TS Entertainment has released their second official statement following their first statement on November 27th, since B.A.P filed a lawsuit against the agency, citing unfair wages and requesting contract nullification.
On November 26th, Korean media outlets reported that B.A.P filed a lawsuit against TS Entertainment for contract nullification, citing issues such as unfair treatment, and reported that during their 3 years of promotions, TS Entertainment gained a revenue of 10 billion won (about $9 million USD) but the members of B.A.P themselves received less than 18 million won (about $16,000 USD) each, during that time span.
Since then, there have been reports that the tensions between B.A.P and TS Entertainment have been ongoing since May 2014, Dispatch released an exclusive Q&A article discussing B.A.P’s side in the controversy, and additional reports regarding TS Entertainment and unfair wages for additional groups have arisen.
Now, through a press release, TS Entertainment has released their second official statement regarding these disputes.
Hello, this is TS Entertainment.
First we would like to apologize for worrying those who have been watching us with care. We bow to you in apology.
TS Entertainment, since its launch in 2008, has produced groups such as Untouchable, Secret, and B.A.P, and is nearing the launch of a new group as well. As K-Pop became an international phenomenon and proudly set its foundations, we have made it our goal to introduce our artists to the world and grow along side the rapidly growing culture.
B.A.P was the first boy band we produced and our cherished project. We invested so much into the group that investment wise, we would not be lacking when compared to any other company out there. Thankfully, the 6 members were all hard working, as well as talented. Also because they worked so hard, B.A.P became a notable K-Pop group that could successfully go on world tours twice.
While we were working hard hand-in-hand, the members notified us [in October] through their chief manager that they wanted to take a break. We decided to respect their request and cancelled their South American and Japanese tour to give them a long period of break. The members went back and forth from their dorm to their families and sometimes even outside of the country to recharge themselves. They kept in contact with the company through all of this. Recently we had confirmed that they would agree to restart their activities starting with awards in January, and had begun to plan schedules for next year. This was in progress when we ran into a report on November 27th about the lawsuit filed against us.
Even on the day that the lawsuit was passed (November 26th), we had talked with the members like any other ordinary day, so it was even a huge shock to us on the 27th. We tried to contact the members through their chief manager, but could not reach them. We then tried to contact their parents and then from those we were able to contact, we were able to confirm that the lawsuit was indeed real and the parents requested for us to them “talk through the lawyers.” We have been waiting for the formal statement of accusation to arrive in order to truly be able to grasp the situation.
Meanwhile, through a number of media sources, we witnessed many accusations stockpile against us. This caused us to be suspicious, and especially because B.A.P had passed their BEP (Break Even Point) and was on the verge of making a steep amount of profit, the gravity of the situation increased. Finally, we were able to gain credible news from certain sources that there is a party behind this who is trying to create an air of hostility between B.A.P and us in order to recruit them easily.
We plan to find this party and as soon as we are able to, we will make sure they pay for not only playing against the rules of this business, but defacing the K-Pop industry as a whole.
In truth, we still not have received an official statement of accusation because there was a mix-up in the stamping of the document, so the court has ordered it to be fixed. Although we have not yet received the official document, the company has requested to view the contents and wants to answer the topics of controversy at the moment.
Controversy 1) $10 million USD ->$ 17,800 USD
TS: B.A.P reached their BEP at their 2 year mark. The payout for the 2nd half of 2014 is expected to be $285,000 USD, but if things had gone according to schedule, the expected payout would be approximately $600,000 USD.
The investment in B.A.P started when they were trainees and bigger investments started in late 2011, when Bang Yong Gook debuted first with “I Remember” and when the unit BANG&ZELO, which released “Never Give Up,” was created. As you can see from the chart above, up until 2013, the cost [of investing] was bigger than the profit. This is because we prioritized “the invasion of the globe through music,” that is, the dream of B.A.P and the goal of TS Entertainment. Thus, we continued to invest, risking losses, and in the end, we were able to turn B.A.P into a solid next generation K-Pop artist. Additionally, it is a very impressive feat to pass their BEP in just 2 years in this industry.
