🔗 HYBE Discloses Reply to CEO Min Hee-jin’s Whistleblowing Inquiry: “We Do Not Engage in ‘Album Pushing’” [Full Text]

To CEO Min Hee-jin of ADOR,

First, we express our deep regret that, at such a critical time when ADOR should be dedicating its full efforts toward achieving successful results with NewJeans’ comeback imminent, you have raised one-sided claims through lengthy inquiry letters on two occasions—April 3 and April 16. In particular, the April 16 inquiry raises allegations concerning HYBE’s management that are unrelated to NewJeans and not factual. While such actions were framed as being in NewJeans’ interest, they appear to stem from CEO Min’s hidden intentions or motives. In light of various facts that HYBE has identified while preparing this response, we have become convinced that delivering HYBE’s position as quickly as possible is the best way to protect NewJeans’ precious value, and we respond as follows.

1. HYBE does not engage in so-called “album pushing.”

Labels under HYBE do not engage in album pushing. This has already been communicated to ADOR multiple times by HYBE, and this fact is documented in multiple instances in the SNS conversation records between HYBE CEO Park Ji-won and CEO Min.

Nevertheless, CEO Min has continuously raised groundless suspicions about the album sales of various artists—both inside and outside the company—including SEVENTEEN, TOMORROW X TOGETHER, ENHYPEN, LE SSERAFIM, TWS, ILLIT, IVE, and RIIZE, saying things like “Isn’t this pushing or bulk buying?” whenever their album sales figures were announced. In particular, regarding ILLIT’s recent album sales, ADOR’s VP Lee also recently met with external analysts and repeatedly questioned, “ILLIT’s first-week sales look like pushing. Doesn’t it seem suspicious?” It was confirmed that he continued to repeat his claims even after the analysts responded that it did not appear to be the case.

CEO Min is even claiming that NewJeans “was offered a suggestion for album pushing by HYBE” to justify her claims. However, this was merely part of a candid conversation, and as we have stated before, we have officially explained multiple times that “album pushing” does not exist, and HYBE operates its business with a clear principle of “not engaging in album pushing for the purpose of competing for first-week sales records.”

To respond to the issues raised this time, HYBE conducted a comprehensive investigation of all albums sold last year, including whether there were any returns through album pushing. We transparently share the findings.

First, in 2023, HYBE artists released 17 new albums and sold a total of 43.6 million copies (including approximately 10 million older catalog albums). This investigation revealed that there were returns totaling 140,000 copies—70,000 copies each for 2 previous albums—which represents 0.32% of total album sales. The year 2023, when this occurred, was a year when album sales fluctuated significantly. Given the favorable album sales at the time, demand forecasts were adjusted upward, but as market conditions changed, forecast errors inevitably became higher than in the past. During this process, returns for the two albums mentioned above were processed after a staff member permitted return conditions that were not specified in the contract. However, immediately after confirming this return transaction, the company strengthened internal controls to make it impossible to verbally agree to returns outside of established principles, and we have confirmed that no additional returns have occurred since then.

ADOR itself also took an optimistic view of market conditions when releasing NewJeans’ 2nd EP ‘Get Up’ and intended to produce 3.5 million copies, but currently 1.61 million copies remain in our inventory. As such, volatility in business conditions and unpredictability in demand forecasting are unavoidable realities in the entertainment industry, no matter how hard one tries.

CEO Min defined album pushing in her statement sent to us as “unfair practices of artificially inflating sales during the first week of release, i.e., ‘first-week sales,’ by using distributors or overseas subsidiaries to place large orders or hastily organizing fan events to inflate sales figures.” However, this definition would mean that NewJeans’ 2nd EP ‘Get Up’ sales activities constitute album pushing.

Japan distributor UMJ initially expressed reluctance to purchase more than 90,000 copies of the album, but through subsequent discussions in which ADOR also participated, an additional 60,000 copies were added for a total sale of 150,000 copies to UMJ, which could constitute a large order by ADOR. As a result of this order, inventory currently stuck at the distributor amounts to 110,000 copies. Additionally, to help move some of the increased volume, ADOR held an additional fan signing event on August 20, 2023, with all NewJeans members participating, which could constitute a hastily organized fan event.

Such activities fall under sales promotional activities. The argument that it is legitimate when NewJeans does it but album pushing when other artists do it is not persuasive.

