[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 enormous revenue overseas. However, that money does not all remain in Korea. As the K-pop stage has expanded globally and sales have grown, the profit structure has become increasingly complex.

HYBE posted record sales of 2.6499 trillion won in 2025. Of this, concert sales amounted to 763.9 billion won. The company held 279 global concerts in various countries. However, operating profit dropped significantly. In the same year, operating profit was 49.9 billion won, a decrease of about 73% compared to the previous year. This was due to costs associated with the debut of new artists and restructuring expenses. Sales increased, but profits did not keep pace—a 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 so are the costs. Local staffing, publicity, legal, and accounting operating costs come first. This makes it difficult for money earned overseas to flow directly back to headquarters.

The second reason is touring expenses. Concerts generate a lot of revenue, but they also incur significant costs. Venue rental fees are substantial. Stage equipment, sound, lighting, and transportation costs are added on. Local promoter commissions, insurance premiums, and security costs are also required. When the travel expenses for artists and staff are included, the total expenditure grows even larger. High ticket sales do not automatically guarantee high net profit.

Taxation is another burden. Overseas concert income is subject to local tax laws. The U.S. Internal Revenue Service (IRS), for instance, in principle imposes a 30% withholding tax on payments to foreign artists and athletes. While the actual tax burden can vary through arrangements like the Central Withholding Agreement (CWA), taxes and settlements are significant variables in overseas performances.

Exchange rates and settlement time differences are also factors. Overseas concert income is generated in local currencies. Settlement takes time, and if exchange rates fluctuate, profit in won terms can change as well. As funds pass through local subsidiaries, promoters, platforms, and payment service providers, the actual amount that remains decreases. The same goes for platforms. Attracting fans comes with costs, as servers and payment systems must be maintained. Live broadcasts, subtitles, community management, and product delivery are also necessary. While platforms provide a long-term foundation, they are not devices for immediate profit growth.

The problem is a lack of statistics. The Korea Culture & Tourism Institute (KCTI) pointed out in its report on K-pop overseas sales trends that there is a shortage of relevant domestic research. While reports on overseas popularity are abundant, comprehensive data on total sales and growth rates are limited. More detailed statistics are needed to track the flow of money. Oh Sijin, Deputy Senior Analyst of the Data Analysis Team at KCTI, emphasized, "We must continue to pay attention to the rapid growth of K-pop's overseas sales," and added, "What matters now is raising the quality of that growth."

K-pop globalization cannot be viewed negatively. Overseas subsidiaries and local investment are expenses required to enter larger markets. To reach local fans, spending locally is unavoidable. The key issue is how much of the results flow back into the domestic industry. It is essential to connect this to domestic creators, studios, platform technology, and copyright revenue. Otherwise, K-pop may grow, but Korea's share of the industry could shrink. An official at a major entertainment agency explained, "As concert exports grow, their impact must return to the domestic production ecosystem. The profit made on stage must translate into growth for the industry behind the scenes."

There are three solutions. First, overseas sales statistics must be meticulously compiled. Only by analyzing sales from concerts, streaming, platforms, and merchandise separately can effective policies be made. Second, more copyright and production capabilities must be retained domestically. When key rights are kept by domestic creators, the results accumulate as assets. It is also crucial to maintain leadership in platforms and intellectual property (IP).

The government is also moving in this direction. In its 2026 work report, the Ministry of Culture, Sports and Tourism announced plans to establish a customized growth strategy. The idea is to link production, investment, and distribution into one system and enhance competitiveness. However, policy speed must keep pace with the market. Companies are already producing and settling overseas. Accounting, tax, and copyright support systems suitable for globalized K-pop must be redesigned.

K-pop is likely to generate even greater revenue from abroad in the future. The important question is not how much is earned, but where it remains. Lee Sungmin, Professor of Media & Visual Studies at Korea National Open University, stated, "Even if globally successful content is created, if long-term profits are accumulated on overseas platforms, it is difficult for this to translate into growth for the domestic industry. For K-pop, too, it is crucial to establish a structure where copyright, IP, and production capabilities are accumulated domestically, rather than focusing solely on the size of overseas sales."

Popular culture critic Kim Heonsik emphasized, "Beyond the quantitative growth of overseas sales, K-pop's true expansion of territory will only have real meaning if a virtuous cycle is established in which domestic creators and technology companies receive their fair share."

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