S.M. Entertainment (Hangul: SM엔터테인먼트) is an independent Korean record label, talent agency, producer, and publisher of pop music, founded by Lee Soo-man in South Korea. Initially, “SM” was an abbreviation of the agency founder’s name, but now stands for “Star Museum.” Its current CEO is Kim Young-min. The label is one of the “big three” record companies of Korea along with YG Entertainment and JYP Entertainment because of strong market share and international operations. SM is credited for starting and leading the Hallyu Wave throughout Asia and internationally.
Once the home to the original Korean Idol groups like H.O.T., S.E.S., and Shinhwa, its current roster of recording artists include Kangta, BoA, TVXQ, TRAX, The Grace, Super Junior, Zhang Liyin, Girls’ Generation, J-Min, Shinee, f(x), and EXO, all of whom enjoy great success both domestically and internationally. It is also home to actors like Go Ara, Kim Min-jong, Lee Yeon-hee and Kim Ian. SM Entertainment also co-publishes Avex Trax releases for Japanese artists such as Ayumi Hamasaki, Namie Amuro, and Koda Kumi, as well as Johnny’s Entertainment acts like Arashi and KAT-TUN.
In 2012, the company’s market capitalization rose to ₩1.38 trillion (US$1.24 billion),reaching the status of a mega-corporation.
After graduating from Seoul National University and pursuing his own career as a singer, Lee Soo Man surveyed teenage girls on what they wanted to see in music groups and started the boy group H.O.T. and girl group S.E.S.. Both groups became successful during the late 1990s. Soon thereafter, Lee created Shinhwa, and once again, the band attained the same popularity and success, continuing Lee’s streak of producing successful artists. In 1999, Lee created Korea’s first R&B duo, Fly to the Sky, with members Hwanhee and Brian, adding to Lee’s list of successful groups.
1990s: First generation groups
In February 1995, SM Entertainment set up its capital fund at ₩50,000,000. In January 1996, SM Entertainment purchased land for a recording site and manufactured its contents for broadcasting companies like KBS, SBS, HBS, KMTV, M-NET. In April 1997, the head office was transferred to the Yadang-ri, Gyoha-myeon, Paju, Gyeonggi-do. In October 1998, Kim Kyoung-wook was awarded the position of CEO. In August 1999, a paid-in capital increase of ₩25,000,000 (5,000 shares) and free issue of 225,000 shares (₩112,500,000) occurred. In that same year, SM Entertainment built a branch office in Apgujeong-dong, Gangnam-gu, Seoul.
However, problems began appearing in SM Entertainment following the breakup of H.O.T., and S.E.S., who disbanded a year after H.O.T., and a few years later in 2003, SM Entertainment saw the departure of Shinhwa, though the group did not breakup and moved to a new management company. In the following years, some of its newer ventures, such as Isak N Jiyeon and Black Beat, failed to attain the popularity achieved by earlier SM artists.
2000s: Second generation and expansion
In early 2000, SM Entertainment agreed to share the split from 5,000 won to 500 per a share. In mid-2000, the company was approved and listed in KOSDAQ as 041510. Late that year, SM Entertainment and Avex Trax signed a contract for music licensing and an Asia agency. In December 2000, SM established an affiliation with Fandago Korea. In January 2001, SM Entertainment established an overseas joint-venture corporation as SM Entertainment Japan Co., Ltd. They are also preparing to establish a new headquarters in Beijing, China. In March of the same year, Kim Kyoung-wook was appointed the company’s third CEO. In May of the same year, SM Entertainment spent ₩10 billion to organize its first joint-venture investment fund in the music industry. SM also established subsidiaries BM Entertainment and Cid.K Entertainment for girl groups M.I.L.K. and Shinvi, respectively, but now defunct upon the groups’ disbandment.
In April 2002, an additional 1,341,180 shares was added, and in June 2002, the third-party paid-in capital increased another 61,048 shares. In late-2002, SM Entertainment was awarded the Grand Prix of Ministry of Culture and Tourism for the Culture Contents for Export Award in music. In 2003, it established its affiliation with the Starlight Corporation Ltd and was awarded a prize for the best music contents in Korea. In February 2004, the third-party paid-in capital increased another 271,428 shares. In April of the same year, the head office moved from Paju, Gyeonggi Province to Apgujeong-dong, Gangnam-gu, Seoul. A month later, it established its affiliation with C-Cube Entertainment Corporation.
