EXO Chen Baekhyun Xiumin Dispute SM Entertainment Over Distribution
source: joins.com

EXO Chen Baekhyun Xiumin Dispute SM Entertainment Over Distribution

A new chapter has unfolded in the ongoing conflict between EXO members Chen, Baekhyun, and Xiumin and their long-time agency, SM Entertainment. The dispute centers around a distribution agreement that affects the trio’s solo careers, managed by their newly established label, INB100.

Almost a year after the trio first took legal action against SM Entertainment over contractual issues, INB100 has now declared “full-on war” against the K-pop giant. This declaration was made during an emergency press conference held in central Seoul on June 10. Although Chen, Baekhyun, and Xiumin were not present, their representatives made strong allegations against SM Entertainment.

According to Cha Ga-won, president and majority shareholder of INB100’s holding company, One Hundred, a former SM CEO had verbally promised to charge INB100 only a 5.5% fee for distributing its music releases through Kakao, the current majority shareholder of SM Entertainment. This was significantly lower than the 15% to 20% typically charged to companies outside Kakao’s umbrella. However, Cha claims that SM is now demanding a 10% royalty fee for the use of the agency’s intellectual property, such as the members’ stage names and the EXO and EXO-CBX brands, in exchange for the discounted distribution fee.

“We declare a full-on war against SM Entertainment, which has made a promise that it could not keep and committed what could be perceived as fraud,” said Cha during the press conference. INB100 representatives also demanded that SM disclose the breakdown of EXO’s earnings, reigniting the same contract issues that were reportedly resolved last June. They claimed that INB100 had sent a formal letter of complaint to SM Entertainment over two months ago concerning the fees and earnings disclosure but had not received a response.

In response, SM Entertainment issued a press release refuting the allegations. According to SM, an outside company imposed the 10% intellectual property fee following court mediation over past issues with previous EXO members who had exited the label while still under contract. SM also claims that EXO-CBX’s contract is still valid and that the trio benefits from the EXO brand but are not fulfilling their contractual obligations with SM despite the agency acting in good faith with a lower distribution rate.

SM’s statement also alleges that Chen, Baekhyun, and Xiumin were “poached” by Cha and MC Mong, a former rapper-producer who launched agencies of his own, including BPM Entertainment. SM added that it did not previously respond to INB100’s letter of complaint to avoid distracting from new EPs released by EXO members Chen, D.O., and Suho over the past month. The company concluded its statement by saying that it will respond with legal action rather than trying to sway public opinion through press conferences.

The conflict between the three EXO members and SM Entertainment has been ongoing for some time. In June 2023, the trio sought to terminate their exclusive contracts with SM, citing a lack of transparency in financial settlements and excessively long contract durations. They also filed a complaint with the antitrust regulator, alleging unfair terms. Although the dispute appeared to have been resolved amicably, with both parties announcing a mutually amicable settlement, the recent developments suggest otherwise.

INB100, founded by Baekhyun in 2023, manages the solo careers of Chen, Baekhyun, and Xiumin, while SM Entertainment continues to handle their group activities as part of EXO. The trio has been using their stage names and the EXO-CBX brand in promoting their activities. However, SM Entertainment’s demand for a 10% royalty fee for the use of its intellectual property has become a significant point of contention.

During the press conference, INB100’s legal representative, Lee Jae-hak, emphasized that a verbal agreement is legally binding under Korean law. “We have recorded files of the conversation between Lee Sung-su and Cha Ga-won as well as other forms of proof. Should SM Entertainment demand the 10% fee, then it should also carry out the other end of the deal it promised,” he said.

INB100 also demanded that SM Entertainment fully disclose the breakdown of EXO’s earnings, re-enacting last year’s dispute over the three members demanding SM Entertainment shorten the length of their exclusive contracts and provide documents of their earnings. According to attorney Lee, SM only allowed the members to “come into the office and read the files” instead of providing them with copies, which goes against the law.

The press conference was attended by INB100 CEO Kim Dong-joon, Lee of law firm Lin, representing the three EXO-CBX members, and Cha, president of construction company p_Arc and majority shareholder and CEO of One Hundred. The company owns INB100 along with other K-pop companies, including Big Planet Made and Million Market. Music producer MC Mong is the co-CEO of One Hundred.

SM Entertainment refuted the agency’s arguments in a press release on Monday evening, stating, “We only offered to help CBX members get a better deal with the distributor. We have no right over the fee that another company decides, which is why no such clause was included in the contract. CBX was able to get a good distribution deal and suffered no damage.”

The ongoing conflict between EXO-CBX and SM Entertainment highlights the complexities and challenges within the K-pop industry, particularly concerning contractual agreements and the distribution of earnings. As both parties prepare for potential legal action, the outcome of this dispute remains uncertain.