Less Than 1 Percent

A Japanese online news service has revealed some of the conditions in the contract between the Korean boy band TVXQ and their management company, SME.

In 2009, three members of the group – Jaejoon, Yuchun and Junsu – filed a petition in South Korea for a preliminary injunction to void their exclusive contract with SME. The trio has since left the group and are now a unit working mainly out of Japan, while the remaining two members are going it alone as a duo under the TVXQ moniker.

The news service, Zakzak, quotes an unnamed source with inside information about both the Japanese and Korean entertainment business who says that one of the things that sparked the trio’s departure was that each member received only “0.4 to 1.0 percent” of the profits derived from the group’s lucrative Japanese activities and no guarantee if the volume of music sales was “less than 50,000 albums.”

Moreover, when the three members broke their contract they were required to pay a penalty equivalent to “up to three times” the investment SME made in them up to that point, plus twice the estimated profits for the remaining six years in the contract.

The source said this penalty would have amounted to about $120 million for the three members.

In addition, the contract stated that all rights for media appearances and entertainment activities both in Korea and abroad belong to SME, and all copyrights related to any music or lyrics or arrangements the members created themselves were “transferred to the production company.”