Sunday, April 20, 2008

Future Pop

CDs are dead, and Korean impresario Jin-Young Park knows it. American music labels could learn a thing or two from the model he's built in South Korea.

Korean music impresario Jin-Young Park discusses why the CD is dead and what music companies need to do about it. See All Video & Multimedia

When prospective U.S. partners ask music mogul Jin-Young Park where he's from, he has a conversation-stopping answer: "I'm from the future."

It's a deft riposte that opens up space for Park, who discovered and managed Asian pop phenomenon Rain for many years, to spool out a string of facts that make record execs weak in the knees. "In meetings with music labels here, they talk to me about releasing albums," says Park. "They can't accept that there's no such thing anymore. Where I come from, CDs are nothing—they're just souvenirs. I tell them, 'Wake up!'"

In South Korea, where Park is building a new kind of music-business model, 80 percent of households have a broadband connection; downloads via both PCs and cell phones make up an overwhelming share of the nation's music market. Download revenue there has soared 422 percent since 2000, to $366 million, while CD sales have declined 83 percent over the same period to just $70 million in 2007. And because almost all digital music is purchased on a song-by-song basis, to the general South Korean consumer, albums have become an irrelevant—even alien—concept.

Ironically, South Korea is in many ways like America—America 40 years ago when rock was big and labels were booming. Back then, like South Korea now, the U.S. music industry was heavily focused on live performance, the release of hit singles, and the active cultivation of loyal fan bases through direct promotional activity. It's the artist as brand: In Korea, consumers don't buy music; they buy a product relationship that reaches across every media platform and entertainment genre.

Take Park's most recent phenomenon, the Wonder Girls—a quintet of winsome teens whose addictively breathy vocals and synchronized dance steps have taken Asia by storm (their song "Tell Me" was one of the bestselling singles in Asia last year, and the band has generated about $5 million so far for Park's company, J.Y.P. Entertainment, with only half of that coming from music sales). Fans of the group can buy tickets for their live concerts at $110 a pop; purchase a growing array of their merchandise (the names and faces of top K-pop stars adorn everything from $5 phone cards to $500 cell phones and music players); download ringtones featuring their songs ($2); and even make bids on a charity auction for a dinner date with the girls on the popular social-networking site CyWorld (five fans paid between $3,800 and $6,000 for the privilege last year). And if all that's not enough, fans can always tune in to the Wonder Girls' reality TV series, now in its third season as one of MTV Korea's top-rated programs.

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