HYBE rather expresses serious concern about the actions and intentions of your side in raising the issue of “album pushing”—a topic easily misunderstood by others—without proper verification. If you genuinely believed that album pushing exists within HYBE and is a major problem in the K-pop market, you should have first conducted sufficient fact-checking.

2. The contract with UMG benefits everyone.

The contract with UMG is a valuable achievement obtained after long and arduous strategic negotiations to maximize the interests of HYBE, its artists, Weverse, and the broader community. UMG has recognized the status derived from BTS, artists under HYBE’s domestic labels, artists under HYBE Japan’s labels, artists under HYBE America’s BMLG, QC Media, and others, as well as the vast catalog they possess. We believe you are well aware that the rates were determined at a level that could never be negotiated with distribution volumes from individual labels alone.

Through this contract, HYBE’s domestic, Japanese, and American labels will achieve significant distribution fee savings. ADOR will also benefit from these distribution fee savings starting immediately with albums and digital releases in 2024. The estimated distribution fee savings for ADOR this year through this contract is close to 5% of related revenue, with significant profitability improvement expected.

Nevertheless, CEO Min claims that this contract has cost NewJeans the opportunity to pay even lower distribution fees in the future, but the only basis for this is the nonsensical argument that NewJeans lost the opportunity to negotiate better fee terms with overseas distributors based on NewJeans’ unrealized future value and future bargaining power. We are curious about how individual labels could achieve terms more favorable than HYBE’s current contract with UMG, and what evidence supports such a claim.

3. ADOR is already enjoying significant benefits from the advancement of label operations.

NewJeans was able to meet with the CEO and executives of *** headquarters, the world’s top sports brand, even during their trainee days before debut, which later led to a modeling deal. This was only possible because HYBE, which operates a multi-label system, provided special support and investment to NewJeans even before their debut. This is precisely the result of advanced label operations.

At the time of NewJeans’ debut, even when activities by Korean artists in China were very strictly restricted, HYBE secured a special debut promotion for NewJeans on China’s largest music streaming site. This is another example where NewJeans alone benefited from HYBE’s multi-label system achievements. Additionally, it was HYBE’s multi-label operational capabilities that enabled NewJeans, only in their first year after debut, to perform at Lollapalooza Chicago in August 2023. In preparing for the actual performance, we deployed key personnel from our concert production studio to support NewJeans with all our might so they could deliver the best stage possible. Furthermore, when producing the 2nd mini album, the management diagnosis team actively assisted with the procurement process, ultimately resulting in cost savings of 1 billion won and an increase in ADOR’s operating profit.

As such, we ask CEO Min to stop her contradictory and hypocritical attitude of fully enjoying the real benefits and efficiencies that the multi-label system provides while disparaging colleagues she works with.

CEO Min has unilaterally claimed regarding the contract between a Source Music artist and a luxury brand that “since the network used for solicitation was one learned through the NewJeans member’s ambassador contract process, ADOR’s understanding should have been sought in advance.” However, the contract between that brand and Source Music naturally led to a contract after a friendly relationship was formed when the artist attended the brand’s fashion show. Additionally, before NewJeans’ Hyein signed as a global ambassador with that brand, BTS’ j-hope had already signed, and before that, BTS as a group had been the world’s first group global ambassadors. By the same logic, ADOR should also have sought understanding from BIGHIT MUSIC (j-hope/BTS), who had already signed an ambassador contract before ADOR’s contract with that brand.

Above all, it is incomprehensible for a label to take issue with strategic decisions regarding the parent company’s new business ventures. A company’s new business ventures are made according to mid-to-long-term growth strategies. Countless other growing companies are investing for the future, and HYBE is no different. HYBE today is also the result of continuous strategy formulation and investment for the future. ADOR and NewJeans are also products of such growth strategies and investment. It is inappropriate to recklessly criticize decisions made for long-term investment and results from a position of not knowing the specific details of the business and bearing no responsibility.

4. Shared Services provides services without discrimination among labels.

Your side has raised suspicions about the fact that the press release date announcing the partnership with UMG coincided with the press release for NewJeans’ Tokyo Dome fan meeting. Press releases with overseas partners are international commitments that are coordinated and executed in advance considering various circumstances on both sides, including time zones and market regulations. On that day alone, 9 press releases were distributed. This means there were 7 more press releases from other labels and other artists. However, no label makes the absurd claim, like CEO Min, that “important materials were released on the same day to undermine our label’s achievements.”