The agency later found new successes with many other acts. SM Entertainment debuted a solo singer BoA in 2000, a five-member boy group TVXQ in 2003, a four-member rock band TRAX in 2004, a four-member girl group The Grace and a thirteen-member boy group Super Junior in 2005, a solo singer of Chinese descent Zhang Liyin in 2006, a nine-member girl group Girls’ Generation in 2007, another five-member boy group SHINee in 2008, five-member girl group f(x) in 2009, four-member ballad project group S.M. the Ballad in 2010, and in 2012 boy group EXO, which is divided into subgroups EXO-K and EXO-M for Korean and Chinese (Mandarin) markets, respectively.
In May 2005, the fourth CEO came on board, Hur Dah-shin. In May 2008 SM Art Company was formed and helmed by Pyo In-bong as co-CEO. It aims to pursue businesses in musicals and theatre business. Its first production was Xanadu starring Super Junior members Heechul and Kangin.In August 2010, Kim young-min took office. Kim Young-min (born April 13, 1970) is a graduate of Korea University majoring in Sociology. In September 1999, Kim Young-min joined SM Entertainment as a team leader of overseas business, and during 2001 to 2005, he was the CEO of Fandango Korea. On October 21, 2008, the company announced its plans to debut BoA in the United States under SM’s new subsidiary label, SM Entertainment USA.
2010-2011: United Asia Management and joint ventures
In February 2010, founder Lee Soo-man resigned from his position as a member of the board of directors. An official at SM is quoted as saying that Lee had decided to do so in order to “focus more energy on SM’s overseas business, new business management and artist development”.
In May 2010, SM announced its largest first quarter operating profit of 2010 at ₩10.4 billion, up 471% from the same period in 2009. Its gross revenue from sales from January to March was reported at ₩22.7 billion, up 58% from the year before.
KMP Holdings: In March 2010, KMP Holdings was established via a joint venture between S.M., YG, JYP, Star Empire, and other companies like Medialine, Ken Entertainment and Music Factory. KMP is the official distributor of releases from these companies. KMP stands for Korean Music Power.The firm’s first distributed release from SM was Super Junior‘s fifth studio album, Mr. Simple and since this release, SM is not self-distributed any longer.
United Asia Management: SM Entertainment, YG Entertainment, JYP Entertainment, KeyEast, AMENT and Star J Entertainment will be joining forces to create a huge Asian management agency named ‘United Asia Management‘. This joint investment corporate body was created in an effort to develop an industry that will push ‘Hallyu’ to ‘Asianlyu’. United Asia Management aims to pioneer a global market, and all artists under the six agencies will be under a database system that manages intellectual property rights. A new contents production system will be utilized as well for movies, dramas, and other media. UAM will also be acting as the global agency for artists planning to advance, or currently promoting, overseas. UAM was officially established as of April 2011.
SM True: On August 16, 2011, SM has established their first international joint venture with Thai media company TrueVisions Group called “SM True.” Artists Kangta and Shinee are present in the event, as well as SM’s CEO, Kim Youngmin. Kim said that the joint venture will help “quickly and more effectively distribute [SM’s] contents” and that this will create a “positive synergistic effect.”
2012: ENT, S.M.ART EXHIBITION and new contracts
In February 2012, SM launched new business initiative that specializes in travel and tourism. It acquired Hawaiian travel firm ‘Happy Hawaii’ and renamed it SM Town Travel. It is helmed by CEO Kang Jung Hyun and “aims to create synergies” between SM’s entertainment product and travel.One of its first products is to offer special concert packages for overseas fans to attend Super Junior‘s Super Show 4 Tour encore concerts in Seoul in May 2012.
On 26 March 2012, 47 of their artists, including Kangta, BoA, TVXQ, CSJH The Grace, Super Junior, Zhang Li Yin, Girls’ Generation, SHINee, f(x), Go Ara, Isak and Lee Yeon Hee, became stockholders of SM Entertainment. Becoming stockholder enabled them to participate in the company’s vision and growth. Kangta, BoA, and most of the Super Junior and Girls’ Generation members will be receiving 680 shares each (value of around $27,200 for each member), while SHINee and f(x) members will be receiving 340 shares each (value of around $13,600 for each member).
Yoon In Wan, the creator of the popular comic, ‘The Blade of the Phantom Master‘, teamed up with S.M. Entertainment for a new webtoon series titled ‘ENT.’ The webtoon released an illustration featuring Girls Generation in cartoon form. Following up, the illustrations of the members of SHINee have been unveiled.
From 10 to 19 August SM Entertainment held an IT exhibition, the S.M.ART EXHIBITION at the COEX Convention & Exhibition Center. SM’s premium contents showcased in state-of-the-art digital technology.
SM signed contracts with VISA & KB Card. They will start printing SM artist Check cards (debit cards) in October.
SM Entertainment has been cleared of the accusations regarding colluding with music distributors. On 16 August, the Seoul High Court revealed their verdict on the issue: “The FTC (Fair Trade Commission) has canceled all corrective orders against SM Entertainment, and the lawsuit costs will be paid by the defendant.” As a result, suspicions about SM Entertainment bargaining with music distributors have been found to be false.
