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Big Hit Ent. and the ‘Fandom Economy’
If you still don’t know who they are, know that they are the machine behind BTS. Wait! Before you think it’s about KPOP, you might want to stay and discover the brilliance behind this label.Big Hit Entertainment is a South Korean entertainment company, now public, founded in 2005 by Bang SiHyuk. It currently manages Lee Hyun, BTS, TXT (Tomorrow X Together) and subsidiaries like Source Music, and Pledis Entertainment and KOZ Entertainment known as Big Hit Labels, their hub for subsidiaries on YouTube. They had other groups like Homme, 2Am, 8Eight and Glam, but that’s another story. It’s worth rose over the years through BTS success and they really made a great impact in the entertainment industry when, in 2017, they ended their stake relationship with Signal Entertainment, who had previously acquired Big Hit through convertible bonds. But what does the ‘Fandom economy’ work for Big Hit Entertainment?
Big Hit Entertainment Founder and TeamFrom left to right:
Bang Si Hyuk: CEO and chairman of the board of directorsYoon Seok Joon: Global CEOPark Ji Won: CEO of Head Quarters (HQ) and management sectors.
Big Hit’s unique management style has influenced the KPOP industry, and I have noticed it bleed to the worldwide due to it’s success. Their use of social media to keep the fans interested has directly translated into massive sales by creating artist related media content, therefore fueling the passion of fans. The Korean formula is different, the loyalty of the fans is built though their constant communication with them, it becomes a lifestyle outside concert venues. Fans want to feel close to their idols and knowing how to harvest that loyalty has made ARMY’s (BTS fandom) a selling and influencing power all over the world. KPop fans will make their opinions heard, focusing on content, algorithms and facts, making them extremely important for artists and labels.Listening to fans is also a philosophy used by Jeff Bezos and Bang Si Hyuk was inspired by it. The difference with Big Hit is that they were able to implement this new philosophy with BTS, and satisfying fans, without exhausting them. Artists under this label are free to take their own decisions and learn from their mistakes. Of course, they educate them about life, mentoring and coaching them how to correctly use social media through training and advising them throughout their career. Working with the fandoms is, therefore, treated as a service given by the company, a plus value. While other entertainment labels have overbooked their artists, by scheduling too many in-person activities, Big Hit has figured out a way to produce content, daily content, for the fandoms. Passionate fans will spend more, Bang called it ‘the fandom economy’. This year, 2020 and in the middle of a pandemic, many agencies had it rough but not them. The WeVerse app was developed to increase communication with fans and centralize all activities, merch and sales from anywhere in the world. Everything is on the internet now, not only online events, but the way we now look for information, express ourselves, soothe and fulfill community needs. The online concert, sold on WeVerse last October, drew as many as 993 000 viewers. They agency also made collaborations with big names, like Samsung and Fortnite to increase their presence globally. Through the internet, BTS has been able to reach everyone in the world, where fans felt like they were even closer to them, with more time in their hands, and it translated in an increase in sales. Big Hit and BTS have proved the value of social media and technology. They even have hired 100 IT professionals from companies like Naver and Kakao to develop management apps and games to produce diverse unique quality content, for fans all around the world and injecting it’s universe and storytelling in everything they do.
As per Big Hit’s website:
Committed to the mission of “Music & Artist for Healing,” comforting and inspiring people around the globe through our music and artist, Big Hit Entertainment continues to make new innovations to the music industry business model. Big Hit strives to become the world’s best music-based entertainment lifestyle platform company.Big Hit places our highest priority on global trend-leading “content” and our key customer, “fans”. The company continuously strives to satisfy our customers with high standards and constant improvement.
“But K-pop idol groups had an advantage, in that they had many opportunities to diversify revenue streams and their fans were extremely passionate, allowing concerts to compensate for the dropped album sales. This was also a time when many around the world were saying the only replacement for the demolished musical industry is live performances. ”
— Bang SiHyuk in the Time Magazine, Oct. 8th, 2019
Hard to believe that Big Hit Entertainment applied for bankruptcy in 2007, but they were able to keep the label afloat thanks to BTS’ debut in 2013. Their lenient policies towards their idols’ creativity, physical, psychological health and technological innovation was the secret to the label’s success. Their first earnings was in 2018, reporting a revenue of 92.4B KRW, or around 82 million USD. After applying for a pre-IPO consultation with the Korea Exchange (the initial public offering), they were finally listed in the KOSPI index (Korea Composite Stock Index Price) and began trading stocks on October 15th, 2020. The initial public offering was 135 000 KRW, but it debuted at 270 000 KRW, reaching the daily permissible limit of 30% spike, and with 1.94 trillion KRW in shares traded on that first day. They started as the black sheep in the entertainment industry, where barely any media wanted to invite them and judged them badly, to be more valuable than the BIG3, the three biggest record labels (JYP, SM and YG Entertainment)….combined. Most importantly, BTS received 478 695 shares in the company ‘to strengthen long-term partnership with major artists and boost morale’. With this, Big Hit has reinforced their trust and created a positive environment for future negotiations with BTS.BTS is the first group, for Big Hit, to bring a good revenue, but solely relying on them is not wise because they have their military obligations and they could be a liability or an asset. Part of the process on cutting their reliance on BTS, is their expansion with the gaming company Netmarble, creating Be:Lift or Big Hit Labels, their hub on YouTube after acquiring Pledis Entertainment, KOZ Entertainment and Source Music. Be:Lift Lab is a media company established with CJ ENM and their goal is to establish KPop idols into a global market, to reinvent and innovate the entertainment industry, they also just debuted ENHYPEN as it’s first group. In that same wave, they also plan to implement the training and preparation process globally. Please note that Bang CEO has previously said that the Korean way is not necessarily better. Asians artists usually have a training period, starting at a very young age. Elsewhere, artists start underground or as an independent artist before signing with a major label. There is no way to measure which method is best, as they both gain experience through time. Will these investments, expansions and future plans also help their value rise in the future?
Image from Sompi
Has Big Hit entertainment found the perfect recipe? Is this method of the ‘fan economy’ viable long term or globally? If so, is there a long term future for BTS , the group that first enjoyed this philosophy? Can anyone use and succeed with this method? Nonetheless, there is many things to learn, to apply, study and be curious about. From management, technology, stocks, groups, investments, inventions, finance and decisions, there is, indeed, much to analyze. Can this be effectively applied to European, Latin American, African, Russian, Greek or any other country?Leave a comment below and share what you think about the ‘Fan economy’.
Source: Big Hit Ent. and the ‘Fandom Economy’