[Opinion] Will Kara Continue On With DSP Media?

Disclaimer: The writer is not really an expert at anything much and is just a mere Kara fan. I have been known to be rather weird and cynical at times. My opinions certainly DO NOT reflect the opinion of Soompi’s news team or Soompi as a whole. Trust me, the rest of the Soompi news team is much more normal than I am.

Reports are coming in that Kara’s contract with their long term agency DSP Media is set to end in the immediate future and this has once again intensified discussions about what Kara and DSP’s future plans are for the group. Will Kara continue to maintain its long and sometimes conflict riddled relationship with DSP Media or is there perhaps a second option for the popular group?

So, first. Let’s get the facts out of the way. Four of the members will have their contracts come to a close in January 2014 with Kang Ji Young following closely in April of the same year. Their separate production contracts with Universal Music Japan also concludes within the same time period (January-February 2014). Sports Joseon is reporting that Kara has already begun initial contract negotiations with DSP Media. DSP Media is, as expected, being extremely cautious about all contract discussions by stating that “It’s too early to start talking about renewing contracts as there is still time remaining on the terms of their contract,” while Park Gyuri has perhaps been referring to speculations about their contract when she posted “What is this…we are doing fine” on Twitter.

20130107092325304Kara’s Hugely Successful 2013 Karasia Concert at the Tokyo Dome

So why is all of this interesting? First off, it is safe to say that Kara is still one of the most, if not the most, popular K-pop group currently operating in the lucrative Japanese pop music market. According to reports last year, Kara’s total sales in Japan for the period (starting December 26, 2011 and ending December 17, 2012) was approximately $39 Million USD, which placed them 9th on Oricon’s total sales chart. The only K-Pop group that placed higher than them is Girls’ Generation. Suffice to say, while we don’t actually have the official financial figures of DSP Media, we can safely say that Kara makes up a significant portion of their revenue and operating profits. DSP definitely has a lot of vested interest in ensuring that Kara resigns with the agency.

1 (16)Certainly Not Performing Well Enough To Be A Suitable Kara Replacement At This Time

This is both a blessing and a curse. I think we can all agree that being so financially dependent on a single group isn’t healthy in the long term, especially in a market that is as finicky as the entertainment business. Though, to DSP’s credit, it’s not like they have been sitting on their hands doing nothing. They continue to push their other artists like Rainbow and A-JAX as frequently as possible in a wide variety of avenues, but the only group that has come even close to replicating some of the success Kara has seen in recent years is Rainbow, and even that is pushing the definition of “coming close.” It’s like saying Pluto is slightly closer to Earth at certain times. It certainly is, but it is still several million kilometers away. 

On the other hand, Kara definitely has the better hand coming into this contract renegotiation. As mentioned above, DSP certainly needs Kara more than Kara needs the agency. Let’s also not forget that Kara has had prior contract term issues with DSP Media, with Kara demanding an immediate end to their contract in 2011. In that situation as well, it was eventually the agency that conceded ground to Kara and not the other way around. Certainly, we don’t know the full extent of the agreement that was reached in 2011, but hints and clues seem to point to significantly better working conditions for the group and presumably a better revenue share for the Kara members. 

ChartThe Drop In The Value Of The Yen Will Hit All Korean Agencies

Eventually, it comes down to a simple argument. Is DSP Media willing to make even more contract concessions with Kara in an effort to keep the group under their umbrella or will those concessions be such that it starts to become a losing proposition for the agency? That is a tough question to even speculate about given the lack of information we have at the moment. However, there are certain economic factors currently in play that might force their hand; biggest of which is the heavily weakening Japanese Yen. This has already hit SM Entertainment fairly hard, with their operating profits for the 1st quarter of 2013 dropping 70% compared to the previous year, a lot of which were down to investments made into their SM C&C division and the cost of running their SM Japan division. The continually weakening Japanese Yen is only going to make it harder for DSP Media to continue to get healthy margins from Kara’s Japanese activities, and if they have to make even more concessions to Kara, they might just end up being forced to concede the whole group to another entity.

And what about those other entities? Certainly, there will be plenty of groups eyeing these contract negotiations with keen interest so that they may snatch up the group if conditions are favorable. But, is there perhaps a third option? 

16121_18674_4234The Best Example Of A K-pop Group That Has Established Their Own Group Focused Agency

Well, there is a third option and it is one we are seeing a lot more of in recent years. It’s the concept of single artist agencies. Shinhwa has Shinwa Company, Yoon Jong Shin runs his own agency Mystic 89, Kim Tae Woo runs Soul Shop Entertainment, and even Yoo Jae Suk is in a single entity agency. Kara forming its own “Kara Company” is certainly an option if the group believes that such a venture is beneficial for the group, but it is certainly not the easiest of options to take. It would require some significant investments to get such a company up and running, they would forgo a lot of the built up industrial contacts and knowledge a more established agency would have, and that is not even getting down to the most fundamental issue. Will DSP Media even allow them to keep the “Kara” name if they leave the agency? I consider Shinhwa to be an exceptional case and an agency cleanly handing over core assets like in the case of Shinhwa and SM Entertainment is something we should not expect to see happening with regularity. 

a839b08927bbb569c96eec892efef472Splitting Up The Group Must Not Be An Option

In the end, the most important point that needs to be made here is that the members must move together as a group. Any situation like before in 2011, where there is a difference in opinions between members that risk splitting the group, is completely unacceptable for the agency, Kara as a group, and for fans. We will most likely not get more Kara contract reports in the immediate future with the group planning on a new album release in August and subsequent activities that keep them busy till at least the later half of this year. Suffice to say, whatever happens to Kara will be watched with keen eyes throughout the industry.

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