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SM, YG Entertainment under probe

August 16, 2015
SUM, a celebrity shop on the second floor of SMTOWN@coexartium, carries souvenirs and fashion items that SM artists have designed or recommended. (Courtesy of SM Entertainment)

SUM, a celebrity shop on the second floor of SMTOWN@coexartium, carries souvenirs and fashion items that SM artists have designed or recommended. (Courtesy of SM Entertainment)

By Kim Se-jeong

The Fair Trade Commission (FTC) is investigating the nation’s two biggest entertainment agencies for allegedly overcharging for souvenirs and products featuring idol groups.

The investigation follows a complaint from the Seoul YMCA, which in July accused SM Entertainment and YG Entertainment of taking advantage of their market dominance to sell merchandise at exceptionally high prices.

SM Entertainment and YG Entertainment are Korea’s top two entertainment management agencies. EXO, Super Junior and Girls Generation belong to SM, while Big Bang, 2NE1 and Psy, among others, belong to YG.

Products on sale include earphones, T-shirts, sunglasses and wallets, which are sold at special shops in Seoul and through the agencies’ websites.

At the SM Entertainment shop, earphones such as those used by EXO members cost 1.23 million won (About $1,043.00). Sunglasses are priced at 278,000 won ($236), and a rabbit doll that the agency made in collaboration with MCM costs 565,000 won ($479.00).

A Big Bang baseball jumper at YG Entertainment shop is priced at 175,000 won ($148).

“Compared with similar products under different brands, these products are unreasonably expensive,” a Seoul YMCA official said in July. “Considering the value of the entertainers, the prices are still too high.”

He said 15 items randomly picked at SM Entertainment’s souvenir store in southern Seoul cost a total of 3.84 million won ($3,256), which was inappropriate especially considering that major consumers were teenagers.

“These companies take advantage of young customers’ love for the idol groups,” he said. “Their sales gimmicks using star marketing have gone too far.

Another reason for the high prices is that the agencies have no competitors. Each management company has created a subsidiary firm ― SM Brand Marketing and YG Next ― to make and sell the products.

Sohn Joo-chan, 16, a student from Hanam, Gyeonggi Province, said that although the goods were expensive, she had good reason to buy them.

“I am a fan. When there’s a new item, especially with a limited availability, I want to buy them and keep them,”she said.

She said peer pressure also played a role.

But some critics believe the FTC may not be able to prove the entertainment agencies are violating “fair trade” rules unless the watchdog can determine the exact size of the market for idol products.

The commission is now collecting related data.

2 Comments

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