Small K-pop Agencies Seek Greater Government Support Amid Rising Production Costs
South Korea’s music industry is calling for greater government support as rising production costs and widening gaps between major and smaller K-pop agencies create growing challenges.
The issue drew renewed attention after members of girl group RESCENE were seen in tears following their first music show win on July 15. During the broadcast, USPEER member Sian was also seen comforting the group with a hug, a moment that resonated with many K-pop fans online.
The topic was also discussed at the Ministry of Culture, Sports and Tourism’s recent meeting on strengthening South Korea’s music industry ecosystem.
Jo Young-chul, head of Mystic Story, said that production costs, including music videos and other video content, have increased two to three times over the past five years. He also cited research showing that the average operating profit of smaller entertainment companies has fallen to about one-third of previous levels.
According to the report, the gap between large and small agencies has continued to widen. While major companies invest heavily in music videos and album marketing, smaller agencies often struggle with much more limited production budgets.
Data from the Korea Creative Content Agency showed that large companies spend an average of KRW 43.11 billion annually on music production, compared with KRW 1.49 billion for small and medium-sized companies.
The report also noted that the number of rookie artists entering the Circle Chart declined by about 40% compared with 2023.
Industry representatives called for additional government support, including tax credits for album production costs, the inclusion of K-pop in government-backed content investment funds, income tax deductions for album purchases, and alternative financing options for smaller labels.
FNC Entertainment CEO Kim Yoo-sik also suggested revising current support criteria, noting that some companies remain significantly smaller than the four largest entertainment agencies but are excluded from government support because they no longer qualify as small businesses under existing standards.
The discussion also included calls for improvements to regional concert venue rental systems and local regulations affecting live performances.
Minister of Culture, Sports and Tourism Choi Hwi-young said the government plans to expand its support for smaller entertainment companies. He announced that the budget for the ministry’s “Global Growth Support for Small Entertainment Agencies” program, which currently supports 10 teams including RESCENE, xikers, and TuneX, is expected to double next year.
Choi also said the ministry is working with financial authorities on introducing tax credits for music production costs and will continue supporting independent music. He added that details of the large-scale K-pop festival “FANOMENON,” scheduled for December next year, will be announced later this month.
