▲ This undated file photo shows K-pop albums on display. The photo is not intended to specify any particular artist. (Yonhap)

 

SEOUL, July 15 (Yonhap) -- South Korea’s album export revenue has turned negative for the first time in nine years in the first half of 2024. The overall K-pop album sales also decreased compared to the same period last year, leading to speculation that the ‘album inflation’ seen in recent years might be deflating.

 

◇ Unusual ‘Negative Growth’ in the K-Pop Market in the First Half of the Year

 

According to the Korea Customs Service’s import and export trade statistics released on the 15th, album export revenue (HS Code 8523.49.1040) for January to June 2024 was $130.32 million (₩179.4 billion), a 2.0% decrease compared to the same period last year. This marks the first decline in album export revenue in the first half of the year since 2015.

 

From 2014 to 2015, album export revenue fell from $13.73 million (₩19 billion) to $12.77 million (₩17.6 billion), a 7.0% drop. However, since then, driven by the Hallyu wave, the revenue consistently grew, reaching $132.97 million (₩183 billion) last year.

 

For the first half of this year, Japan led the revenue with $46.93 million (₩64.8 billion), followed by the United States with $30.45 million (₩42.1 billion) and China with $18.40 million (₩25.4 billion). Taiwan, Germany, Hong Kong, Canada, the Netherlands, the UK, and France also made it to the top 10 export destinations.

 

Another indicator of the K-pop market’s scale, total album sales, also showed a decrease. According to Jin-Woo Kim, Senior Researcher at Circle Chart, the cumulative album sales for the top 400 albums from January to June this year was approximately 47.6 million copies, a decrease of about 8 million copies compared to the same period last year.

 

Many major K-pop artists have recorded lower album sales compared to their previous releases. Comparing the first-week sales of current albums to their predecessors shows a decline for artists like SEVENTEEN, ZEROBASEONE, BTS’s RM, IVE, and Red Velvet. Although AESPA saw a slight increase, they did not surpass the 1.7 million copies sold for their third mini-album last year. It should be noted that SEVENTEEN’s latest album was a best-of compilation with fewer new tracks, and RM’s military service limited his promotional activities.

 

▲ ▲ This undated file photo shows K-pop albums on display. The photo is not intended to specify any particular artist. (Yonhap)

 

◇ Are Fans Exhausted by the Sales Competition? The Chinese Market Remains ‘Frozen’

 

Some in the music industry interpret the current situation as a correction from the overheated album sales competition of recent years. Researcher Kim Jin-Woo stated, “The competition for first-week album sales among idols last year was more intense than ever. The pressure on production companies and fans to match or surpass previous sales led to market overheating through strategies like ‘push-through’ or ‘infinite fan signings.’ This bubble has started to burst this year.”

 

To boost album sales, K-pop agencies have used promotional strategies like varying album jacket images or including different photo cards and posters, increasing the number of versions of the same album. Some groups released up to 20 different versions of a single album this year. Billboard recently highlighted K-pop artists alongside Taylor Swift’s example of releasing 14 album variants, noting that such strategies helped artists achieve high Billboard 200 rankings despite many fans lacking CD players.

 

An industry insider said, “While there was no drop in musical quality, there were discussions about the end of album inflation. Fans are diversifying their consumption of music-related content beyond just buying albums, including online content, merchandise, and concerts.”

 

Another reason for the decline is the continued ‘frozen’ state of the Chinese market, a significant player in the K-pop industry. Album export revenue to China fell by 18.7% compared to last year, significantly affecting the overall 2.0% decline in album export revenue.

 

◇ Declining Stock Prices for Major Entertainment Companies… Annual Album Sales Projected Around 100 Million

 

With the drop in album sales, stock prices for major listed entertainment companies are also struggling. As of the 12th, the stock prices for HYBE and JYP were ₩189,700 and ₩57,500, respectively, down from ₩213,000 (HYBE) and ₩64,900 (JYP) three months ago.

 

Hwan-Wook Lee, a researcher at Yuanta Securities, forecasted that the second-quarter performance of major entertainment companies would fall short of market expectations due to increased new business marketing costs and delays in Japanese performance revenues.

 

The K-pop industry does not anticipate a dramatic rebound in the second half of the year without significant changes but does not foresee a complete market collapse. Another industry source said, “The latter half of the year will likely be similar to the first half. Although the drop due to the Chinese market is hard to recover from, overseas concerts and other activities should help the companies recover their revenues.”

 

Kim Jin-Woo concluded, “If we view the K-pop market as merely a bubble, we might expect annual sales to drop to around 80 million copies, but that is unlikely to happen. The K-pop market will not collapse; while there was a bubble, steady global fandom growth will likely keep annual sales around 100 million copies.”

 

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