”Multiple labels under one roof” shattered...HYBE's multi-label system backfires

HYBE, which is on the verge of becoming the first entertainment company to be designated as a major corporation, has been undermined by the multi-label system that had been the core growth engine of the company, exposing the weaknesses and limitations of the multi-label system due to the conflict between HYBE and its subsidiary label ADOR. ADOR representative Min Hee Jin attacked another HYBE label, BELIFT LAB's girl group "ILLIT," claiming that they copied "NewJeans," and HYBE initiated an audit, claiming that Min Hee Jin was attempting to seize control of the label. Mr. A, a label official affiliated with HYBE who requested anonymity, said, "The multi-labels themselves, which set out to operate independently, are actually intriguing conflicts among the labels," and that "the structure that stimulates competition has become the seed of conflicts, which have eventually exploded.


[Internal competition without collaboration... Or lining up by sales].
HYBE's multi-label system was designed to reduce the dependence on specific artists and labels, so that each label would operate independently and competition and cooperation among labels would be realized. CEO Park Ji-won selected the multi-label system as the key to becoming the first entertainment company to surpass the 2 trillion won (approximately 200 billion yen) mark during a conference call held last February. The main content of the call was that through fair competition and collaboration, HYBE-affiliated labels had been able to achieve sales growth and musical success together through strong competition.

The reality was different. There was internal competition, but no cooperation, and excessive independent management led to a series of discrepancies between the labels. The term "multi-label" was meaningless, as there was more cooperation with outside firms.

He also pointed out that sales competition among labels also fostered internal conflicts. Last year, HYBE Korean label sales were BigHitMusic (552.3 billion won), Pledis (327.2 billion won), ADOR (110.3 billion won), SOURCE MUSIC (61.1 billion won), BELIFT LAB (27.3 billion won), and KOZ Entertainment (19.4 billion (KRW 19.4 billion), in that order. The labels with relatively low sales had no choice but to keep a close eye on their competitors even within HYBE. In the end, they have no choice but to make "music that sells" rather than good music. In the process, the source IP (intellectual property rights) created by other labels were often brought in and used without hesitation because they were "HYBE labels," resulting in a uniformity of music and style.

This is why the "NewJeans" copying scandal of "ILLIT" should not be taken lightly. Representative Min Hee-jin was able to make this claim because she is not a simple manager, but a person who directly plans and produces content. From the hair, makeup, and styling of the "NewJeans" members, to the album concept, music, music videos, and short form content, the hands of CEO Min Hee-jin are the ones that created the current result. The results were borrowed without the consent of Min and ADOR, and beyond benchmarking, they were deemed to have reached the level of copying, and so they decided to raise the issue. As the creator of "NewJeans," CEO Min Hee-jin's action was taken to protect the source IP of "NewJeans.

Mr. C, a member of the HYBE-affiliated label, commented, "When the teaser of 'ILLIT' was released, there were mixed reactions within the company. Only then will there be no further internal confusion.

[HYBE CEO: "Improvement through multi-label sophistication]

In the end, the multi-label system was effective in increasing HYBE's sales and extending its reach, but the situation has revealed its limitations in the entertainment industry, where intangibles and individual ideas are at the core. CEO Ji-won Park stated in an internal letter, "We have gone through a lot of trial and error to perfect the multi-label system, but this incident may cause some people to have doubts," and promised, "We will continuously worry about what we need to supplement and improve the multi-label system to make it more advanced.

However, the dominant outlook is that the ADOR situation will not have a significant impact on HYBE sales. Ironically, it is thanks to the multi-label system. The analysis suggests that since the company's dependence on specific artists has been diversified, there will not be a major impact on sales. Park Soo-young, a researcher at Hanhwa Investment & Securities, commented, "Assuming a worst-case scenario in which 'NewJeans' is eliminated from the artist lineup, the impact on sales and operating income for this year is estimated to be less than 10%. This situation could rather be used as an opportunity to confirm the solidity of the multi-label structure."