Our communications organization wrote and distributed 273 press releases for NewJeans alone over the past year. Compared to BIGHIT MUSIC’s 659 releases for 8 teams active as both groups and individuals including BTS, and Pledis Entertainment’s 365 releases for 4 teams including SEVENTEEN, it is difficult to claim that “only NewJeans’ PR is being neglected.” Our PR does its best to promote all labels and artists without discrimination.

The claim that NewJeans’ growth was not mentioned in IR/press releases also stems from CEO Min’s insistence on emphasizing only ADOR’s performance. Performance information must be provided in a balanced manner based on numbers. Of course, NewJeans and ADOR have achieved noteworthy growth, but it is also an undeniable fact that there are several teams, including BTS and SEVENTEEN, that show much higher revenue contribution than NewJeans. By CEO Min’s standards, these groups should have been mentioned even more prominently. Nevertheless, CEO Min has made one-sided, unreasonable modification requests, and our PR eventually accommodated some of your side’s demands.

Our legal organization supported ADOR with a total of 655 contract and advisory review cases in 2023. Considering that BIGHIT MUSIC handled 888 cases and Pledis Entertainment handled 770 cases during the same period, the level of service our legal organization provided to ADOR was by no means small. Furthermore, in ADOR’s case, beyond typical tasks such as filing lawsuits against malicious commenters targeting artists, we have very actively supported tasks including lawsuits against malicious commenters targeting CEO Min personally, various defamation lawsuits, and correction requests to media outlets. No other label within HYBE—nor any individual—has ever received such extensive support from the legal organization.

Industry trend reports are internal documents that collect and analyze qualitative responses and issues from consumers beyond quantitative indicators like chart performance, and then propose improvement suggestions. They are not materials that represent HYBE’s position or evaluation of artists. How each label receives and uses this material is entirely left to each label’s discretion. Because of the nature of this report, it can contain very diverse opinions, and sometimes areas for improvement are included without reservation—that is the reason this report exists. Rather, if only reports full of constant praise would be satisfactory, we would like to ask how such analytical materials would help ADOR’s development. Despite this purpose, after CEO Min requested early last year to “please not review (evaluate) (NewJeans’) content (music, performance, music videos, etc.),” qualitative evaluation content about NewJeans has not been included. After she again requested that content about NewJeans be completely removed, since then they have not been included in trend compilation or qualitative evaluation at all.

5. We cannot agree with the ethical and other issues raised.

The claims of ILLIT similarity controversy commit the fallacy of using parts to represent the whole. We express regret that CEO Min, who is recognized as something of an expert in the entertainment field, is claiming plagiarism based on internet posts.

Nevertheless, before responding to your side’s issues, we reviewed all internal documents produced at BELIFT LAB and confirmed that there was absolutely no intention to imitate NewJeans. Most of your side’s claims are based on the fact that there are opinions discussing similarities on the internet. However, similarity cannot be established solely by internet claims. By that standard, claims about NewJeans’ ‘Cookie’ lyrics controversy or the kalguksu-related controversy could also be considered true. We believe CEO Min knows better than anyone that while countless stories can freely circulate on the internet, not all of them guarantee facts.

We have never even considered marketing activities that mention or compare NewJeans. If you check the press releases distributed by us during ILLIT’s debut process, you can quickly confirm that not only NewJeans but no other senior artists’ names were used in ILLIT marketing. Comparison marketing with senior artists is thus a kind of taboo within HYBE.

There has been exactly one case in HYBE PR history where this taboo was broken. It was ADOR. In March 2023, when NewJeans’ ‘Ditto’ recorded the most cumulative No. 1s on the Melon daily chart, ADOR VP Shin strongly demanded that HYBE PR explicitly include the comparative phrase “a record surpassing BTS.” The staff’s repeated attempts to dissuade and persuade escalated into a very unseemly argument, but ADOR did not budge on its insistence that the phrase be included, and ultimately the press release included the phrase “This is a record that surpasses BTS’ mega-hit ‘Dynamite’ (75 times).” Subsequently, many articles were published with this as the title (NewJeans Surpasses BTS).

Nevertheless, CEO Min repeatedly claims that HYBE is imitating NewJeans and exploiting their buzz. We would rather like to ask CEO Min: CEO Min has recently made statements without hesitation such as “RIIZE, TWS, ILLIT are all copying NewJeans.” Does ADOR really think all rookies who debuted after NewJeans are imitations of NewJeans? Additionally, CEO Min has made statements to those around her multiple times since joining HYBE that BTS is also a team made by copying her. We are curious whether she truly believes that to be true and whether that belief remains unchanged.

