Amidst the revived discussions about the conflicts between SM Entertainment (SM hereon) and Big Planet Made Entertainment (BPM hereon), the latter has accused Kakao Entertainment, which acquired the former in 2023, of power abuse.
| KED Global | Yonhap
According to reports, BPM submitted a report to the Fair Trade Commission in January stating that Kakao distribution charges have a disparity between companies affiliated with it and companies that are unaffiliated.
BPM revealed that it had obtained evidence where Kakao demanded a distribution fee of around 20% of the royalties from general agencies, whereas affiliated companies like SM were charged a mere 5-6% for the same service. BPM said the company has already submitted all the supporting evidence to the Fair Trade Commission and is considering making the data public for transparency.
| theqoo
The Fair Trade Act prohibits market-dominant operators from unfairly determining, maintaining, or changing the price of goods and services in order to prevent the abuse of the dominant status. Additionally, trading services to related parties or other companies under majorly advantageous conditions are also potentially considered unfair trade practices. So, Kakao, which holds a dominant position in the distribution market, is accused of abusing its power through its discriminatory charges.
Once BPM took notice of this issue, they requested Kakao to terminate their distribution contract, but they were turned down. However, Kakao agreed to drop the distribution contract with another music agency around the same time.
Kakao Entertainment responded to these accusations by saying that BPM was demanding a unilateral contract termination based on “incorrect facts.” They refuted the claim of providing unfair benefits to partners. They said that since all contracts between them and their specific clients are confidential, BPM couldn’t possibly know the exact content of the contract with other companies.
Kakao also stated that the company’s distribution commission rate is based on different metrics, including whether an agency has made an advanced payment, the contract period, the offset rate, and so on. But whether an agency is a Kakao affiliate or not is never a part of consideration while negotiating charges.
Finally, Kakao emphasized that they are committed to maintaining fair partnerships and warned that dissemination of such false information could harm the rights of the music industry officials, hindering the growth of K-Pop. The company also mentioned that they are considering all possible responses if BPM persists in their demands for a unilateral contract suspension.
Meanwhile, BPM has recently come into the spotlight after it was speculated that SHINee member Taemin will be joining the label after leaving SM. BPM Entertainment currently houses VIVIZ, amongst other groups. They also reportedly approached EXO’s Chen, Xiumin, and Baekhyun in 2023 to sign with them.
They filed an official complaint with the authorities.