[All] [Exclusive] Min Hee-jin's 'whistleblowing' was Hive's 'album push'

Dear Hive Management

On April 3, 2024, Adore Co., Ltd. filed a complaint against Hive Co., Ltd. and Belief Lab Co., Ltd. regarding the damage to the brand value of New Jeans caused by the plagiarism controversy surrounding Eyelet, and requested corrective measures.

(See email and attachment below)

The controversy over the plagiarism of Eyelet is only a very small part of the problems that have occurred between New Jeans and Hive so far that have surfaced. New Jeans’ legal representative earnestly requested Adore to take corrective action against Hive, saying that the various obstructive acts and discriminatory and unfair treatment that Hive has been carrying out towards New Jeans are so severe that they cannot be tolerated. Accordingly, Adore, who is responsible for the management of New Jeans, would like to state the position of New Jeans’ legal representative and Adore regarding this matter as follows.

Although the previous email was sent to Hive, including Belief Lab, Belief Lab only responded that they are preparing a response, and Hive has not yet provided a clear response. Newjins' legal representative and Adore are waiting for Hive's response. Since the content that I want to convey through the previous email and this email is not limited to Adore/Newjins, but is about Hive's ethical management and sustainable management, I am sending it to Hive's management.

The big problem with Hive is that it continues to repeat the evils of the existing industry and continues to engage in immoral behavior without any sense of criticism. It is not fulfilling its social responsibility as a representative company of the entertainment industry, and its management structure is also not transparent, which is why the direct and indirect damage to New Jeans continues to increase.

1. The most representative example is Hive’s ‘album push’.

'Album push' refers to an unfair practice of artificially inflating sales figures for the first week of release, i.e. 'initial sales figures', by using distributors or overseas subsidiaries to place large orders or hastily organizing fan events.

This is an act that disrupts the fair market order, such as sending false information about an artist's performance, making a team that is no longer growing seem to be growing, or exaggerating the performance of a project beyond its actual value.

The impact on the stock market is even more serious, especially due to the push of albums, as it does not simply inflate numbers but seriously distorts the growth potential and future of companies and the entertainment industry.

This has already been strongly criticized by public opinion as an act of deceiving shareholders, members, capital markets, and fandom, and if this act continues, it will ultimately become an unhealthy issue that will destroy the ecosystem of the entertainment industry from the root. Nevertheless, the fact that Hive, a leader in the industry, is pushing out albums by taking advantage of the regulatory blind spot cannot be denied as a truly serious problem.

New Jeans has been advised by Hive to 'push the record'.

When New Jeans released their 2nd EP 'Get Up', they were advised by HYBE to push out 100,000 copies, saying that it would break Espa's initial sales record, but they flatly refused because it went against Adore's business philosophy.

The reason Ador refused is because he was concerned that the pure #1 records that New Jeans has achieved so far without pushing albums could fade, and that various business opportunities that have arisen because of it could be damaged. For reference, New Jeans' legal representative asked Ador about the matter when the pushing issue was raised in the community, and Ador confirmed in a response that New Jeans does not push albums.

If the issue of 'album pushing' becomes a bigger issue in the future and receives public attention, even New Jeans, who resolutely refused to push albums simply because they are part of HYBE, could be misunderstood as using 'album pushing' to embellish their achievements. Accordingly, Adore, who is in charge of managing New Jeans, wants to prevent a situation where not only their album sales but also all the hard work that Adore/New Jeans have put in to grow without using tricks is completely negated. The fact that New Jeans is not receiving full recognition for their outstanding results even without 'album pushing' is already serious damage to them.

Above all, the biggest problem is that the belief that success can be achieved solely through music and performance/content without any shortcuts may be shattered. This is something that will crush the market's vision and hope.

I hope that the perception that “those who don’t do it are fools” will no longer spread.

Even groups like New Jeans, who have high album sales without 'pushing albums', were encouraged to surpass other groups' records, so what about other groups?

This cannot but be seen as a serious lack of ethical awareness on the part of Hive.

We strongly urge improvement and prompt correction of Hive's two-faced attitude of criticizing the absurdity and contradictions of the existing entertainment industry and aiming to promote the entertainment industry.