Recently, CEO Min’s associate VP Lee called the editor-in-chief of a certain media outlet late at night to complain about an article titled “Rookie girl group ILLIT surpasses NewJeans’ achievements,” and HYBE’s PR department had to clean up the mess. Moreover, CEO Min’s side has repeatedly demanded that PR correct the title and article, even for news articles—not press releases—written based on objective performance figures comparing ILLIT and NewJeans.

Demanding that NewJeans’ achievements be publicized even if it means breaking internal taboos, while taking issue with media’s own coverage based on figures about achievements surpassing NewJeans through impulsive behavior—this is an attitude that lacks consistency and fails to maintain common sense.

CEO Min is also making false claims about the separation process from Source Music based on her characteristically distorted interpretive framework. NewJeans not becoming HYBE’s first girl group was not because HYBE did not keep its promise. At the time, CEO Min requested to take full responsibility and create the team herself, and strongly insisted on debuting them under her own separate label. HYBE respected CEO Min’s opinion and, despite Source Music’s objection, transferred these members to ADOR and even provided substantial funding of 16 billion won to enable CEO Min to debut NewJeans in the way she wanted. During this process, NewJeans’ debut schedule was inevitably delayed—independent of HYBE’s intentions—due to the need to split the company and transfer contracts.

CEO Min herself has even publicly stated this process. In an interview with a media outlet published on March 24, 2022, CEO Min said that the girl group project was proceeding under her own plan and directly announced Q3 2022 as the launch timing herself. She even answered, “A hasty debut would inevitably place a great burden on the young members. Because I don’t want to rush everyone, I set Q3 2022 as a reasonable launch timing.” Additionally, this interview by CEO Min was published two months before LE SSERAFIM’s debut (May 2, 2022), showing that CEO Min already had sufficient time to promote the new girl group.

As such, CEO Min’s claims about the separation process from Source Music differ greatly from the understanding of members who know well how much full support and concession Source Music and HYBE provided for ADOR’s success.

We respond as above to the email sent by CEO Min and convey our strong regret as follows:

First, we would like to ask about the intention behind sending a complaint-style email collecting matters that could have been sufficiently understood through internal communication, making it seem as if there are serious problems with HYBE’s multi-label system.

Given the important timing with NewJeans’ comeback new album and Tokyo Dome performance approaching, we believed that protecting NewJeans’ IP was the most important value and intended to accept CEO Min’s current claims as yet another tantrum and unreasonable demand and respond sincerely. However, as we continue to identify circumstances indicating that CEO Min’s complaints are being used as a full-scale means toward the goal of ADOR management seizing label management rights, and that CEO Min’s business execution and decision-making methods have serious defects unbecoming of a normal business executive, we believe we have no choice but to respond firmly.

In fact, CEO Min has continuously nitpicked at HYBE, raised issues, and expressed complaints while showing behavior of building justification to seize ADOR’s management rights.

Despite enjoying the benefits of having Source Music cast trainees who were then trained at HYBE T&D, receiving capital and talent to establish a company, and receiving substantial support for successful artist activities, she has repeatedly made demands beyond common sense and, when they were met, expressed yet another new complaint.

Compensation issues are no exception. Despite having compensation terms agreed upon at the time of ADOR’s establishment, CEO Min demanded additional compensation after NewJeans’ debut, and after much deliberation, HYBE sold 20% equity to CEO Min and others, creating a structure where ADOR’s management could own and operate shares of the company and providing additional compensation by granting put options. Even though she is already guaranteed the highest level of compensation among all HYBE members, CEO Min has continued to demand additional compensation and, in last month’s performance negotiations, poured out curses and near-invective too obscene to repeat while stating she would not accept unless she was paid three times HYBE CEO’s performance bonus, without any basis.

While continuing such unreasonable compensation demands and pressuring HYBE, CEO Min and other ADOR executives have been continuously reviewing and exploring how to make HYBE sell its ADOR shares regardless of major shareholder HYBE’s wishes, and how to recruit outside investors. This clearly demonstrates the intent and will to secretly steal management rights from the major shareholder as a minority shareholder. We cannot help but suspect malicious intentions behind sending an email internally raising sudden unreasonable issues while secretly engaging in such activities externally.

Once again, we convey our deep regret that your side has raised one-sided claims that differ from the facts, and we inform you that we will take all necessary legal measures against those involved regarding the attempted illegal seizure of management rights.