Source: SPN, TV Report, Newsen, Newsen, Edaily, Daum, Star News, Sports Chosun
Credit: allkpop, allkpop, allkpop, allkpop, allkpop, allkpop
TV Report uncovers details on the story behind KARA’s contracts
Further details regarding KARA’s decision to terminate their exclusive contracts with DSP Media have been revealed through TV Report, Park Gyuri’s mother, and representatives of DSP Media.
TV Report claimed that industry representatives were aware of the issues surrounding KARA and their agency since December 2010. Representatives of DSP Media and Park Gyuri allege that the reason for the four members’ terminations was “eventually because of money.”
According to another industry representative, KARA brought in a total of $18 million USD in income from their Japanese promotions, but as of December 2010, the group was only paid $3,000 USD per person.
The members were also only paid for album sales for August and September of 2010, excluding CF and event appearances. The girls are said to have been paid in a greater amount for their activities aside from album and digital sales, which are all going to be paid without problems. The reason the girls are paid less for their album sales is said to be because of specific clauses in DSP’s contract with their Japanese distribution company.
Income made from the girls’ Japanese albums are calculated three months after its initial release, and 85% of the profits go to the distribution company, leaving DSP with the remaining 15%. The representative mentioned that the numbers are similar for any Korean artist advancing into the Japanese market.
Especially with DSP Media’s CEO, Lee Hoyeon, currently hospitalized, all artists under the agency were ordered to be kept under tight control. Around this time, another entertainment agency approached KARA and offered them to join their agency. The agency went as far as to offer to pay the penalties the girls would have to deal with for breaching their contracts should they take the offer.
The representative was said to have met with one of the members’ mothers to present a contract with fairer terms and a promotion plan that would instantly earn KARA enough fame to rival that of SNSD’s popularity.
The representative first met with Gyuri’s mother, but discussions did not run smoothly. In an interview with TV Report, her mother stated, “I could not betray DSP, who worked their hardest in creating who KARA is now. I have no problems with the contracts, and I trust DSP.”
Representatives of DSP further added, “There were mothers that brought up problems, so we made sure to make all related documents as transparent as possible to them. We used accountants that they chose, but in the end, they could not trust even that.
Another representative also revealed that DSP Media met with KARA’s mothers on January 18th and almost reached a compromise to reform the income distribution regarding their Japanese albums. The next day, KARA’s lawyers from Landmark announced their contract terminations.
Is there a possibility for them to reach a compromise? The industry is already speculating them to be the ’second TVXQ‘ due to the complex underlying issues.
“There are definitely various problems with both parties, but the ultimate issue is the competition in trying to scout KARA, and money. The reality of these disputes with TVXQ and KARA is quite disappointing,” said one representative.
DSP Media has reasoned that they have no option left but to take legal action, predicting yet another legal battle in the industry.
DSP Media releases official statement, Goo Hara cancels contract termination
After the four members of KARA previously announced that they filed to terminate their contracts with DSP Media, representatives of the agency have finally released an official statement on January 19th.
“DSP Media will be making an official statement regarding the contract terminations reported by Jung Nicole, Han Seungyeon, Kang Jiyoung, and Goo Hara of KARA. We received a one-sided declaration from their lawyers, Landmark, on January 18th, but Goo Hara has decided not to join the others in terminating her contract.
According to their claims, the 10-month hospitalization of CEO Lee Hoyeon caused the management to become inefficient in planning and promoting the group’s activities, but that is not the truth, as the CEO’s wife ran administration in place of the CEO. KARA’s explosive popularity with the Hallyu wave in Japan testifies to these efforts, further proving that the management did not mishandle their activities.
CEO Lee Hoyeon was not able to run the company himself beginning March of 2010, and KARA’s Japanese achievements were made five months later in August. DSP Media has done all they can in supporting and preparing KARA’s Japanese advancement.
Regarding the income distribution claims made by Nicole’s mother and their lawyers, the information they revealed was distorted and is a complete misunderstanding. Income was distributed in a manner that was most profitable to the KARA members, and unlike what they claimed, every employee was paid at the same time the moment profits were received.
They also claimed that DSP used its stature to force unwanted schedules and activities, but this is also a baseless claim. This is a claim that only defames the company employees who have worked their hardest to raise KARA as one of Korea’s top groups and leaders of the Hallyu wave.
And regarding speculations from another report about a competing agency attempting to persuade their parents and lawyers to terminate the girls’ contract with DSP, we ask that they stop such actions immediately. Should such requests be made repeatedly, we will make sure that they are met with legal consequences.
As the company that has poured their sweat and effort into creating who KARA is today, we hope that such issues are no longer exaggerated. Should there be issues between both parties, adjustments and reconciliation should be the appropriate step in continuing to promote themselves as a representative girl group of Korea.”
Regarding news of Hara staying with DSP Media, representatives continued, “Hara has decided not to comply with the terminations she submitted earlier today with the other members.” The possibility of further changes in the remaining three contracts is now at center stage.
As for their Japanese drama, “URAKARA” which is now facing an uncertain future, they stated, “They’ve already filmed four episodes before this so we have about three weeks of time left. We are looking forward to drawing a positive decision with the KARA members before then.”
DSP Entertainment responds to TV report article
Earlier today we reported details regarding Kara’s contract, uncovered by TV report in midst of this very significant controversy. Edaily, a Korean online newspaper, contacted DSP Entertainment today regarding the report; and here is what the group’s management company had to say about the allegations against them.
A representative from DSP explained to Edaily through a phone interview today that they paid each members of Kara around 300 million Won per person ($300,000) last year, more than half of which has already been paid during the first half of the year. When questioned why the members were only paid $3,000 this past December, the representative explained that it was based from a promotion with a franchise of a convenience store during August. DSP received 3 million Yen ($40,000) from the deal, and the Kara members each received $3,000 from this according to the representative. So some may be curious on why they were only paid a share of this promotion and not their album and single sales? The representative explained this as well.
