Berliner Boersenzeitung - Five things to know about NewJeans' shock split from agency

Here are five things to know on the row, what this means for the multi-billion-dollar industry and what is next for the group.

- Who are they? -

NewJeans made its debut in 2022 and have five members -- Haerin, Danielle, Hanni, Minji and Hyein -- who are all under 20.

They are among the South Korean entertainment powerhouse HYBE's most successful K-pop groups along with BTS.

The group has topped global charts, including the Billboard 200, and broke the Guinness World Record last year for "Fastest K-pop act to reach 1 billion streams on Spotify".

NewJeans' producer is Min Hee-jin, a creative director widely regarded as one of the most successful in the K-pop scene, having worked with stars such as Girls' Generation, EXO and SHINee, among others.

- What happened? -

The saga began in April, when HYBE attempted to push Min, who was then CEO of subsidiary ADOR, out.

The company accused the producer of breach of trust, but the move sparked a sprawling legal and PR battle with Min accusing HYBE in turn of copying her star-making formula for a competing girl band.

After being dismissed as CEO in August, Min resigned last week from ADOR's board of directors citing a "hellish dispute with HYBE" and vowed legal action against the company.

Voicing solidarity with Min, the group sent an ultimatum to HYBE demanding her reinstatement.

In the throes of the crisis, one of the group's members Hanni gave a tearful testimony to South Korean lawmakers overseeing workplace conditions and safety, saying they had been subject to workplace bullying.

In a late-night press conference on Thursday, the group finally announced the end of their contract with ADOR.

But ADOR insisted that their contract "remains in full effect" and therefore, they "respectfully request that the group continue its collaboration with ADOR on upcoming activities, as has been the practice to date".

- Is this an isolated case in K-pop?

"Historically, the contractual relationship between agencies and group members has repeatedly caused problems over the years," Lee Dong-yeon, a professor at the Korea National University of Arts told AFP.

In 2009, the iconic boy band TVXQ shocked the industry with legal action against their label over their 13-year contract which they likened to a "slave contract" due to excessive working hours and unfair profit distribution.

Recently, in 2023, some members of FIFTY FIFTY sought to suspend their contracts, citing a lack of financial transparency and health neglect.

Kim Jin-gak, a professor at Sungshin Women's University, said the NewJeans case "seems to have arisen because the parent company tried to exert too much control.

"While it may not significantly impact the entire K-pop industry, I believe it could lead to some changes in the way K-pop operations are managed."

- What's next? -

The legal battles will continue, and "the process is expected to take a long time," said lawyer Kim Tae-yeon.

"Given the additional complexities in this case, it could take two to three years or more if it goes to litigation," she added.

The biggest legal issue would be whether or not the girl band would have to face a contractual penalty, which experts predict could amount up to 620 billion won ($440 million).

"If the court finds that the company is at fault, as NewJeans claims, and that NewJeans did nothing wrong, they could defend themselves against any penalties," said Kim.

HYBE's share price was down five percent in early trading Friday.

The market has however already priced the incident in, and penalties will "result in an insignificant amount of financial loss for HYBE," Lim Soo-jin, an analyst at Daishin Securities told AFP.

- Will NewJeans continue in the meantime? -

For now, NewJeans is no more. Or at least, the name may have to go because the label has exclusive rights over it.

But Danielle, one of the group's members, said they will keep fighting to be able to continue to make music together.

"We really wish to be able to release new music for Bunnies next year as soon as possible ... and we really hope that we have the opportunity to meet you guys from all around the world," she said, referring to the name for their fandom.

"Regardless of our name, just remember that NewJeans never dies."

(L.Kaufmann--BBZ)