SM hands over album and digital music distribution exclusively to Kakao, plans to co-produce a global K-pop group

SM and Kakao have reportedly decided to join forces to produce a global K-pop group. 

SM Entertainment has reportedly decided to join forces with “IT giant” Kakao Entertainment to deal with HYBE’s attempt to take over the company. SM’s album and digital music distribution has also been confirmed to be exclusively handed over to Kakao.

sm kakao

According to the investment bank (IB) as well as music industry insiders, SM and Kakao signed a business cooperation contract on February 7. The two sides have agreed on terms related to capital increase, issuing convertible bonds and purchase of shares.

SM has decided to give Kakao the exclusive rights to distribute the SM artists’ physical albums and digital music in Korea, and also cooperate with Kakao (including its subsidiaries) to distribute albums and digital music overseas.

Currently, the distribution of music and albums of SM artists is by Dreamus, the company SM has shares in. Kakao is responsible for distributing digital music and albums of artists such as IVE, IU, MONSTA X, STAYC…

In addition, it is reported that SM also decided to cooperate to distribute tickets for concerts and fan meetings in Korea of SM artists through Kakao.

Previously, on February 21, SM announced that it would remove the “limit on the number of concerts per year” under its previous exclusive contract with Dreammaker, in which Lee Soo Man has shares in. This will help increase the number of concerts for each SM artist by 20 times. If this plan is implemented, the total number of SM concerts annually could reach more than 400 times.

Notably, Kakao will take over the operation of Seoul Arena, a new concert venue located in inner Seoul. It is expected that the concerts of SM artists will be held here when Kakao confirms the acquisition of SM’s shares.

SM and Kakao have decided to establish a joint venture and will hold a global audition to discuss plans to co-produce a global K-pop group.

SM announced plans to partner with Kakao via YouTube the day before, saying, “In the global strategy, the business scope will be enhanced through the global platforms Kakao has built, with operating mergers or establishing joint ventures in key regions”.

In this regard, SM and Kakao are said to be particularly interested in the American market. The North American – South American market including the US is the largest music market in the world and also where SM’s competitor, HYBE, has built a solid distribution network thanks to the success of BTS.

Source: SM ent

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