S.M. Entertainment SM엔터테인먼트 was established in 1995 by Lee Sooman. It is one of the largest entertainment companies in South Korea. The company operates as a record label, talent agency, music production company, event management and concert production company, and music publishing house.
The label is home to prominent Kpop artists such as Kangta, S.E.S., BoA, DBSK, TRAX, CSJH The Grace, Super Junior, SNSD, Shinee, f(x), Henry, Zhou Mi, EXO, Red Velvet, and NCT, and the former home of artists like H.O.T., Fly to the Sky, and Shinhwa. It also manages a number of actors, including Kim Minjong and Lee Yeonhee. In Japan, S.M. Entertainment co-publishes Avex Trax releases for artists including Ayumi Hamasaki, Namie Amuro, and Koda Kumi, as well as Johnny's Entertainment artists such as Arashi and KAT-TUN.
After graduating from California State University, Northridge in the USA, Lee Sooman returned to Korea and established SM Studio in Apgujeong-dong, Gangnam, Seoul in 1989. The business changed its name to S.M. Entertainment and set up its capital fund in February 1995 with Jung Haeik as CEO. The agency developed an in-house production system and produced a string of successful artists including boy group H.O.T. in 1996, girl group S.E.S. in 1997, Shinhwa in 1998, and R&B duo Fly to the Sky in 1999. Kim Kyungwook became CEO of the company in 1998.
The early 2000s saw the disbandment of both H.O.T. (in 2001) and S.E.S. (in 2002), as well as the departure of Shinhwa to a new agency. In the following years, new groups such as duo Isak N Jiyeon and boy group Black Beat failed to attain the popularity of previous S.M. artists. In December 2000, S.M. became affiliated with Fandago Korea. In January 2001, the company founded an overseas division, S.M. Entertainment Japan. Around the same time, the company was approved for listing on KOSDAQ, and an affiliation was established between S.M. and Avex Trax. The subsidiaries BM Entertainment and Cid. K Entertainment (under which the girl groups M.I.L.K. and Shinvi were signed respectively) were also formed, but later became defunct as the groups disbanded.
In late 2002, S.M. was awarded the Grand Prix of Ministry of Culture and Tourism for the Culture Contents for Export Award in music.
In 2003, S.M. became affiliated with Starlight Corporation Ltd. and C-Cube Entertainment Corporation. The same year, the company debuted five-member boy group DBSK. The following years saw the debuts of artists such as TRAX (2004), The Grace (2005), and Super Junior (2005).
In 2005, Kim Youngmin became the company's third CEO, under whom several artists debuted with a view to promoting outside of South Korea. Artists debuting under S.M. at this time were solo singer of Chinese descent Zhang Liyin (2006), Japanese-language soloist J-Min (2007), SNSD (2007), Shinee (2008), and f(x) (2009). In April 2008, a Mandarin-language sub-unit of Super Junior was formed, Super Junior-M. In October 2008, S.M. announced plans for a debut in the USA for BoA under subsidiary label SM Entertainment USA.
In May 2008, the SM Art Company was formed with Pyo Inbong as co-CEO, aiming to produce musical and theater works. Its first production was of Xanadu, which starred Super Junior members Heechul and Kangin.
In February 2010, after two decades on the board of directors, founder Lee Sooman resigned from his position in order to "focus more energy on SM's overseas business, new business management and artist development." In March, KMP Holdings was established as a joint venture between S.M. Entertainment, YG Entertainment, JYP Entertainment, Star Empire, Medialine, CAN Entertainment, and Music Factory. The firm's first release from S.M. was Super Junior's fifth studio album, Mr. Simple, which marked the end of S.M.'s self-distribution.
In April 2011, S.M. Entertainment, YG Entertainment, JYP Entertainment, KeyEast, AMENT, and Star J Entertainment joined to create United Asia Management. In August, S.M. joined with Thai media company TrueVisions Group to create SM True.