I know this is already rampant within the Hive Label, but I ask you to thoroughly investigate and transparently deal with any transactions that could be seen as “album pushing,” including any transactions with subsidiaries that were conditional on returns, and to deal with them strictly.

2. HYBE restricts the opportunity for labels to select the best partner through fair competition in all areas of business except production, including distribution, business, and management.

The recent 10-year exclusive album/music distribution contract between HYBE and UMG is hindering the future work of New Jeans. They say that distribution fees can be lowered in the short term, but it is not reasonable for a fast-growing artist like New Jeans to be contracted with a specific label for a long period of 10 years. It is reasonable to induce competition among companies through a short contract period to induce the best conditions, but the contract between HYBE and UMG has blocked New Jeans from finding a label that can offer lower distribution fees or better conditions for New Jeans.

Also, even if the distribution fee is lowered, the label is paying an internal distribution fee of almost the same size to Hive in addition to the external fee paid to UMG, so from the label's perspective, it is like a three-pronged approach. No matter how good the results are in the future, it is not reasonable at all for New Jeans to have to pay a considerable amount of distribution fee for the next 10 years.

The problem doesn't end there. An even bigger problem is that the level of service provided by UMG's labels is not high, and satisfaction with it is also not high.

This is a complaint not only of Adore, but of all labels within Hive.

In other words, for the next 10 years, even if the unsatisfactory service is not improved due to this contract, we have no choice but to use UMG's subordinate labels. Therefore, this long-term contract not only reduces the motivation of UMG's subordinate labels to improve their services, which is a serious problem even now, but also constitutes a serious business hindrance that weakens Adore/Newjins' overseas competitiveness.

The long-term contract between HYBE and UMG is more damaging than beneficial to NewJeans, and it is unfair that the risks resulting from this should be borne entirely by the label and artists.

When negotiating the contract with UMG, it must have been clear that NewJeans was a good bargaining chip for Hive, but one cannot help but wonder what level of service and benefits NewJeans actually received from Hive.

3. The biggest problem is that Hive is not prioritizing the improvement and advancement of its main business, label operations.

Hive is currently encouraging labels to conduct various businesses with Hive, including the authority for performances and MD, as well as agency rights for advertising and album/music distribution, regardless of the capabilities of Hive's business organization or the quality of its services.

However, it doesn't really matter to the label whether the business is an internal affiliate or an external company, because the label places the greatest importance on the business operator's ability to conduct business.

After experiencing that Hive’s business performance fell short of Adore’s expectations in several cases, Adore had to secure its own resources for performance, advertising, and MD businesses while looking for other external partners to achieve better results. However, it was not an easy process to sort out the relationship with the existing internal business partners.

For example, in the case of the advertising business, New Jeans was in a situation where various advertising proposals were flooding in from outside due to the high topicality from the time of its debut, so it was a situation where it was possible to manage only the advertisers who were voluntarily brought in without artificial advertising sales. However, due to problems caused by the Brand Synergy Business Team in charge of the advertising business, unnecessary disputes were frequent with advertisers as well as labels.

Adore raised the issue several times whenever this situation occurred. However, even after raising the issue, no improvement was made, and it was only after a fatal incident that it was finally resolved. There was a conflict of interest in the process of promoting a new contract between Le Seraphim and an overseas luxury brand that New Jeans was under contract with, and the Brand Synergy Business Team was found to have lied to both Adore and the brand in signing the contract.

The Brand Synergy Business Team should treat both Adore and Source Music equally. However, the Brand Synergy Business Team treated certain artists with bias, and only after such circumstances were revealed was the contract finalized by accepting Adore’s protest and returning three months’ worth of agency fees.

In the process, the unnecessary work of meeting the brand directly to determine the facts and argue over the pros and cons was entirely the responsibility of the label.

Even though we had to pay the same commission rate as external business operators and had experienced unfair practices with clear reasons for contract termination, the process of terminating the contract was not easy because we were an internal business team belonging to the same affiliated company. In fact, after termination, we had to hear groundless rumors within the company that Adore was a difficult label.

Even when we judged that an external business was necessary for competitive performances or MD business and proceeded in compliance with regulations and procedures, there were cases where we were given unnecessary warnings and hints as if these procedures were a violation of Hive's internal regulations simply because we were conducting external transactions.

