"We Can't Afford to Foster New Artists" 10 Billion Won Per Idol Group Is the Norm... The Crisis Behind K-pop's Global Craze

Ministry of Culture Addresses Music Industry Ecosystem

Production Costs Double or Triple in the Past Five Years

Mid-Sized and Indie Agencies Voice Survival Concerns

Government Discusses Tax Credits and Loans for Music Production

Photo by Getty Images Bank

Although K-pop continues to grow on the surface, the fundamental vitality of its industry ecosystem is rapidly weakening. This is due to soaring production costs and the increasing concentration of resources among major agencies, which are making it nearly impossible for small and indie agencies to discover and develop new intellectual property (IP) talent. In response, the government has decided to provide tangible financial support to enhance the competitiveness of smaller agencies, including introducing tax credits for music production costs and new loan programs.

On July 8, the Ministry of Culture, Sports and Tourism held an on-site roundtable on "Strengthening the Music Industry Ecosystem" at the National Museum of Modern and Contemporary Art in Seoul, presided over by Minister Hwi-young Choi. The event was attended by representatives from small and mid-sized agencies such as Mystic Story, RBW, FNC Entertainment, CAM Withus, EMA, as well as officials from popular music-related associations, who gathered to discuss the structural crisis facing the music industry.

Minister of Culture, Sports and Tourism Hwi-young Choi met with representatives of popular music agencies and related associations on the 8th at the National Museum of Modern and Contemporary Art, Seoul, Jongno-gu, Seoul, to gather opinions on strengthening the music industry ecosystem. Provided by the Ministry of Culture, Sports and Tourism

According to the Ministry of Culture, Sports and Tourism, both sales and exports of popular music in 2025 increased by 15.4% and 32.4%, respectively, compared to the previous year—marking the highest growth rates among all content industry sectors.

However, in contrast to these impressive figures, the mood on the ground is subdued. Minister Choi stated, "The number of rookie artists entering the Circle Chart last year dropped by about 40% compared to the previous year, and the production cost gap between large corporations and small agencies has widened to as much as 30 times. At this rate, there are concerns about how long K-pop's growth can be sustained."

Industry representatives unanimously voiced concerns over the burden of production costs at the meeting. Woo Seunghyun, President of the Korea Popular Music Industry Association, said, "It's a widely accepted view in the industry that it takes 10 billion won to successfully launch a single idol group in the market. Just as having a theater is meaningless without movies to screen, the sustainability of the industry is threatened if the discovery of new, original content dries up."

President Woo proposed introducing a tax deduction for album purchases—similar to those for books and performances—to stimulate consumption. He also suggested that, in the long term, a "Popular Music Promotion Agency" should be established, akin to the Korean Film Council, to serve as a policy control tower. Jo Youngcheol, CEO of Mystic Story, added, "Over the past five years, production costs for albums, videos, and related expenses have surged two to three times," urging that tax credits be extended to the popular music sector as well.

The issue of mid-sized agencies—those that exceed the criteria for small businesses but still face a significant capital gap compared to major agencies—was also raised. Kim Yoosik, CEO of FNC Entertainment, suggested, "Instead of one-off support, we need a system that supports two or three albums for a team over a period of one to two years." There were also calls to revise current support criteria, which are limited to "within three years of debut" without considering industry characteristics such as delayed success ("reverse runs"), to better reflect reality. Kim Jinwoo, CEO of RBW, argued, "The K-pop business requires such massive capital investment that a single failure can make a second attempt nearly impossible," and insisted that K-pop should be included as a primary investment target for government policy funds such as the Korea Growth Fund.

Culture, Sports and Tourism Minister Hwee-Young Choi met with representatives of popular music planning agencies and related associations on the 8th at the National Museum of Modern and Contemporary Art Seoul branch in Jongno-gu, Seoul, to hear their opinions on strengthening the music industry ecosystem. Provided by the Ministry of Culture, Sports and Tourism

Indie and small-scale labels called for expanded funding channels essential for their survival. Kim Baekjun, CEO of EMA, pointed out, "For small labels, advances from distributors are virtually the only way to secure funds," and proposed establishing distribution contract guidelines and creating a dedicated investment track for indies, including loans secured by original IP. Jung Jungoo, CEO of CAM Withus, said, "In the indie ecosystem, the production cost for one idol group could support the creative activities of dozens of teams," and requested that support be expanded from idol-centered acts to a wider range of genres.

The chronic imbalance in performance infrastructure was also highlighted. Park Junseok, President of the Korea Music Label Industry Association, stated, "Last year, most of the approximately 1,700 small concerts with fewer than 300 seats likely operated at a loss." Ko Kiho, President of the Korea Popular Music Performance Industry Association, pointed to the excessive rental fees of large provincial venues and urged local governments to revise related ordinances. He also emphasized the need to improve the current system, where agencies bear all losses in the event of disasters or force majeure, and to establish a dedicated insurance system to protect performance industry workers.

The Ministry of Culture, Sports and Tourism plans to significantly expand next year's support, reflecting feedback from the field. The budget for the recently established "Support for Global Expansion of Small Agencies" program will be nearly doubled, and the ministry is closely coordinating with financial authorities to introduce both tax credits and loan support for music production costs.

Minister Choi also unveiled plans for a mega project led by the Popular Culture Exchange Committee. A detailed blueprint for "Phenomenon," a major K-pop festival jointly organized by the four leading domestic agencies (HYBE, SM, YG, JYP) and scheduled for December 2027, is set to be announced within this month. He expressed hope that "a large-scale K-pop festival will attract overseas fans to Korea and create a variety of associated events across Seoul."

This content was produced with the assistance of AI translation services.