The market capitalization jumped by 240 billion won... YG·Blackpink, the reason why their contract is still only half-renewed

Group Blackpink signed an ‘exclusive contract for group activities’ with YG Entertainment. Blackpink and YG Entertainment reached a dramatic agreement about four months after the expiration of their exclusive contract last August.

YG Entertainment (hereinafter referred to as YG) officially announced on the 6th, "After careful discussions with Blackpink, we have signed an exclusive contract for the group's activities based on deep trust." In addition, they said, "Blackpink plans to repay the love of fans around the world with activities commensurate with their global status, such as releasing a new album with YG's full support as well as a large-scale world tour."

With the news of Blackpink's contract renewal, YG's stock price soared by 29% at one point in the morning, and as of 2 PM, it is trading on the KOSDAQ market at 60,100 won, up 12,100 won (25.21%) from the previous day. YG's market capitalization increased by 241.1 billion won in one day to 1.1264 trillion won. The uncertainty over the contract renewal of Blackpink, which was considered one of YG's core values, has been resolved, and YG's corporate value has regained stability.

Although YG hastily put out the fire, it is not as optimistic. This is because YG limited the scope of Blackpink's exclusive contract to 'regarding group activities.' In other words, only group activities have the right to an exclusive contract. In this contract renewal, no individual contracts were concluded. Regarding this contract, YG said, "It is based on strong trust," but this is why there is talk in the industry about this issue being a "half-formed contract renewal." In relation to this, YG is maintaining its basic answer of "we are discussing."

In particular, according to Ten Asia coverage, some members of Blackpink did not sign a contract renewal until the very end, which caused YG's sorrow. In fact, it took nearly four months from the expiration of the contract to the announcement on the morning of the 6th.

The group's activities are limited to album releases, performance activities, and MD product sales conducted under the name of Blackpink. The sales generated here are expected to be significant, but the profits generated through each member's individual activities are unrelated to YG. For example, if Jennie shoots a commercial or Lisa releases a solo album, the guarantee Jisoo receives through her acting activities will not be shared with YG at all.

Furthermore, details such as the maintenance period and profit sharing ratio of this renewal contract are not known. Normally, in the case of a contract renewal, the average period is about 3 years, but since negotiations took quite a long time, the industry speculation is that it is likely to last only about 1 to 2 years. In addition, the profit sharing ratio is also at an absolute level, so there is a high probability that it has been adjusted under the conditions that members take.

An industry insider said, "Because Blackpink worked for a full seven years under the terms of their contract at the time of their debut, it is highly likely that they were not satisfied with their profits during that time. Considering the profit sharing ratio at the time of their debut, Blackpink has been working hard for the past seven years. “It would have brought enormous profits to YG,” he said. “This time, the period and ratio of Blackpink’s absolute advantage would have been set.”

He added, “For YG, it was important to capture Blackpink in some way in terms of image or symbolism rather than the profit sharing ratio, so this contract renewal seems to have given YG a big sigh of relief.”

It is unclear how much Blackpink, which was a clear cash cow at the time of the original contract, will be able to take responsibility for YG's future in the future. In the case of Blackpink, the number and frequency of album releases are not high when looking at the past seven years. There are only two full-length albums and two mini albums. There are only three digital singles and two live albums containing live performances. Of course, it is difficult to predict the future, but considering this history, there are many speculations that Blackpink will release at most two albums and at least one album and engage in related activities with YG during the future contract renewal period.

Nevertheless, YG's decision to renew Blackpink's contract is significant. This is because you can see new songs and stages by Blackpink, a K-pop group with a huge fandom, and it contains hope that they are artists in progress rather than history. YG will also be able to share one more chapter with Blackpink, his biggest IP and achievement.

Choi Ji-ye, Ten Asia Reporter wisdomart@tenasia.co.kr