Risienne Shines After Two Years... Small Agencies Lack the Funds to Survive

Funding Gap in Content Industry Reaches Up to KRW 2.3407 Trillion
Production Cost Gap Between Large and Small Companies at 29 Times
45% of Idols Drop Out Within 3 Years of Debut
Government Expands Funds to Attract Private Capital
Copyr

Lisene. Provided by The Muse Entertainment

While K-content is surging in the global market, the financial support needed to nurture the next generation of stars and productions is quickly running dry. The annual funding gap for domestic content companies now exceeds 2 trillion won. There is a growing call to expand the private investment market—leveraging copyrights and intellectual property (IP)—so that creators and production companies can survive until they prove the commercial viability of their works.

According to the Korea Creative Content Agency and others on August 19, 2025, domestic music industry sales grew by 15.8% year-on-year, while exports rose by 32.4%. However, the investment gap between major agencies and small-to-medium production companies is widening. In 2023, the average annual music production cost for large corporations was 43.11 billion won, approximately 29 times higher than the 1.49 billion won for small businesses. For overseas performances, large enterprises averaged 83.4 per year, while small companies managed only 4.

The case of the girl group Lisene illustrates the reality faced by small production firms. Their August 2024 release, “Love Attack,” climbed to the top of Melon’s “Top 100” last month, nearly two years after its debut, and their remake “Pretty Girl” also won first place on a music broadcast. If investment had stopped based solely on their initial results, such a turnaround would have been impossible. Their agency, The Muse Entertainment, posted an operating loss of approximately 5.6 billion won last year and became capital impaired.

For rookie groups to become profitable, years of investment in trainee education, album and music video production, and marketing are required. Jinwoo Kim, CEO of RBW, said at a Ministry of Culture, Sports, and Tourism meeting last month, “If you spend 1.5 billion won per album and release one or two a year, you need about 10 billion won over three years.” He emphasized the need for opportunities to disperse such risk.

Large agencies can absorb the underperformance of some artists through profits from other business lines, but smaller agencies find it difficult to produce the next album if initial results are lacking. The ability of a company to survive is determined less by an artist’s potential and more by the agency’s financial strength.

Professor Jeongseop Kim of Sungshin Women’s University analyzed 1,182 K-pop idol teams that debuted between 1996 and 2025 and found that only 55.03% were still active three years after debut. The dropout rate was about 63% within five years and about 82% within ten years. For small and medium-sized agencies, the so-called “seven-year curse” is now more like a “one to three-year curse.”

Funding challenges are not unique to K-pop. The Korea Creative Content Agency estimates that in 2024, the domestic content industry faced a funding gap of at least 1.6348 trillion won. Including companies that secured only part of their needed funds, this number rises to 2.3407 trillion won.

Content companies grow based on intangible assets such as copyrights, IP, creator capabilities, and fandom. However, the financial sector mainly assesses companies based on collateral, credit ratings, and past performance. This is why, even with good ideas, creators often hit a funding wall before they can turn concepts into actual works.

This year, the government is working to create a 731.8 billion won content policy fund. The Ministry of Culture, Sports and Tourism and the Financial Services Commission also announced a “K-Culture Value-Up Fund” worth 150 billion won last month. Policy financing can serve as a safety net to address market failures, but there are limits to sustaining the entire industry with government money alone.

As an alternative, “cultural finance”—where the future earnings of copyrights and IP are converted into investment assets—has come to the fore. Production companies obtain funds from private investors and share content profits with them. If returned capital is reinvested in rookies and new projects, the industry can achieve virtuous growth.

In Korea, Musicow connects music IP with the financial market by issuing and trading beneficial securities based on music copyright royalties. Investors receive a share of copyright royalties according to their holdings, while creators and rights holders can securitize future royalties to fund new productions.

The Korea Music Copyright Association’s copyright royalty collections increased from 406.5 billion won in 2023 to 445.3 billion won last year. The Korea Intellectual Property Research Institute estimates the potential value of the domestic music securities market at up to 22.6615 trillion won. Considering recent growth trends, this may rise to as much as 25 trillion won.

Musicow is now expanding its investment scope from individual music securities to the production market. Shinhan Investment Corp. and Musicow Invest agreed in July to establish “Music IP Fund No. 1,” totaling 40 billion won. Depending on the results, they aim to launch follow-up funds exceeding 100 billion won.

However, simply trading the copyrights of existing music will not fundamentally solve the funding issues on the production side. It is vital to provide investment from the planning and production stages of new IP, ensuring that box-office gains feed into rookies and future works. Objective IP valuation standards and investor protection systems are also necessary.

Professor Kim stressed, “There are clear limits to relying solely on government subsidies and short-term, small-scale support,” and emphasized the need to build a cultural finance system that can attract private and foreign capital to the production market.

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