If the quality of infrastructure owned by Hive is judged to be insufficient, it should be an urgent task to improve the competitiveness of the relevant business entities. However, rather than finding ways to encourage and improve the competitiveness of business operators, Hive manages the label's performance indicators only as consolidated sales, an indicator that is advantageous to Hive's size.

The problem of distracted management that prevents them from focusing on their core business is also evident in the performance of Hive's new corporations.

In 2021, Ithaca Holdings was acquired for an astronomical 1 trillion won, but since then, Hive's global business has not shown results. Businesses such as platform/game/voice AI/blockchain have also shown sluggish results despite large investments in funds and personnel.

As can be seen in the 2023 business report, the performance of new businesses such as Hive America (-KRW 142.4 billion), Hive UMG LLC (-KRW 23.4 billion), Weverse (-KRW 4.4 billion), Hive IM (-KRW 20.9 billion), Supertone (-KRW 6.7 billion), and Binary Korea (-KRW 3.8 billion) are all so poor that they are recording negative results.

Despite serious deficits from non-core businesses, Hive's 2023 earnings report was busy correcting the poorly performing businesses.

The foundation of the entertainment business lies in the label business that trains and manages artists.

In 2023, New Jeans achieved unprecedented performance growth in less than two years, unprecedented in the 30-year history of the entertainment industry. However, this overwhelming growth of New Jeans is not even mentioned in IR/press releases. In fact, there was an incident where biased IR script content was discovered and revised.

Why does this happen so often only in New Jeans?

4. There is an urgent need to improve Hive's Shared Service that supports Adore/Newjins.

As I emphasized earlier, the essence of the entertainment business is the label business, and it is right for Hive to play a role in helping the label business prosper.

Hive's Shared Service is currently straying from the essence without understanding the multi-label system. In a multi-label system, Shared Service cannot simply be a support organization that pursues military-style efficiency by performing only common functions as instructed.

Adore pays Hive an amount equivalent to Adore’s total labor costs each year as a service fee for legal affairs, human resources, finance, public relations, IT, etc. However, despite the need to support a rapidly growing business and improve production and operation, the label’s satisfaction with the services provided by Hive is low compared to the high fees.

Considering the conditions and growth potential that are bound to differ depending on the label/artist, support that is delicately considered from the perspective of the label and the artist is necessary, but just like the case mentioned in 3 above, we are not able to maintain a balanced attitude between Hive and the label, or between the label and another label.

As everyone knows, New Jeans achieved exceptional success right after their debut. However, despite the fact that they should have reported this success story as it was, HYBE PR has consistently taken a lukewarm stance. We have raised objections to HYBE PR's attitude several times, but this attitude has continued and has been found in IR/PR scripts. There have even been cases where foreign and domestic reporters have contacted Adore directly or directly requested related materials, saying, "HYBE PR team seems to be passive in PRing New Jeans compared to other artists within HYBE."

In addition, the 'Industry Trend Review' document circulated internally every week by Weverse Magazine's editor-in-chief, Myung-Seok Kang, continued to contain biased and partial content, and Adore even raised an objection, saying, "It needs to include facts such as numbers and indicators and maintain at least a minimum level of objectivity."

I also raised an objection to CEO Park Ji-won, but I received feedback saying, "Don't read it," and CHRO Kim Joo-young said, "Think of it as one person's opinion." I don't understand why the content of an individual who lacks objectivity and credibility should be distributed to all executives as if it were representative, and the bias of the content makes me wonder if it was distributed for some kind of purposeful propaganda/dissemination.

If you consider the impact and ripple effects that one person's error in judgment of the market can have on those who have moved to other industries and are unfamiliar with the entertainment industry, it is difficult to simply ignore it and treat it as a minor matter.

However, I have heard that even in recent documents, the self-consoling attitude of selecting and reviewing only the reactions you want while ignoring the negative reactions related to the plagiarism controversy of Ailrit is still continuing. Adore has already requested to refuse to receive, but after receiving the contents from other recipients recently, I was able to confirm that it was not only Adore who did not agree with the review.

