[Why Did K-pop Leave Korea] Overseas Revenue Grows, But Less Returns Home... The Paradox of K-pop Globalization

③ Local Costs and Taxes: The Outflow of Revenue
Complex Settlement Structures for Concerts and Platforms
"Urgent Need to Build a System for Revenue to Flow Back into the Domestic Industry"

The photo is not directly related to the main content. It shows BTS's world tour performance, "BTS WORLD TOUR 'ARIRANG' IN TOKYO," held at Tokyo Dome in Japan on the 17th and 18th. Big Hit Music

K-pop generates massive profits overseas. However, not all of that money remains in Korea. This is because as K-pop stages have expanded globally and sales have grown, the revenue structure has become more complex.

HYBE posted record-breaking sales of 2.6499 trillion won in 2025. Its concert revenue alone reached 763.9 billion won. The company held 279 global concerts in various countries. However, its operating profit dropped significantly. In the same year, operating profit stood at 49.9 billion won, a decline of about 73% from the previous year. This was due to the costs of debuting new artists and restructuring business operations. Sales increased, but profits did not follow suit. This is the paradox of K-pop globalization.

The local business structure is a key reason. K-pop is no longer just about producing albums at the Korean headquarters and selling them abroad. Local subsidiaries and partners are now involved. Revenue is generated overseas, and expenses are also incurred overseas. Local staffing, marketing, legal, and accounting costs are incurred first. The structure makes it difficult for money earned abroad to flow directly back to headquarters.

The second reason is the cost of touring. Concerts generate a lot of revenue but also come with high expenses. Venue rental fees are substantial. Stage equipment, sound, lighting, and transportation costs are added. There are also local promoter fees, insurance, and security expenses. Including travel costs for artists and staff, total expenditures become even larger. High ticket sales do not necessarily mean high net profits.

There is also the tax burden. Overseas concert revenues are subject to local tax laws. The U.S. Internal Revenue Service (IRS), for example, generally withholds 30% at the source for payments to foreign artists and athletes. Although actual tax liabilities can vary through the Central Withholding Agreement (CWA) and similar arrangements, taxes and settlements are key variables in overseas performances.

Exchange rates and settlement delays are additional factors. Profits from overseas concerts are generated in local currencies. Settlements take time, and fluctuations in exchange rates affect profit amounts when converted into won. As money passes through local subsidiaries, promoters, platforms, and payment service providers, the actual amount left decreases. The same applies to platforms. Attracting and retaining fans incurs costs, such as operating servers and payment systems. Live broadcasting, subtitles, community management, and merchandise delivery are also necessary. While platforms provide a long-term foundation, they are not tools for immediate profit growth.

The problem is the lack of statistics. The Korea Culture & Tourism Institute (KCTI) pointed out in its report on overseas K-pop sales trends that there is insufficient domestic research data on this subject. While there have been many reports on K-pop’s global popularity, there is little comprehensive data on total sales and growth rates. More detailed statistics are needed to track the flow of money. Oh Sijin, Senior Associate Researcher at KCTI's Data Analysis Team, stressed, "We must continue to pay attention to the very rapid growth of K-pop's overseas sales," adding, "What is now needed is to improve the quality of this growth."

K-pop globalization cannot be viewed negatively. Local subsidiaries and investments are necessary expenses for entering larger markets. To reach local fans, there are costs that must be spent locally. The key issue is how much of the overseas performance returns to the domestic industry. The goal should be to connect it to domestic creators, studios, platform technologies, and copyright revenues. Otherwise, K-pop may grow, but the share for the Korean industry could shrink. An official from a major agency explained, "As concert exports grow, their effects must return to the domestic production ecosystem," and added, "Earnings on stage must translate into growth for the industries behind the stage."

There are three solutions. First, overseas sales statistics must be made more detailed and reliable. Only by separately analyzing concert, streaming, platform, and merchandise sales can effective policies be developed. Second, more copyrights and production capabilities need to be retained domestically. When core rights return to domestic creators, performance results accumulate as assets. Third, Korea must protect its leadership in platforms and intellectual property (IP).

The government is also moving in this direction. In its 2026 annual work report, the Ministry of Culture, Sports and Tourism announced that it would establish a customized development strategy. The plan is to connect production, investment, and distribution and strengthen competitiveness. However, policy implementation must keep pace with market changes. Companies are already producing and settling accounts overseas. Accounting, tax, and copyright support systems must be redesigned for globalized K-pop.

K-pop is likely to generate even greater profits abroad in the future. The important question is not how much is earned, but where the money ultimately stays. Lee Sungmin, Professor of Media and Visual Studies at Korea National Open University, noted, "Even if content achieves global success, if long-term profits accumulate on overseas platforms, it is difficult for this to lead to growth for the domestic industry," and added, "For K-pop as well, it is important to build a structure in which copyrights, IP, and production capabilities are accumulated domestically, rather than focusing only on the scale of overseas sales."

Kim Heonsik, a popular culture critic, emphasized, "For K-pop's territorial expansion to have real meaning, it is necessary to move beyond quantitative growth in overseas sales and build a virtuous cycle in which domestic creators and technology companies receive their fair share."

This content was produced with the assistance of AI translation services.