Skip to main content

Psy's record label sets sights on China

By Katie Hunt, for CNN
May 14, 2013 -- Updated 1059 GMT (1859 HKT)
Psy's Gangnam Style was a big a hit in China
Psy's Gangnam Style was a big a hit in China
STORY HIGHLIGHTS
  • Psy's record label plans to expand in China
  • YG Entertainment seeks to capitalize on K-pop's popularity
  • But piracy makes it hard for record labels to make money
  • China ranks 20th globally in terms of recorded music revenue

Hong Kong (CNN) -- Buoyed by the runaway success of "Gangnam Style," the South Korean company behind music sensation Psy is taking on what has been a tricky market for international record labels to crack -- China.

"While our previous activity in China had been putting on concerts occasionally, we will now be setting up an office in China and aggressively pursue the China market," a representative for YG Entertainment told CNN in Seoul.

YG is one of three South Korean companies that have largely been responsible for Hallyu -- the Korean wave of sugary and attractive girl and boy bands that have taken Asia by storm over the past decade.

And China has not been immune to K-pop's allure.

YG's chief operating officer Choi Sung-jun says that acts like Psy, boy band Big Bang and rapper G-Dragon are extremely popular among Chinese fans. G-Dragon's concert on Friday and Saturday at Hong Kong's Asia World Expo has been completely sold out, he added.

Pop star keeps Koreans' spirits up
Psy time... or 'sigh' time?
'Gangnam Style' to 'Gentleman' for Psy
Psy: Growing up 'Gangnam Style'

READ: Psy hopes for another viral smash hit with Gangnam sequel

China's airwaves have been dominated by Chinese-language "Mandopop," but tastes are evolving as the internet gives young people access to different types of music, says Nathaniel Davis, operations director of China-based music industry consultancy Splatter.

However, high rates of piracy on both digital and physical products make it very difficult for a label to discover steady revenue streams.

"Labels cannot function or sustain themselves from record sales revenues and so much of their income comes from the 'other' ways artists generate revenue -- endorsements, commercial appearances, ringtone sales, and live shows," Davis says.

Reflecting these challenges, Choi says the company's initial focus in China will be on making money from concerts.

In March, music giants Universal, Warner and Sony, along with China's Gold Typhoon Entertainment, settled a hard-fought music-piracy law suit with Chinese Internet company Sohu that will see the record companies receive royalties and licensing fees. The labels reached a similar agreement with search engine Baidu in 2011.

READ: One hit wonder or K-pop breakthrough?

Despite being the world's second largest economy, China ranks 20th globally in terms of recorded music revenue, according to the International Federation of the Phonographic Industry (IFPI).

In 2012, recorded music revenues totaled $92.4 billion, up 9% from 2012 but equal only $0.1 per person. Digital downloads accounted for more than 80% of sales in China, compared with 42% globally.

China is aware of the problems facing the industry and is concerned that it has not produced a act of global or even regional standing.

"Psy's success seems to be haphazard but it isn't," Zang Yanbin, president of the China Record Working Committee told the China Daily in March.

"Behind Gangnam Style are great efforts by the Korean government and music companies to develop and promote Korean pop music. The Chinese government should also try to create better environments for Chinese pop music."

YG's ambitions are not limited to China. The company recently incorporated in the United States and speaks of a "digital silk road" spreading K-pop to the world.

Last year, the music video to Psy's Gangnam Style went viral to become the most-watched video on YouTube. The song was also the third best-selling single of the year, according to the IFPI, and has helped boost the financial fortunes of YG.

The company, which went public in Korea in 2011, reported a 45% increase in net income to 18.8 billion won ($17 million) in 2012.

YG said it was too early to say whether they planned to develop local Chinese acts or simply promote their existing artists in the country.

But one novel strategy has been adopted by rival SM Entertainment, which is trying to make inroads into the Chinese market with Exo -- a boy band that performs their songs in Mandarin as well as Korean.

Journalist Frances Cha in Seoul contributed to this report

ADVERTISEMENT
Part of complete coverage on
August 20, 2014 -- Updated 2031 GMT (0431 HKT)
The beheading of U.S. journalist James Foley by ISIS militants brings into focus the risks faced by reporters in conflict zones.
August 20, 2014 -- Updated 1219 GMT (2019 HKT)
In an exclusive CNN interview, Lance Armstrong admits to having a "f**k you" attitude.
August 19, 2014 -- Updated 0858 GMT (1658 HKT)
Summer isn't over yet. These new hotels are keeping it alive and fresh.
August 20, 2014 -- Updated 1535 GMT (2335 HKT)
You've seen her turn on the catwalk, but her income might make your head spin.
August 20, 2014 -- Updated 0036 GMT (0836 HKT)
The pain that Michael Brown's parents are going through is something Sybrina Fulton can relate to. She, too, lost a son in a controversial shooting.
August 19, 2014 -- Updated 0904 GMT (1704 HKT)
19-year-old Udi Segal explains why he won't join the country's military.
August 20, 2014 -- Updated 1758 GMT (0158 HKT)
The sights couldn't be sadder: Animals killed or suffering through war in Gaza.
August 18, 2014 -- Updated 1314 GMT (2114 HKT)
They are the faces of a community on the run. Photographer Warzer Jaff documents the plight of the Yazidis.
August 19, 2014 -- Updated 1150 GMT (1950 HKT)
A cameraman films a massive New York City subway rat charging at him and attacking him. WPIX reports.
Drinkers guzzled an incredible 10.3 billion liters of this brand in 2013, making it the world's No.1 beer. And you may have never heard of it.
CNN joins the fight to end modern-day slavery by shining a spotlight on its horrors and highlighting success stories.
Browse through images from CNN teams around the world that you don't always see on news reports.
ADVERTISEMENT