In 2012, S.M. debuted boy group EXO in two units to promote in both Korea and China. In February, S.M. acquired Hawaiian travel firm Happy Hawaii and launched a new business initiative specializing in travel and tourism, SMTown Travel, with Kang Junghyun as CEO. SMTown Travel offered concert packages for overseas fans attending Super Junior's Super Show 4 Tour encore concerts in Seoul. In March, 47 of S.M.'s artists including Kangta, BoA, DBSK, CSJH The Grace, Super Junior, Zhang Li Yin, SNSD, Shinee, f(x), Go Ara, Isak, and Lee Yeon Hee became stockholders of S.M. Entertainment. Kangta, BoA, and most of the Super Junior and SNSD members received 680 shares each (with a value of around $27,200 for each person), while Shinee and f(x) members received 340 shares each (value of around $13,600 for each person). In August, S.M. held the S.M.ART Exhibition at the COEX Convention & Exhibition Center and signed contracts with Visa and KB Card to begin printing S.M. artist cards. Korean TV personalities Kang Hodong and Shin Dongyup announced that they had signed exclusive contracts with S.M.'s broadcast sector, SM Culture & Contents (SM C&C), seen as a move by S.M. to expand into television. In September, SM C&C merged with AM Entertainment (which represents actors such as Jang Donggun, Kim Haneul, and Han Jimin) and two other TV personalities, Lee Sugeun and Kim Byungman, announced that they had also signed with S.M. In November, KMP Holdings was acquired by KT Music, and in June 2013, KT Music absorbed KMP's distribution network.
In 2013, SM C&C acquired Hoon Media (a production company led by Lee Hoonhee, responsible for KBS serials "1 vs 100," "Heroines 6," "Qualifications of Men," and "Music Bank") and Woollim Entertainment, a record label responsible for artists such as Infinite. In January 2014, the seven talent agencies behind KMP Holdings formed a collective bond partnership and bought 13.48% of KT Music's stocks, leaving parent KT Corporation with 49.99%. In February, S.M. acquired a share in Baljunso, an indie record label founded in 1991 by Kang Byungyong. On August 1, S.M. debuted Red Velvet, its first girl group since f(x) four years prior.
In August 2015, S.M. partnered with sports marketing company IB Worldwide to create Galaxia SM, responsible for golfer Park Inbee, gymnast Son Yeonjae, and Choo Shinsoo, right fielder for the Texas Rangers. On November 6, the 10th anniversary of Super Junior's debut, S.M. announced the creation of the group's own sub-label, Label SJ. In late 2015, S.M. partnered with modeling company ESteem Models to promote self-owned content and network.
In January 2016, Lee Sooman held a conference at the SM Coex Artium, speaking about plans for a new boy group, NCT ("Neo Culture Technology"), with "unlimited members." The first unit of this group, NCT U, released its first singles in April 2016. In late January, the company established a restaurant SMT Seoul; in late February, S.M. established a series of stores selling branded foods under the name SUM Market.
On February 11, 2016, the Chinese e-commerce giant Alibaba Group acquired a 4 percent minority stake in S.M. Entertainment for $30 million.
On May 5, 2016, S.M. released the first single under their newly established EDM label ScreaM Records, "Wave," featuring f(x) members Amber and Luna and produced by Xavi & Gi and E-mart’s Electro Mart. ScreaM Records is part of S.M.'s New Culture Technology 2016 project, under which the company has also begun the digital music channel SM Station and a number of mobile apps. In late 2016, S.M. began organizing a League of Legends tournament called "2016 S.M. Super Celeb League," where their representatives Heechul and Baekhyun participate in matches with both professional players and fans from South Korea and China.
On February 16, 2017, S.M.'s international Kpop academy announced plans to open in September. The Gangnam-based academy is a collaborative venture with the private Jongro Sky Academy. The school planned to be certified as an alternative program for domestic Korean middle and high school education, as well as US secondary school education.
SM Entertainment's YouTube channel, SMTOWN, has 10 million subscribers. It's the most number of subscribers for a music label from all of Asia.