Recently, New Jeans released the unprecedented news that they would be holding their first concert in Japan at Tokyo Dome.

Coincidentally, Hive distributed the news of the UMG distribution contract signing on the same date and time and announced that this was good news. After reading this article, Newjins' legal representative contacted Adore with the following inquiry.

“Isn’t it possible for the HYBE PR team to distribute and control all the articles from the desk? If the UMG case is good news, it would be common sense and more beneficial for HYBE to promote it by separating it from the New Jeans big news and showing a series of good news every day. At a time when they are focusing on the New Jeans announcing their long-awaited comeback and promoting the big news of their fastest entry into Tokyo Dome, I wonder why HYBE insisted on distributing the article in an overlapping manner to promote the greatness of the UMG contract article.”

Even if the dates coincidentally overlap, Hive PR's reason for existence is to collate and organize all the news, discuss and coordinate, and find a way to maximize mutual benefits.

In particular, this is quite a contrast to Hive's blatant support for Ailit, who, despite being a team with a different label from New Jeans and an older average age, is even referred to as "Hive's youngest daughter" when promoting her.

When I asked the CCO about the Illit plagiarism incident,

“There were rumors of plagiarism before the debut, but after the official debut and the release of the stage and music, the controversy seems to have died down,” was the reply.

It is a well-known fact that plagiarism controversy has become a widespread issue. And even if it is not a controversy, there is a label that is being victimized by unnecessary noise issues within a company.

What's surprising is that even the executives in charge of Hive PR are casually conveying their biased opinions toward certain labels to the affected labels.

Hive needs to realize the extremely obvious truth that 'the very act of plagiarism being talked about and becoming an issue is problematic' and that there are those who 'have been harmed' as a result.

5. What are Hive's business ethics principles? Newjins' legal representative and Adore ask Hive.

Is Hive's attitude of protesting against the absurdity of the entertainment industry since its founding by the parent company arbitrarily taking what is done by its successful subsidiary, emphasizing that it is only one company at a time, marketing it by associating it without the other party's consent, and consistently acting shamelessly as if it were turning a blind eye?

If they were really confident in their music, why did they need to copy New Jeans' concept, choreograph New Jeans, and use New Jeans' popularity? Why can't they compete with their own work? Can they be happy with the results they get?

The term 'New Jeans Syndrome' was coined because New Jeans was so successful that it changed the K-pop trend, and as a result, the music production trend also changed significantly from the existing girl crush style to the easy listening style represented by the so-called 'New Jeans style'. This contributed greatly to Hybe's corporate image as well as stock price under the title of market leadership and multi-label success. Rookies who debuted after New Jeans were influenced by New Jeans regardless of gender, and Hybe joined the trend to a problematic degree.

For some reason, instead of protecting Adore/Newjins, who changed and led the flow of K-POP, the parent company of HYBE is creating the cause and factor for hindering the activities of Newjins.

Why are organizations and people who have no contribution to the creation of New Jeans' unique identity using New Jeans' things as if they were public property and using them as if they were common, damaging the image of New Jeans that was painstakingly built?

In order to raise awareness for Eyelet, Hive used the most notable and popular team, New Jeans, to create a lot of buzz and not only created a lot of mentions through comparison/contrast to exhaust their image, but also went so far as to use the opposing reaction of saying that they are different, which damaged the value reputation of New Jeans.

This incident has confirmed that HYBE has no concept of artist RM, nor the basic concept of balanced treatment for affiliated creators/artists.

In the midst of the confusion over the fact that this happened at the parent company and not at another company, we ask how Adore/Newjins can receive compensation for the damages they have already suffered.

New Jeans' legal representative and Adore hold Hive accountable for unnecessarily depleting and exploiting the value of New Jeans, rather than showing consideration for New Jeans, and demand realistic correction of the contents of this letter.

In addition, we request a complete revision of the Ailit marketing direction and concept.

Chairman Bang Si-hyuk, who had long admired Min Hee-jin's creative works and proposed to recruit her with a devoted heart in 2019, ultimately expected that Min Hee-jin's creative works would be easily plagiarized and utilized.