As can be seen in the charts above, after the BEP was reached, the profit grew at a phenomenal rate. Even looking at late 2014 (July to December), if we had stayed on schedule with the South American and Japanese tours, we were expecting a total of $600,000 USD for the group. However, due to cancellation of the schedules, we expect the payout to be around $285,000 USD.
We had estimated, depending on the amount of activities in 2015, that the payout for early 2015 would have reached $1.8 million USD.
Controversy 2) 1( B.A.P):9(TS) profit ratio
TS: The expected average profit share through the contract was a ratio of 4(B.A.P):6(TS).
Before we discuss this, we would like to reveal how we calculate the settlements. We process the turnout every 6 months through this method. First we deduct the cost from the total sales from B.A.P and then we take the profit and categorize it into channels and venues through which the sales were made, before distributing the profits.
The reason we deduct costs from total sales is because there are things that are hard to classify, such as specific types of cost like as dorms, transportation, food, lessons, exercise, massages, hospital bills, T-Money, etc.
The reason the distribution for events and performance is a ratio of 5:5 and the distribution for album/audio files/merchandise is a ratio of 1:9 is because the former costs less in production than the latter. Also, the latter requires us to pay our employees after distribution, as well as pay for the venues of concerts and events, and we usually include the cost of labor in the production cost itself.
In early 2014, we focused more on albums, concerts, and music files because we wanted to increase the fame of B.A.P. Through everyone’s hard work, we successfully finished two world tours and we were shifting our focus onto activities that would turn the average distribution of profits to a ratio of 4(B.A.P):6(TS).
Controversy 3) Slave contract?
TS: Our contract is standard with the FTC (Fair Trade Commission) and has additional, simple elaborations in some parts of the contract.
All the facts mentioned through one media source are based on the “standard contract” according to the Fair Trade Commission and elaborates on certain parts.
On the issue of the length of the contract, according to the “standard contract,” it says if there are instances where “long overseas activities or contracts with overseas agencies” or other reasons that require contracts to be longer, one can extend the length of the contract through a written agreement.
At the time [B.A.P signed their contracts,] we set the length as “7 years from the release of an album (single, group, digital or official)” and the members each signed in March, June, or September of 2011. Since some members, such as Zelo and Yong Gook began activities earlier, the members all have different termination dates.
Controversy 4) Issue of trust
TS: Issue of communication [with family members]
Last July, even after the payout was completed, the B.A.P members had no problems and continued their schedules. But after mid-September they started acting odd. They disappeared and showed emotional fits and thus their scheduled activities suffered. However, we apologized to the broadcasting people countless times in order to protect the members.
Then, we gained information from their management team and executive members of the company and tried to think of a solution for the emotional stress they [B.A.P] were receiving. When they requested that they “wanted to rest,” we respected that and since October 13th, we agreed to “minimize official schedules” and cancelled the South American and Japanese tour so that they could get enough rest until the end of the year.
We kept in contact with them continuously and had meals with them. Since none of them seemed to act out of the ordinary, we thought they were simply resting and getting ready for their activities. Additionally, as is mentioned before, we had previously confirmed that they would begin activities again in January. We became aware of the lawsuit in the midst of these activities.
These are our official responses to the controversy that is prevalent at the moment and we plan to reveal everything and prove the truth in front of the court, one by one. We can say with confidence that TS Entertainment did not break any laws and that we have never treated B.A.P wrongly or forced them into anything.
Our company policy is “Honesty, Hard work and Humility.” Perhaps our wish to create a better, more comfortable environment where their talents to be improved was communicated incorrectly. If we failed to recognize that we were hurting the members’ hearts, it is also our fault and the result of our inexperience.
Finally, TS Entertainment would like to talk to the members of B.A.P and discuss the goals we had talked about when they debuted and wish they would harden their resolves again. However, if they continue to disregard our attempts at communication, we will do as they wish and find the best way to solve this problem in court.
We would like to once again apologize to everyone we have worried with this incident and promise we will do our best to reach an amicable settlement on the issue.