mandatory military service, adding up to a possible 15 years. The
length of time of the contract could end up being their entire
entertainment career. If they were to break the contract, they would owe the staggering amount of three times the initial investment
of the agency plus twice the amount the artist would make in their
remaining contract time, in addition to another large sum. Having that
kind of penalty gives little option to do anything else but follow the
contract.      

Why agree to such contracts in the first
place? Young star-hopefuls know that in order to debut that they should
not demand too much. “Everyone knows that a rookie won’t survive if
they strike up a problem with their agency,” said a director of one
agency.

Because of this lawsuit by the 3 DBSK members, some attention has been given to the contracts of other K-Pop performers. Under SM, Yoona of Girls’ Generation is also in a 13 year contract, Super Junior members all have contracts going from 5 to 13 years, while SHINee members’ contracts vary from 6 to 13 years.    

JYP has Wondergirls‘ under contract for 7 years, Big Bang‘s contract with YG Entertainment is 5 years, and SS501‘s contract with DSP Entertainment is also at 5 years.

Since
it is a long term investment, the company will probably want to make as
much ‘return’ as possible from all of their performers.

The Trademark

Despite the all legal troubles and subsequent rumors of disbanding, the members of DBSK
have strongly stated their desire to continue performing together as a
group. If the three were to leave the record label, the five of them
together can still be called ‘Dong Bang Shin Ki’ since SM was not able
to register the group name as a trademark in 2004.

SM
Entertainment has recently re-applied for the trademark rights to ‘Dong
Bang Shin Ki,” in addition to applying for the rights to several other
well known group names. Applying for trademark rights of a group is a
normal occurrence by agencies in entertainment, but has been seen by
fans as being a hostile act.

Money Issues and the Fan Backlash

On August 3, a Reuters article posted on Forbes Web site reported that SM Entertainment Co’s stocks fell by 10 percent after DBSK’s request for an injunction was filed.

“For
investors, it’s reasonable to worry over the news, since Dong Bang Shin
Ki is one of the major sources of revenue for SM Entertainment,” said
Kim Chang-Daewoo Securities. 

As a major source of revenue, it’s highly likely that SM Entertainment will want to keep DBSK
and come to an agreement. On the other hand, if they give in to demands
so easily, other performers might be encouraged to do the same,
damaging the bottom-line profit of the agency.  

On August 9,
SM entertainment revealed on a radio talk show that there was a better
distribution than reported. “We split profits with the group Dong Bang Shin
Ki at the ratio of 4:6,” SM said.

In reply to this, the 3 members of DBSK said “The splitting of profits is not transparent. We cannot trust them.”

“Let’s say SM is right and that they were paid 11 billion won for the 6
years of work,” said a source that is close to the three members of the lawsuit. “This is the pre-tax profit. After taxes were paid, and
this amount is divided by 6 years, and 5 members, this is less than 200
million won per member. For the first half of this year, the profits
from album sales in Japan is 2.5 billion Yen (33 billion won). However,
DBSK doesn’t even receive 200 million won per year.”

On August 12, DBSK’s official fanclub, Cassiopeia, called for a boycott of all SM Entertainment products, to show their support of DBSK’s actions.   

On August 14, a Dong Bang Shin Ki fancafe submitted a prosecution application to the Korea Consumer Protection Board regarding the postponement of SMTOWN
LIVE ‘09 concert that was originally planned to take place on August
16. While the delay of the concert was due to the ongoing lawsuit with
the 3 DBSK
members, SM still released SM Summer album ’09. This angered many fans
because the reasons for postponing the concert and releasing the album
were contradictory of one another.      

On August 15, it was reported by Kbytes
that the Seoul Central District Court had accepted the ‘Preservation of
Evidence request’ that was submitted by the three members on August 5.
Through this, the court requires that all receipts, transaction slips,
account books, and other items be preserved and submitted to
the court for the lawsuit.

What’s to come?

Junsu, Yunho, Jaejoong, Changmin and Yoo Chun debuted in 2003 in
South Korea under the SM Entertainment label. Two years later in 2005
they debuted in Japan under Avex’s sub label, Rhythm Zone, and by 2006,
they continued to take over Asia, touring in China, Thailand and
Malaysia.

What
will happen next? Unless the members of DBSK and SM Entertainment come up with a compromise, it will be up to
the courts to decide whether or not their contracts will remain valid.
The first court hearing will be tomorrow, August 21. 

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Sources
Kbites – 01 02 03 04 05 06 07 08
The Korea Times – 01 02
Forbes – 01