K-pop continues to captivate massive international audiences, but the genre is experiencing significant struggles within its home market in South Korea. While major entertainment companies are generating record-breaking revenue from worldwide concert tours, industry experts say the Korean music market is undergoing a fundamental structural transformation following the pandemic.
Some industry observers hesitate to label the current situation as a crisis, but most agree that the domestic landscape is shifting dramatically. Meanwhile, international K-pop projects are thriving overseas, including Netflix's animated film "KPop Demon Hunters" and various localized K-pop groups that have achieved explosive popularity in foreign markets.
Album sales data reveals the stark contrast between domestic and international performance. K-pop album sales experienced steep growth after 2014 and reached a record high of over 100 million units in 2023. However, the market correction that followed the pandemic led to the first decline in sales in a decade, and this downward trend is expected to continue throughout this year.
"Cumulative sales stood in the low 80 million range as of October, so the full-year total will likely match or fall slightly below last year's level," explained music data journalist Kim Jin-woo. This represents a significant decrease from the peak performance of recent years.
Physical album exports are also experiencing a slowdown in major international markets. Data from the Korea Customs Service shows that album exports from January to October reached $243.8 million, representing a 2.7 percent decrease compared to the same period in the previous year. These figures fall short of industry expectations, especially considering K-pop's rapid global expansion in recent years.
Japan, which serves as the largest overseas market for Korean albums, saw exports drop by 10.8 percent to $70.7 million during this period. Similarly, exports to the United States also decreased by 5.1 percent, indicating broader challenges in key international markets.
The domestic digital music market is facing similar difficulties. According to the most recent Circle Chart digital rankings for November 9 to 15, only four K-pop tracks managed to secure positions in the top 10: NMIXX's "Blue Valentine," LE SSERAFIM's "Spaghetti," Hwasa's "Good Goodbye," and BLACKPINK's "Run."
This performance stands in sharp contrast to the height of the girl group boom, when popular acts such as NewJeans, aespa, and IVE consistently dominated the digital charts. The share of newly released songs appearing near the top of the rankings has also significantly decreased.
"Data on new-song streams, which reflect the latest trends, show slower short-term momentum and a gradual decline in the long-term share of new releases," Kim Jin-woo noted. This trend suggests that Korean audiences may be shifting their listening preferences or consuming music differently than in previous years.
While overseas concert revenue continues to soar, rising production costs and expenses related to debuting new rookie groups are significantly cutting into company profits. HYBE, one of the industry's major players, saw its concert sales in the third quarter nearly triple compared to the same period last year. However, despite this dramatic increase in revenue, the company still posted an operating loss of 42.2 billion won (approximately $31 million).
The success stories of mid-sized agencies, once celebrated as miraculous achievements within the industry, are becoming increasingly rare. As the business model shifts toward large-scale marketing campaigns and extensive global touring, smaller companies are finding it extremely difficult to maintain operations and compete effectively.
"Overall costs have risen, but album and digital sales have fallen sharply. Revenue from overseas concerts is also limited, so companies without sufficient capital will face greater challenges," explained an official from a mid-tier entertainment agency. This economic pressure has led to significant changes in the industry landscape.
Several groups have been directly affected by these challenging market conditions. Groups such as Purple Kiss, Weeekly, and Everglow have either disbanded or halted their activities entirely this year. Additionally, H1-KEY, which gained recognition for their hit song "Rose Blossom," was forced to change agencies due to financial pressures.
Industry experts believe that K-pop's rapid expansion has made the entire sector less flexible and dynamic than it once was. "With production and marketing costs rising sharply, the space for smaller agencies has shrunk and the industry's vitality has diminished," said pop music critic Lim Hee-yoon. "Artists are focusing more on overseas markets, and the domestic K-pop fandom appears to be stagnating."
Another pop critic, Kim Do-heon, emphasized the need for innovation within the industry. "As the industry matures, its systems have become more rigid. Instead of repeating old formulas when results fall short, companies need to start making changes, even in small ways," he said. This perspective suggests that the K-pop industry may need to fundamentally rethink its approach to remain sustainable and continue growing both domestically and internationally.
