[Exclusive] “SM officials leaked internal secrets”… Background of Big Planet’s opposition to Kakao fees

While Big Planet Made Entertainment claimed that Kakao Entertainment discriminated against music distribution fees, it was confirmed that there was a tip from a high-ranking key official of SM Entertainment, an affiliate of Kakao Entertainment, behind this claim.

As a result of Ten Asia's coverage on the 7th, the background to Big Planet Made Entertainment's (hereinafter referred to as 'Big Planet') claim of discriminatory imposition of music distribution fees by Kakao Entertainment (hereinafter referred to as 'Kakao Entertainment') was SM Entertainment (hereinafter referred to as 'SM Entertainment'). ) It was discovered that there was a direct leak of internal confidential information from Mr. A.

At a meeting with a high-ranking Big Planet official, Mr. A said, "SM Entertainment is paying a distribution fee of 5%. If negotiations are reached, Big Planet will also act as a mediator with Kakao Entertainment to lower the distribution fee to the 5% range." " he exclaimed. The testimony presented in the official statement released by Big Planet on the 4th was confirmed as a statement by SM Entertainment's Mr. A. As a result, Mr. A, a key official of SM Entertainment, directly leaked internal secrets.

Accordingly, Big Planet said in an official statement, "We are aware of the circumstances and related testimony that Kakao Entertainment demands a distribution fee of around 20% from general companies, while charging a distribution fee of around 5-6% to affiliates such as SM Entertainment. He pointed out, “This difference in distribution fees is difficult to understand based on common sense, and may result in maximizing the profits of affiliated companies.”

Kakao Entertainment refuted. Regarding the distribution fee that Big Planet took issue with, Kakao Entertainment said, "The distribution fee rate is negotiated with the other party in accordance with our strict standards, taking into consideration various conditions such as investment of advance money provided to the other party, contract period, offset rate, and valuation of the title to be distributed. He emphasized, “Whether or not it is a Kakao affiliate is not a consideration at all for calculating distribution commission rates.”

Accordingly, Big Planet reported Kakao Entertainment to the Fair Trade Commission (hereinafter referred to as the Fair Trade Commission). Big Planet said, "After recently discovering that Kakao Entertainment was charging distribution fees discriminatoryly between agencies belonging to its affiliates and subsidiaries and other agencies, we filed a report with the Fair Trade Commission in January asking them to review this issue." He announced.

Accordingly, the Fair Trade Commission is expected to begin an investigation into the matter as early as this month, or at the latest within next month, to determine whether any unfair transactions have occurred.

Attention is being paid to whether this dispute between Big Planet and Kakao Entertainment will change the entertainment industry's perception of music fees. There have been continued complaints in the industry about excessive and unfair music fees. An official in the music industry said, "If a distribution company takes a commission of more than 15%, it is difficult for most small and medium-sized entertainment companies to turn a profit. The distribution fee determines the difference between surplus and deficit." “We need an equitable fee setting policy,” he said.

Attention is being paid to whether this dispute will serve as a signal to resolve the controversy over distribution fees, which has been a chronic problem in the industry.

Reporter Junho Yoon, Ten Asia delo410@tenasia.co.kr