In March 2017, S.M. acquired the independent record label Mystic Entertainment, becoming the label's largest shareholder.
In late July 2009, three of the members of S.M. Entertainment boy group DBSK (Kim Jaejoong, Park Yoochun, and Kim Junsu) applied to the Seoul Central District Court to investigate the validity of their contract with S.M., as they felt the thirteen-year contract was excessively long and that earnings were not fairly distributed to the members. Leaving the group would lead to an early termination penalty of over KR₩11 billion. The news of this dispute caused S.M. Entertainment's KOSPI stock price to drop by 10.06%. In addition, 120,000 fans of DBSK filed a petition against S.M.'s long-term contracts to the Seoul Central District Court, also filing for compensation for an SMTown Live Concert that was canceled a week before its scheduled date.
Their statement read, "(They) have had health problems and finally reached their physical limits, but SM Entertainment continued to send them abroad and plan excessive activities. Thus, the three members have started to hope they will be able to continue their careers as they wish, instead of being used as tools for the agency's profits."
The court ruled in the favor of the three members. In response, S.M. held a press conference claiming that the lawsuit was fraudulent, and filed an injunction. In early May 2010, it was announced that the three members, Jaejoong, Yoochun, and Junsu, would return to the stage as JYJ under a new management agency, C-JeS Entertainment. The injunction was dismissed by the Seoul Central District Court on February 17, 2011, and the final decision on the case was postponed indefinitely for mediation under the justice department.
On November 28, 2012, during a voluntary arbitration at the Seoul Central District Court, S.M. Entertainment and JYJ reached a mutual agreement to terminate all contracts between the two parties and not to interfere with each other's activities in the future, concluding the lawsuit. S.M. reportedly stated that they had decided to end the litigation "to avoid bringing additional harm to U-Know Yunho and Max Changmin, who are active as TVXQ, and to avoid making any more unneeded issues."
On December 21, 2009, five months after the three DBSK members filed their lawsuit and while the dispute was ongoing, Han Geng, the only Chinese member of Super Junior, also filed a lawsuit against S.M. for similar reasons of unfair profit distributions and having signed an unfair thirteen-year contract that contained provisions in S.M.'s favor and which he was not allowed to revise or end. Han Geng's friend and current manager Sun Le also submitted a statement to Korean courts citing S.M. Entertainment's violation of Han Geng's rights, which was later leaked via the internet. The statement argued that S.M. had discriminated against Han Geng financially as well as in terms of management.
On September 27, 2011, Han Geng's departure from Super Junior was made official when legal representatives of both Han Geng and S.M. released a joint statement saying that "Han Geng and S.M. Entertainment have amicably settled on a mutual agreement, and the lawsuit was able to come to a close after Han Geng submitted his 'Notice of Withdrawal of Appeal.'"
On May 15, 2014, Kris Wu, a Chinese-Canadian member of EXO, filed a lawsuit to terminate his contract with S.M., as first reported by Chinese news portal Sina. He was represented by Cho Bumsuk, the same lawyer who'd handled Han Geng's case. Kris, whose real name is Wu Yifan, was quoted as saying, "The company has treated me like a machine part or as an object of control rather than presenting a vision as an entertainer." He left the group in the same month that the lawsuit was made public, while the rest of the group continued to promote its single "Overdose." On July 21, 2016, Kris officially parted ways with EXO; hia contract with SM is valid until 2022.
On September 29, 2014, SNSD member Jessica claimed on a Weibo post that she had been forced out of the group, writing:
I was excited about our upcoming fan events only to shockingly be informed by my company and 8 others that as of today, I'm no longer a member. I'm devastated - my priority and love is to serve as a member of GG, but for no justifiable reason, I am being forced out.
The following day, Jessica released a statement claiming that while in August 2014, her company and fellow members had been positive about the launch of her fashion business, Blanc and Eclare, as of early September, they had changed their stance, and she was directed to either close the business or cease promotions as a member of SNSD. She claimed to have received a "one-sided notice" asking her to leave the group the day before.
