Dispute Over Contract Terms and Distribution Rates Continues Between Agency and EXO-CBX

Courtesy of SM Entertainment

SM Entertainment has refuted claims made by Chen, Baekhyun, and Xiumin of the K-pop boy band EXO that the agency has imposed "unfair" demands regarding revenue from their individual activities. The dispute emerged shortly after the trio, known as EXO-CBX, held a press conference in Seoul on Monday to raise their concerns.

In response, SM Entertainment issued a statement asserting that EXO-CBX secured a favorable distribution deal and experienced no harm from the contract they signed with the agency in June of the previous year.

Last year, EXO-CBX informed SM of their intent to terminate their exclusive contracts, citing the agency's failure to provide adequate accounting data. This led to an antitrust complaint filed by the group with the Fair Trade Commission. A temporary resolution was reached when EXO-CBX agreed to sign with SM for group activities with EXO, while their individual activities would be managed by INB100, a label established by Baekhyun earlier this year.
 

▲ EXO-CBX / Courtesy of SM EntertainmentAccording to Lee Jae-hak, the legal representative for EXO-CBX, SM is not honoring the agreed terms, which specified a 5.5 percent commission rate for album and music sales under INB100. Instead, SM is demanding 10 percent of the artists' revenue from individual activities, albums, concerts, and commercials. Lee presented a voice recording of SM's Chief Artists & Repertoire Officer, Lee Sung-soo, confirming a 5.5 percent distribution commission rate from distributor Kakao for INB100.

SM countered these claims, stating that they permitted the release of Baekhyun's solo album under INB100 and covered the penalty for the cancellation of his solo concert in Japan, as a compromise when adjusting the distribution commission rate became difficult. The typical distribution commission rate for non-Kakao affiliate labels ranges from 15 to 20 percent.

SM also claimed that the trio’s intention to invalidate the contract followed an approach by Cha Ga-won, president of INB100's holding company, who allegedly attempted to lure the artists away from SM.

Lee Jae-hak further stated that EXO-CBX sent a formal notice to SM in April regarding the breach of the agreement, to which the agency has yet to respond. The group is considering canceling the agreement on grounds of fraud or nonfulfillment of obligations and may file complaints with the police and antitrust authorities concerning the agreement process.

During his solo concert in Hong Kong on Monday, Baekhyun addressed the ongoing dispute, explaining that he founded INB100 to engage more closely with fans and that he did not intend for the label to become a major entity. "I just hope to communicate closely with my fans in diverse ways. I just need my fans to know my genuine intention," said Baekhyun.

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