South Korean popstar RAIN (Chung, Ji-hoon) and his ex-agency JYP Entertainment had lost their lawsuit in Hawaiian District Court brought by a local promoter, Click Entertainment, alleging Rain’s last-minute cancellation of Honolulu concert in 2007 cost them $1.5 million and caused damage to the company’s reputation.

A couple of days ago, the court found in Click’s favour, ruling that Rain and JYP were guilty of both breach of contract and fraud.  Nearly $5 million of the damages payment are punitive, with Rain himself and JYP ordered to pay half each.

It is reported that Rain has testified he didn’t know why the concert had been cancelled and the cancellation was out of his control.

I think many people, especially outside of Korea, wonder how the singer, the performer himself, couldn’t know the reason of the cancellation and how he could say it was “out of his control”.  In this regard, I think people should know more about Korean music business to understand Rain’s comment.

In Korea, almost every singers and bands are under exclusive contracts with certain entertainment entrepreneurs, called “Ghi-Hoek-Sa”, which is the mixture of agencies and management companies, yes, they’re doing both of jobs in Korea.  The problem is the contract between the singers and the entrepreneur is being criticized as very unfavorable to the singers.  For example, the term of the contract is very long, sometimes 10 to 20 years.  If the singer wants to move to other entrepreneurs, the contract requires the singer to pay huge amount of money as a penalty.  Moreover most of singer’s activities including sound recording and concert performance is under control of the entrepreneur.  That is why many people in Korea call the contract as a slavery contract.

Some people, however, object to that kind of argument.  Instead, they argue the entrepreneurs has poured enormous investment to the singer and certain clauses in the contract such as long-term period and penalty clauses should be understood as the means to secure their money back.

Serious controversy is still going on in Korea regarding which side of arguments is right, although the court has been ceaselessly ruled in favor of the singers and declared the invalidity of the contract.

Also, in Korean music business, it is quite usual for the singer and the entrepreneur to sell their right to the performing in concert to other company.  And the company sells the right once again to another company.  It can be repeated again and again.  By reason of this, the singer is having difficulty in controlling the concert performance even though he is the main performer.  Some companies even sell the right at a cheap price to unverified and incompetent companies.  That’s why so many disputes between singers and local promoters has been provoked in Korea.

Thankfully, many foreign people are showing their enthusiasm for Korean entertainment figures, calling it “Hallyu”.  However, unfortunately, it seems there are still uncleared and unstable legal issues, as we’ve seen above, which hold good Korean entertainment contents from developing into a legally secured entertainment business in Korea.

© 2009 Wonil Chung, a Korean entertainment lawyer / Chung & Partners, a Korean Business Law Firm.  All rights reserved. Some copyrights, photos, icons, trademarks, trade dress, or other commercial symbols that appear on this post are the property of the respective owners.