However, according to S.M., Jessica had informed management in the early spring that she would leave the group after one more album, but before agreements could be made she had set up her independent business, which caused problems for the group's schedules. This prompted management to begin promoting SNSD as eight members rather than nine, with the intention to announce the news; however, Jessica had already "posted her own perspective." The company then stated that the group would henceforth continue as eight, while they would still manage Jessica's individual schedule.
On August 6, 2015, Jessica and S.M. Entertainment reached an agreement to terminate her contract, with Jessica stating, "This release is to confirm that SM Entertainment (“SM”) and I have officially parted ways. I will cherish the many years we spent and I wish SM the best of luck in all of its endeavors."
On October 10, 2014, Lu Han was the second Chinese member of EXO to file to nullify his contract with S.M. Entertainment and leave the group, just over four months after Kris. His lawsuit included the claim that S.M. had favored Korean division EXO-K over Chinese division EXO-M. On July 21, 2016, Lu Han officially parted ways with EXO. His contract with SM is valid until 2022.
In April 2015, No Minwoo, a former member of TRAX, filed a lawsuit against S.M. for subjecting him to an unlawful seventeen-year contract. He alleged that S.M. had also interfered with his career after he had left the company and sought KR₩100 million in damages. He lost his lawsuit against SM Entertainment on July 21, 2016.
On August 24, 2015, Tao was the third Chinese member of EXO to file against S.M. and leave the group, being represented by the same legal team that represented former members Kris and Lu Han. On January 5, 2016, SM entertainment won one of their counter-lawsuits against Tao following the ruling of the Intermediate People's Court in the Qingdao, Shandong, China. The agency sued Tao over his failure to repay the company after his departure. They released an official statement saying, "SM has ongoing lawsuits against Exo members Wu Yifan (Kris), Luhan, and Tao for violating their exclusive contracts and partaking in illegal promotions in China. Among these lawsuits, SM filed a lawsuit against Tao for failing to repay SM on October 13, 2015. An intermediate court in Qingdao, China made the verdict that Tao is to repay SM Entertainment as well as interest for the delayed payment."
On November 21, 2009, S.M. Entertainment boycotted the Mnet Asian Music Awards event, claiming reservations regarding the standard of fairness and the criteria used in Mnet's selections for award recipients. The company specifically cited SNSD, who had topped Korean music charts for nine consecutive weeks and had won numerous awards for their newest single "Genie," but had never won on Mnet's weekly "M! Countdown" show, and had only appeared on their charts a month after the album release. S.M. also cited the fact that voters had to pay a fee, saying that they did "not want to see fans suffer any damage from the poll which has commercial intentions."
In 2010, the Korean Fair Trade Commission (FTC) undertook an investigation into S.M. Entertainment policy, especially regarding their artists' contract terms, and concluded that they were unfair. Artist contracts were subsequently reduced by a length of three years, and there was a reduction in the penalties for breach-of-contract violations. All artists signed under S.M. at the time re-contracted with the agency under the new terms.
S.M. was one of fifteen companies fined and sued by the FTC for price rigging in 2011.
In 2012, S.M. was accused of colluding with music distributors, but was cleared of the charge. On August 16 the Seoul High Court revealed their verdict on the issue: "The FTC (Fair Trade Commission) has canceled all corrective orders against SM Entertainment, and the lawsuit costs will be paid by the defendant."
In August 2014, after the release of the Red Velvet's music video for "Happiness," Japanese media reported that images referencing the bombing of Hiroshima and Nagasaki, as well as the 9/11 attacks, were seen in the background of the video. S.M. Entertainment responded to the reports, stating that "after questioning the director, we found that he simply used a collage source for the images, and there was no intention behind it." The representative added, "As S.M. wasn't able to catch it before, we will remove the material that caused the misunderstanding as soon as possible. We will make sure not to let this kind of thing happen in the future." S.M. later uploaded a new version of the music video without the controversial images.