Korean investors are going crazy for the country's biggest music labels. But are they just betting on a fad?
For the past month, the biggest story in South Korea's stock market has centered on a five-piece boy band called Big Bang, and a couple puffs of marijuana.
News that the Big Bang's front-man had reportedly tested positive for pot threatened to put a crimp in the initial public offering of YG Entertainment, the label responsible for some of the biggest acts in Korean Pop. The concerns were for naught. Last week, buyers snapped up YG Entertainment's stock like teenagers trying to score tickets to their favorite boy band's show. The company's share price more than doubled on its first day of trading, reaching roughly $67 as buyers ordered 561 times more stock than was available. Its market cap now sits at roughly $340 million.
The frenzy of Korean pop (aka K-Pop) today might be hard to believe considering the state of the music industry. To better understand its ascension, let's draw an analogy. YG is vastly different
from the major U.S. and U.K.-based labels that now dominate the
industry. It's more like Motown, circa 1965. That's the year that The
Supremes scored their fifth straight No. 1 hit on the Billboard Hot 100,
cementing Hitsville U.S.A.'s crossover dominance in American pop. It
was the kind of achievement that would have been unthinkable half a
decade before in the mostly segregated music market. Like, Motown, YG is
relatively tiny. Its roster includes roughly a dozen music acts. Also much
like Motown, which picked up Stevie Wonder at age 11, it it recruits its
stars while in their early teens, writes and produces their songs
in-house, and manages their careers. And just as Motown went from R&B radio to the top of the pop charts, K-Pop is looking to break out of its home country and onto the world stage.
Now imagine if Motown owner Berry Gordy gathered all of his talent -- Stevie, The Temptations, and Marvin Gaye among them -- to make a big announcement. "Crew, it's been a hell of a run. I've been talking to the bankers out in New York. We're going public!"
The hysteria around YG Entertainment is just part of a bigger story about South Korea's emerging status as Asia's new pop culture capital. As Patrick St. Michel wrote for The Atlantic in September, Hallyu, or "Korean Wave," has already invaded Japan. And many believe the country's brand of candy-colored, over-the-top hit making is ready to go even bigger. Already, there are early signs. Adoring crowds in Paris. A show at Madison Square Garden. And, as required for any global phenomenon, tens of millions of Youtube views.