On 17 August, MC Kang Ho-dong and Shin Dong Yup announced that they have signed exclusive contracts with SM C&C in collaboration with SM Entertainment. With the signing of the two MC’s, this is seen as a move by SM to expand into television production outside of the management of singers and actors. On September 19, SM C&C merged with AM Entertainment as part of its strategy to extend into drama and video contents production. AM Entertainment, who represent actors, such as Jang Dong-gun, Kim Ha-neul, Han Ji-min. However Hyun Bin and Shin Min-ah were not included in the merge because both of their respective contract with AM had expired. They have yet to decide while the former is serving mandatory military service and the latter is still filming MBC drama Arang and the Magistrate. On the same day it was announced that they have also signed exclusive contacts with comedians Lee Su-geun and Kim Byung-man of Laws of the Jungle and 1 Night 2 Days fame.
- SM TinTin Hall (2000)
- SM Entertainment Japan (2001)
- SM Academy (2003)
- SM Art Company (2005)
- SM Pictures (2007)
- SM Amusement
- SM F&B Development
- SM Entertainment USA (2008)
- SM Town Travel (2012)
- SM Culture & Contents (2012)
Contractual dispute with JYJ
In late July 2009, three of the TVXQ members; Hero, Micky and Xiah, submitted an application to the Seoul Central District Court to determine the validity of their contract with SM Entertainment.Through their lawyers, the members stated that the 13-year contract was excessively long and that the group’s earnings were not fairly distributed to the members. Early termination penalty of their contract will cost them 2 times the profit that the group is estimated to earn for the rest of the contract period (over ₩11 billion, or around US$9.2 million). The news was enough to cause SM Entertainment’s stock price to drop over 10% on the KOSPI.
The Seoul Central District Court ruled in favour of the three members. They have claimed that the contract was unfair and the members were left out of proper profit distribution.In response, SM Entertainment called a press conference and claimed that the lawsuit was a fraud, stating that the lawsuit was not about unfair contracts or human rights but a scam motivated by the three members’ greed over their cosmetics business. The three members remained silent except to say through their lawyers that they hoped SM Entertainment would respect the court’s decision.
In response to the lawsuit, 120,000 members of TVXQ fan club, Cassiopeia, filed a petition against SM Entertainment’s long-term contracts with the Seoul District Court.Cassiopeia also filed for compensation from SM Entertainment for the canceled SM Town Live Concert, as both SM and TVXQ initially stated that the concert would go on as planned; the concert was canceled a week before its scheduled date. It was later announced in early May 2010 that the three members of TVXQ (Jaejoong, Yoochun and Junsu) will return to the stage as a sub-group. Their group is called JYJ representing the first letter of each of their names.
On February 17, 2011, the Seoul Central District Court dismissed SM Entertainment’s injunction against JYJ, filed in April 2010 for damage compensation. In September 2012, the final decision on the case was postponed indefinitely, by Seoul Central District Court for mediation under the justice department.
On 28 November 2012, during a voluntary arbitration at the Seoul Central District Court, SM Entertainment and JYJ have reached a mutual agreement to terminate all contracts between the two parties and not to interfere with each other’s activities in the future. Thus concluding the three years and four months exclusive contract lawsuit. A SM official is quoted as saying, “We made a judgment that we don’t have to manage the three members of JYJ any longer as they expressed their intention not to keep their activity as TVXQ” and further added that they have decided to end the litigation “to avoid bringing additional harm to U-Know Yunho and Max Changmin, who are active as TVXQ, and to avoid making any more unneeded issues”.
Contractual dispute with Han Geng
On December 21, 2009, five months after the three TVXQ members filed, Han Geng of Super Junior followed suit. The following day, December 22, 2009, Han Geng’s lawyer released the reasons for the contract termination: it contained provisions in SM Entertainment’s favor, the 13-year contract length was unlawful, it would take an unfair sum of money to end the contract, he was not allowed to request to revise his contract, he was forced to do things that were not in his contract, he was forced to do things against his will, he was fined if he disobeyed the company, missed any events or was late, and there was unfair profit distribution. Along with this, it was disclosed that because of SM Entertainment’s refusal to give him a day off in over two years, he had developed gastritis and kidney disease.
