DBSK: First Court Hearing on Aug 21

In case you haven't been keeping up, here is a recap of the last three weeks of Dong Bang Shin Ki news.

The Court Filing and Statement

It was on July 31 when Xiah JunSu, Micky YooChun and Hero JaeJoong of Dong Bang Shin Ki went to Seoul Central District Court to file an application for provisional disposition to terminate their exclusive rights contract with SM Entertainment.

An article in The Korea Times mentioned the legal document that was released by the law firm representing the three members. It stated that their 13 year exclusive contract with SM Entertainment was essentially an inescapable lifelong contract and claimed that they were not given a fair share of profit distribution. In addition, after debuting in a number of countries around Asia, they have been overworked in their daily schedules and had been given little time to rest.

"(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 statement read.

After a revision of the contract in February, the members were to be given 0.4 to 1 percent of total album sales. The original contract said that each of the members would receive 10 million won if the previous album sold more then 500,000 copies, and would receive nothing if the sales were under 500,000.

"The statement added that the three members tried to communicate with SM Entertainment, but the agency continually brought up the issue of their makeup business and avoided further settlements," said an article in the Korean Times.

"SM Entertainment's attitude made them realize there was no hope in solving the situation through communication, and the members finally decided to take legal action to further settle the case.''

Contract Woes

This 13 year long contract would not include the two years for their mandatory military service, adding up to a possible 15 years. The length of time of the contract could end up being their entire entertainment career. If they were to break the contract, they would owe the staggering amount of three times the initial investment of the agency plus twice the amount the artist would make in their remaining contract time, in addition to another large sum. Having that kind of penalty gives little option to do anything else but follow the contract.

Why agree to such contracts in the first place? Young star-hopefuls know that in order to debut that they should not demand too much. “Everyone knows that a rookie won’t survive if they strike up a problem with their agency,” said a director of one agency.

Because of this lawsuit by the 3 DBSK members, some attention has been given to the contracts of other K-Pop performers. Under SM, Yoona of Girls' Generation is also in a 13 year contract, Super Junior members all have contracts going from 5 to 13 years, while SHINee members' contracts vary from 6 to 13 years.

JYP has Wondergirls' under contract for 7 years, Big Bang's contract with YG Entertainment is 5 years, and SS501's contract with DSP Entertainment is also at 5 years.

Since it is a long term investment, the company will probably want to make as much 'return' as possible from all of their performers.

The Trademark

Despite the all legal troubles and subsequent rumors of disbanding, the members of DBSK have strongly stated their desire to continue performing together as a group. If the three were to leave the record label, the five of them together can still be called 'Dong Bang Shin Ki' since SM was not able to register the group name as a trademark in 2004.

SM Entertainment has recently re-applied for the trademark rights to 'Dong Bang Shin Ki," in addition to applying for the rights to several other well known group names. Applying for trademark rights of a group is a normal occurrence by agencies in entertainment, but has been seen by fans as being a hostile act.

Money Issues and the Fan Backlash

On August 3, a Reuters article posted on Forbes Web site reported that SM Entertainment Co's stocks fell by 10 percent after DBSK's request for an injunction was filed.

"For investors, it's reasonable to worry over the news, since Dong Bang Shin Ki is one of the major sources of revenue for SM Entertainment," said Kim Chang-kwon, an analyst at Daewoo Securities.

As a major source of revenue, it's highly likely that SM Entertainment will want to keep DBSK and come to an agreement. On the other hand, if they give in to demands so easily, other performers might be encouraged to do the same, damaging the bottom-line profit of the agency.

On August 9, SM entertainment revealed on a radio talk show that there was a better distribution than reported. “We split profits with the group Dong Bang Shin Ki at the ratio of 4:6,” SM said.

In reply to this, the 3 members of DBSK said “The splitting of profits is not transparent. We cannot trust them.”

“Let’s say SM is right and that they were paid 11 billion won for the 6 years of work," said a source that is close to the three members of the lawsuit. "This is the pre-tax profit. After taxes were paid, and this amount is divided by 6 years, and 5 members, this is less than 200 million won per member. For the first half of this year, the profits from album sales in Japan is 2.5 billion Yen (33 billion won). However, DBSK doesn’t even receive 200 million won per year.”

On August 12, DBSK's official fanclub, Cassiopeia, called for a boycott of all SM Entertainment products, to show their support of DBSK's actions.

On August 14, a Dong Bang Shin Ki fancafe submitted a prosecution application to the Korea Consumer Protection Board regarding the postponement of SMTOWN LIVE ‘09 concert that was originally planned to take place on August 16. While the delay of the concert was due to the ongoing lawsuit with the 3 DBSK members, SM still released SM Summer album '09. This angered many fans because the reasons for postponing the concert and releasing the album were contradictory of one another.

On August 15, it was reported by Kbytes that the Seoul Central District Court had accepted the 'Preservation of Evidence request' that was submitted by the three members on August 5. Through this, the court requires that all receipts, transaction slips, account books, and other items be preserved and submitted to the court for the lawsuit.

What's to come?

Junsu, Yunho, Jaejoong, Changmin and Yoo Chun debuted in 2003 in South Korea under the SM Entertainment label. Two years later in 2005 they debuted in Japan under Avex's sub label, Rhythm Zone, and by 2006, they continued to take over Asia, touring in China, Thailand and Malaysia.

What will happen next? Unless the members of DBSK and SM Entertainment come up with a compromise, it will be up to the courts to decide whether or not their contracts will remain valid. The first court hearing will be tomorrow, August 21.