Before Seraphim's debut, the unilateral change/announcement of plans for HYBE's first girl group was rude and irresponsible, but even that wasn't enough. There is still a conversation record of CEO Park Ji-won begging Min Hee-jin not to promote a 'Min Hee-jin girl group' until Seraphim's debut. I understand it was at Chairman Bang Si-hyuk's request.

There is no difference between then and now with Hive, who made the bizarre and difficult to understand request to not promote New Jeans for the absurd reason that "if it is revealed that all members are rookies, it will be obvious what kind of team Min Hee Jin is preparing for."

Externally, Hive seems to be operating rationally by promoting a multi-label system, but looking back at the time Adore was founded, this is also not true.

Min Hee Jin was unilaterally informed by Source Music of her debut plans being changed by Hive.

It was said that Seraphim would be HYBE's first girl group, and that the debut group trainees at the time would become Source Music's next team. The debut group trainees at the time were the trainee team that currently includes the members of New Jeans.

Even if HYBE had first broken their promise and unilaterally changed their debut date, and had voluntarily proposed the establishment of a separate label, it would not have been satisfactory. Now, they are calling them Source Music's next team.

Even though they used Min Hee-jin to announce that they were Hive's first girl group and signed trainees based on that publicity, Hive broke their promises as easily as an old pair of shoes. At that time, Min Hee-jin and the current Adore executives felt so disillusioned that they wanted to quit. However, we did not want to be perceived by the public, the remaining trainees, or even ourselves as people who did not keep their promises without any sense of responsibility.

At that time, I explained this intention to CEO Park Ji-won and proposed that we establish Adore and plan a separate debut.

Was the process of establishing Adore a pleasant and easy one?

Looking back on past incidents, I can't help but think that there are no people around Chairman Bang Si-hyuk who are honest enough to report on industry trends that should be objectively addressed in a biased manner.

I would like to speak clearly this time, as it seems that the unreasonable demands from three years ago were not addressed and have continued to cause problems this time.

Not only Ailrit, but also Seraphim has been plagued by endless plagiarism controversies in both the concept and the songs of the albums released three times. I heard from overseas producers and associates working with Adore that Seraphim's songs are currently in cost negotiations with Hive due to plagiarism issues.

I believe that now is a time when reflection and improvement are more urgent than ever.

I've heard news that Hive may soon be designated as a conglomerate.

I hope that Hive will stop imitating the bad aspects of large corporations and find ways to practice ESG management that are appropriate for its status. I also hope that Hive will feel responsible for the multi-label system that it has been promoting externally, and set and practice goals for improvement and the future.

I make this proposal believing in the advice that Chairman Bang Si-hyuk has preached internally and externally: “When faced with the absurdity and irrationality of business, even if it is difficult to speak out, we must voice our differences of opinion and work to correct them.”

I hope that we do not make the mistake of applying anachronistic logic such as, “If the parent company does well, it is ultimately beneficial for the subsidiary” and “If the result is good, the process is glorified” to K-pop and the cultural arts industry, which are leading the global entertainment industry.

Such thinking rationalizes outdated practices and bad habits that focus on certain individuals and organizations, such as 'military soccer,' which ultimately slows down and disintegrates the organization and further devastate the entire entertainment industry.

If you have created a multi-label system for diversity and risk diversification, make it 'different' and create a healthy business environment.

There is no need to go as far as respecting the creator. It is not common sense for a company that relies on creation to mass-produce copycats, even for the sake of shareholders' rights and interests.

It is a short-sighted, foolish act that will ultimately result in the loss of both parties, business-wise.

The following is from an online town hall message distributed to all employees by Chairman Bang Si-hyuk at the time of Hive's listing.

“My fundamental philosophy on running a business has never changed. It is to base it on common sense, and to work to solve problems necessary to implement that common sense, ultimately contributing to creating a better world.”

“It will be an opportunity to improve the company’s management soundness and transparency, thereby achieving management advancement.”

Currently, Hive seems to be in greater need than ever to practice ethical management in all aspects of creation and management.

As Chairman Bang Si-hyuk said, I hope you will make efforts to solve the current problems.

I hope that Hive will become a sensible, sound, and transparent organization.

Please respond to the request for correction made by New Jeans Legal Representative and Adore by April 23, 2024.

https://v.daum.net/v/20240517132933758