[Insight & Opinion] The "Happiness" Lee Soo-man Once Sang

Published 23 Feb.2023 14:18(KST)

[Asia Economy] I have a memory of visiting SM Entertainment long ago and feeling quite disappointed. It was hard to find the image of a meticulous and flawless agency. The materials were insufficient, explanations were lacking, and nowhere could I get answers to my questions. It seemed as if they tried to cover up any issues simply with the faces of their affiliated celebrities and new technologies, leaving me with the impression of a small, poorly managed shop. Since SM, known as the most systematized agency, was like this, I wondered if other agencies might be even worse. Around the same time, I heard a similar story from the CEO of an asset management firm. Although he was interested in investing in the entertainment industry, he hesitated because it seemed all agencies had problems with governance and management capabilities. Above all, he said the transparency as a listed company was questionable.

The management dispute at SM Entertainment is drawing attention. As already known, the current management teamed up with Kakao, while SM’s largest shareholder, Lee Soo-man, allied with HYBE. It is a confrontation between the largest shareholder and the management established by the largest shareholder. Producer Lee Soo-man is the founder of SM Entertainment. He is a pioneer who led the shift from listening to watching music, nurturing K-pop. The name SM itself comes from his name, Soo-man. In 2000, he listed SM Entertainment on KOSDAQ, marking the beginning of the full-fledged era of entertainment agencies. The method of selecting talented aspiring stars, subjecting them to rigorous training, and then debuting them became the standard star production process followed by all agencies. The entertainment industry is a typical high-risk industry with a higher probability of failure than success. Lee Soo-man’s abilities and achievements as a producer representing K-pop deserve high praise.

However, corporate management is another matter. It is never justifiable for a company to funnel money to major shareholders through irregular means. Unfair internal transactions always damage corporate value. As is well known, SM had a separate producing contract with Lee Soo-man’s personal company and paid up to 6% of sales. It is said that the amount paid over the past seven years alone reached 100 billion KRW. Two years ago, SM began acquisition negotiations with Naver, CJ ENM, and Kakao respectively. The reason all negotiations failed was Lee Soo-man’s personal demand to maintain the existing contract. The situation has come this far as a result of their own actions. In fact, negative rumors about Lee Soo-man have circulated for a long time. I have seen several people speak harshly of him in ways that are hard to mention. Lee Soo-man and HYBE have also promised to improve governance and modernize management through statements. This should have been done long ago. Lee Soo-man is the person who created and grew SM. However, whether it is HYBE or Kakao, once the acquisition is complete, he will leave. The company must operate without him. Just as Ford Motor Company runs without Henry Ford, Disney Productions without Walt Disney, and Apple without Steve Jobs. Without him, SM’s unique music and color will also change. It will be the responsibility of those left behind to make such changes desirable.

As a singer, Lee Soo-man’s representative song is "Happiness," released in 1977. "All the love and hate / Pretending not to see, closing my eyes and ignoring / Considering the past days as poverty / Dreaming of happiness, I spend today again." The singer Lee Soo-man sang "Happiness" with a restrained nasal tone and a smiling eye expression. Six years later, in 1983, he released "After Everything Ends," featuring strong electronic sounds and a screaming style. "Who are you waiting for? / What are you hoping for? / After everything ends." I wonder, is he happier now than the Lee Soo-man of 1977?