Han Geng’s best friend and now current manager, Sun Le, also submitted a statement to the Korean courts citing SM Entertainment’s violation of Han Geng’s rights. This statement was later leaked to the public via the Internet. Though many suspected the statement to be fan-created, it was later confirmed as true. Sun Le’s statement contended that: Han Geng was forced to wear a mask due to SM Entertainment’s ill handling of the visa issue, SM Entertainment purposely discriminated against Han Geng and his family, including financially, SM Entertainment refused to cooperate or listen to any of Han Geng’s suggestions, SM Entertainment purposely turned down individual activities for Han Geng (including Ariel Lin‘s “Firefly” music video, which later starred two other Super Junior members) and SM Entertainment treated Han Geng’s potential endorsers poorly.
On September 27, 2011, Han Geng’s departure from Super Junior was made official when legal representatives of both Han Geng and S.M. Entertainment eventually released a statement stating, “Han Geng and S.M. Entertainment have amicably settled on a mutual agreement, and the lawsuit was able to come to a close after Han Geng submitted his ‘Notice of Withdrawal of Appeal’.”
Fair Trade Commission revisions
SM Entertainment has released an official statement regarding the contract revisions demanded by the Fair Trade Commission. SME officials clarified on the 23rd, “The FTC only ordered us to revise the contract of one of our trainees by removing the three years added onto his contract. We complied, thus making every contract under our agency to date as ‘fair.’ BoA, TVXQ, The Grace, Super Junior, Girls’ Generation, SHINee, The Trax, and other celebrities under our agency have already been acknowledged as fair contracts by the FTC.”
They continued, “As leaders of the industry, we have been cooperating closely with the National Assembly and other related bureaucracies in order to protect the rights and interests of our celebrities, and to aid in the advancement of Korea’s entertainment industry and the Hallyu wave.” After numerous discussions with the FTC, SME drafted a new contract earlier this year with the changed terms mentioned in the previous article. All artists re-contracted with the agency under the new terms, which were acknowledged by the FTC to be fair. The representative continued, “We fully complied with the recent request by the FTC regarding our contract with a trainee. With the help of the FTC, we will be developing better contracts for the progression of Korean culture and contract customs.”
2009 MNet Asian Music Awards boycott
SM Entertainment along with Inwoo Production boycotted the 2009 Mnet Asian Music Awards event on 21 November, hence none of their artists attended the event. SM stated that they have reservation regarding the standard of fairness and criteria used in their selections, citing that Girls’ Generation had topped a music chart for nine consecutive weeks but was never placed first place on their show and only debuted on their charts a month after the album was released. They also asked that their artists be removed from a mobile poll which requires participants to pay a fee in order to vote saying they “do not want to see fans suffer any damage from the poll which has commercial intentions”.
SM Town, which started in 1999, is the project name for SM Entertainment’s summer and winter vacation albums. SMTown albums consist of current SM Entertainment artists. Each SMTown album consists of one SMTown song and a song from each artist or group.
|Debut||Artists||Gender||Members||Leader||Disbanded||Fanclub name||Official color|
|1996||H.O.T.||Male||5||Moon Hee-jun||2001||Club H.O.T||White|
|1998||Shinhwa||Male||6||Eric Mun||left the company (2003)||Shinhwa Changjo||Orange|
|1999||Fly to the Sky||Male||2||Non-leader group||left the company (2004)||Fly High||Sky blue|
|2000||BoA||Female||Solo||—||—||Jumping BoA, SOUL (Japan)||Yellow|
|2002||Blackbeat||Male||7 ® 5||Lee So Min||2007||Soul Black||Black|
|2002||Shinvi||Female||3||Yoo Soo Jin||2003||Linos||Teal|
|2002||Isak ‘N’ Jiyeon||Female||2||Non-leader group||2004||—||Wine|
|2002||Chu Ga Yeol||Male||Solo||—||—||—||—|
|2003||TVXQ||Male||5 ® 2||Yunho||—||Cassiopeia, BigEast (Japan)||Pearl red|
|2004||TRAX||Male||4 ® 2||Jay||—||Traxian||Cobalt blue|
|2005||The Grace||Female||4||Non-leader group||—||Shapley||Pearl pink|
|2005||Super Junior||Male||12 ® 13 ® 12||Leeteuk||—||Everlasting Friends (short; E.L.F)||Pearl sapphire blue|
Mint Green (Korea only)
|2007||Girls’ Generation||Female||9||Taeyeon||—||Sone (stylized; S❤NE)||Pastel rose|
|2008||SHINee||Male||5||Onew||—||SHINee World (short; Shawol)||Pearl aqua|
Actors and actresses
Left the company
Notable former trainees
- Attack on the Pin-Up Boys (2007)
- Heading to the Ground (2009)
- Paradise Ranch (2011)
- I AM. (2012)
- To The Beautiful You (2012)
- Starworld Entertainment
- Fandango Korea
- Avex Entertainment
- Sony Music Entertainment Japan
- Nayutawave Records
- EMI Music Japan
- J Storm
- TrueVisions Group
- Kraze Burger