He went on to claim that Kara was offered a share of profit that was much higher than the going rate in the Japanese music industry. Japanese artists usually receive only 1% of the total album and single sales, and because DSP believed that this amount was unfair for Kara, they offered to pay the members around 20-30% of DSP’s share in the sales. In Japan, the distributor takes 84% of the album/single sales, leaving the management company with the remaining 16%. In DSP’s case, they had to split it evenly with Universal Japan, which is Kara’s management company in Japan. Hence, DSP was to receive 8% of the total album/single sales, and they would have had to pay only 1/8 of it to Kara members. However, the representative stated that they felt that the amount was unfair for Kara, so they had offered the parents of the members 20-30% of DSP’s share, which would be 1.6-2.4% of the total sales, rather than 1%.
Lastly, he stated that the Kara members were supposed to receive the third quarter profits in December, but this couldn’t be done because the parents didn’t give an answer to their offer.
A lot of information from this interview are contradicting of other reports, mostly the ones that were written in favor of Kara. This interview does give one piece of information that is of value; the fact that dispute most likely started over profit distribution of album and single sales in Japan, and the members’ parents were heavily involved in this. Reminds us of another group of the past, doesn’t it?
2nd official statement from Landmark and Kara
Seungyeon, Hara, Jiyoung and Nicole, the 4 out of 5 members of Kara, previously released a statement regarding their decision to leave their management company, DSP Media. Since then, DSP has released an official statement about the issue in which they argued against some of the four members’ points. Now that Goo Hara changed her mind to return to DSP, the remaining three members decided to press on with their offense and released another statement through Landmark, their legal representatives.
Below is the second statement released by Landmark;
The loss of faith in our company is what hurts us the most!
The members of Kara and DSP Media began to lose trust in one another ever since the change in DSP’s top management which occurred in March 2010. This is due to the fact that the members of the new management, who lacked professional knowledge, failed to provide proper management for Kara. The current executive director of DSP Media is the wife of Mr. Lee Ho Yeon, the ex-director who is currently ill. She has never worked in the entertainment management industry before; and so far, she has only been concerned about DSP’s profits and the health of DSP. She failed to build a trusting relationship with the members of Kara as she disregarded situations and the growth potential of the members.
The contract turned into a registration form!
The members of Kara signed the contract for their work in Japan under the knowledge that it was a simple registration form. The members and the parents were told that the contract, which was in Japanese, was a form for simply registering as a music artist in Japan. This made them sign the contract without knowing that they were signing a contract, and when they asked for a copy of the contract after the fact, a DSP employee declined their request as the contract was not to be released outside of the company.
The company had no rights to make deals in Japan!
The executive director of DSP Japan, the company in charge of Kara’s work in Japan, is the same person as the original DSP executive director (wife of Lee Ho Yeon). The company removed part of the earnings as a share of DSP Japan, and then paid the members with a percentage of the remaining portion. This means that the same manager, who owns both companies, cut Kara’s share of the earnings through a transaction out of formality, which resulted in Kara getting taxed twice by the company. According to their contract with DSP, Kara members had their rights violated by this action.
Karaya is owned by the executive director and his family!
Karaya is an online clothing store for which three members of Kara (Gyuri, Hara and Jiyoung) work as models. It is owned by the current executive director of DSP Media, and other managerial positions are held by the director’s family members, which clearly shows that this is another scheme to profit from the Kara members. Karaya also made the members wear clothing with the inappropriate line “BEST F***IN FIVE” on it then posted the photos on its website, which not only disregarded the reputation of the members, especially Jiyoung who is a minor, but also resulted in heavy complaints from Kara’s fans. This action was a clear display of how DSP disregards the reputation or profit of the artists and is only concerned about the profits of itself.
KARA cancels appearances, “URAKARA” to air as scheduled
Due to the contract terminations filed by KARA’s Seungyeon, Nicole, and Jiyoung, DSP Media will be halting all of their scheduled appearances.
Seungyeon, Nicole, and Jiyoung’s lawyers, Landmark, reported on January 19th that DSP Media will no longer be managing the three girls, and thus suspended their KARA schedules.
KARA will not be making an appearance at the “Seoul Music Awards“, scheduled for January 20th. Leader Gyuri will also be temporarily halting her appearances on her radio program with Super Junior’s Shindong.
Representatives of DSP Media stated,”Gyuri was put in a state of shock after receiving notice of the contract terminations, and expressed that she could not take part in the live recording for her radio show on the morning of the 20th.”
Their Japanese drama, “URAKARA,” will continue to be aired as scheduled. Representatives of Nihon TV spoke with Star News on the 20th and stated, “We are planning to air the episodes of ‘URAKARA’ according to schedule. Rumors of KARA’s disbandment are worrying their Japanese fans. Because their drama completed all the necessary filming, it will air without any problems.”
KARA Nicole’s mom tweets her stand on the agency issues
KARA’s agency troubles has just added another chapter to its saga, as recent tweets by member Nicole’s mother are quickly becoming a hot topic.
She stated on Twitter, “There is no parent who would gamble with their child’s life over money. There is no parent who would destroy what her child has been working for through blood, sweat, and tears.”
She added, “Our children were able to achieve their dreams through extremely hard work. Now that we’ve looked back on the blood, sweat, and tears, we had no choice but to go this route. There are many more hills to climb in the future. Even though we knew this would happen, we still chose to do it. Because we love our daughters.”
“We will show exactly what is there. We will say exactly what is there. We will not submit to lies.”