K-Pop

Knowing Stock Price Would Increase, Why Did YG Still Agree With BLACKPINK’s Half-contract Renewal?

BLACKPINK finally signed a group contract with YG four months after the expiry of their old exclusive contracts in August

YG officially announced the successful contract renewal of BLACKPINK on December 6th. The agency said, “With YG’s full support, BLACKPINK plans to repay the love of global fans with many activities in the future”.

Following the news of BLACKPINK’s contract renewal, YG’s stock price soared to 29%. As of 2 p.m., it was trading at 60,100 won on the KOSDAQ market, recording an increase of 12,100 won (25.21%) compared to the previous day. YG’s market capitalization also increased by 241.1 billion won to 1.1264 trillion won within a day. In short, YG’s corporate value has regained stability as they already solved the most important problem. 

However, fans are still not happy wholeheartedly because YG has limited the scope of BLACKPINK’s exclusive contract to “group activities”. In other words, the company will only manage the members when they promote as a group, not including individual activities. Although YG emphasized strong trust, many people in the entertainment industry still consider this a half-contract renewal.

Group activities are limited to album releases, concerts, and MD sales under the name of BLACKPINK, and revenue generated from each member’s individual activities is not related to YG. For example, if Jennie shoots an advertisement or Lisa releases a solo album, their profits are not shared with YG.

Moreover, details, such as the period of the new contract and their profit distribution ratio are also not disclosed. A contract renewal normally lasts for 3 years on average, but some people believe that BLACKPINK’s contract may be only 1-2 years since it took a long time for YG to reach an agreement with the members. 

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Also, it is highly likely that the profit distribution ratio has been adjusted to allow the members to receive shares at an absolute level. An official in the entertainment industry said, “For YG, keeping BLACKPINK, in terms of image and symbolism, was more important than the profit distribution ratio issue. Therefore, the company is seemingly relieved as they finally had the members sign with them again.”

It is unclear how much BLACKPINK will contribute to YG’s future considering the number and frequency of their album releases and promotions during the past seven years. It is difficult to make a prediction but based on YG’s unusual schedule, BLACKPINK will release at most two albums under YG during their new contract period.

Nevertheless, BLACKPINK’s successful contract renewal is meaningful because we can continue looking forward to new songs and performances by BLACKPINK. YG will also be able to accompany BLACKPINK, their biggest IP and achievement, in this second chapter of their career.

Source: Daum

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