:: KOREA FOCUS ::

title text

What Business Can Learn from K-pop for Global photo

Strategy
Seo Min-soo
Research Fellow Samsung Economic Research
Institute

news
I. Introduction
The world is sitting up and taking notice of K-pop, the driving force behind the New Korean Wave (sin
hallyu), which is reinvigorating the international popularity of modern Korean culture started by TV dramas.
Girls Generation appeared on the popular American talk show The David Letterman Show on January 31,
and the number of views for K-pop videos on YouTube reached some 2.3 billion in 2011.

So, how did K-pop move from the fringes of the world pop music market to succeed globally, despite
language and cultural barriers? To identify the factors behind the success of K-pop, a cultural diamond model
was created. Its four corners are 1) Creators Entertainment companies who produce and promote K-pop
music and train performers; 2) Distribution social media channels that spread K-pop internationally; 3)
Consumers the fans who enjoy and share information about K-pop music and performers; and 4) Contents
the K-pop style of singing and dancing that is constantly refreshed.

Now Koreas major cultural product, K-pop is creating massive added value. Other fields of business need to
take the strategic values of K-pop the songs, the singers and the fans as a stepping stone for the
development of new products, establishment of new marketing strategies, and exploration of new markets.

First, businesses should try to develop products derived from K-pop to create added value. Game developers
and animators should create products that feature K-pop characters and contents, while producers of musicals
and TV dramas should explore ways to incorporate K-pop songs and the singers. Second, products that will
attract K-pop fans should be developed.

To attract more tourists, it is necessary to create tourist products that combine K-pop content with sightseeing
and shopping, and turn places strongly associated with K-pop into landmark sites. Third, to make the most of
publicity and marketing, collaborative efforts should be made with K-pop singers, who are known for their
fashion and sense of style. Fourth, new marketing strategies should be adopted, such as using K-pop stars as
models to advertise products that are closely connected to pop music. Lastly, K-pop fans can be used to pave
the way for Korean products overseas. Using YouTube and other social media, the major medium for the
spread of K-pop, plans for the overseas entry of Korean products need to be fine-tuned according to region.

The success of K-pop can be attributed to the systematic creation of stars, trained thoroughly from the outset
with the global market in mind and from a long-term perspective. Taking lessons from this example, a third and
fourth Korean Wave can be triggered, raising awareness of Korea and leading to the diversification of exports.

II. K-pop Floods the World Stage

K-pop fever began in the late 2000s when Korean boy bands and girl groups (commonly called idol groups
in Korea) began to make forays into major Asian markets such as Japan, China and Thailand. These groups
built on the efforts of the singer BoA, who was a huge success when she entered the Japanese market in 2001.

Fans of K-pop can now be found not only in Asia but in the United States and Europe as well. In August
2011, Billboard established a new K-pop chart, and in France, England, Spain and other parts of Europe
tickets for K-pop concerts sold out quickly. Such activity prompted major newspapers to publish articles on
the K-pop phenomenon, i.e. the Financial Times on February 10, 2012; the New York Times on October 24,
2011; and Le Figaro on June 9, 2011.

The online response has also been explosive. Online viewing of the songs and videos of Korean idol groups
has greatly increased, and YouTube, the worlds biggest video site, has established a channel devoted to Kpop in recognition of its mushrooming popularity. In 2011, K-pop related material attracted some 2.3 billion
views in 235 countries. In addition, the use of K-pop as a search term on Google increased ten-fold in 2011
compared to 2004. In contrast, J-pop searches fell by one third in the same period.

As K-pop spreads, amateur cover versions of the songs are rapidly spreading online in the form of usercreated content (UCC) videos. Imitating K-pop song and dance has already become something of a trend in
Thailand and other parts of Southeast Asia, and young people in Europe and the United States are showing
signs of picking up the fad.

III. Strategic Value of K-pop

The K-pop Korean Wave Index shows that Korean pop music has peaked in popularity some 10 years after
the first steps to take the genre abroad. Compared to the early peak in 2004 when the index reached 100, in
2011 the index rose to 262, marking a 2.6-fold increase in seven years.

K-pop is a strategic asset for Korea. It not only creates economic added value but also has the spillover effect
of raising recognition of Korea and Korean products. It is estimated that the economic effect reached 4.98
trillion won in 2010. This indicates a need to carefully analyze the factors behind the success of K-pop, identify
the implications for business, and explore ways to apply them to various businesses. Valuable lessons can be
learned from K-pop, which has moved from the fringes of the world pop music market to succeed globally
despite language and cultural barriers.

IV. Success Factors Behind K-pop

The cultural diamond model used in sociology was employed to analyze the factors behind the success of Kpop. The diamonds four corners carry major determinants to the success:

1) Creators: Entertainment companies developed systemized training and carefully laid plans to advance into
overseas markets; 2) Distribution: The time and cost for entering overseas markets is shortened with the use of
social media such as YouTube, Facebook and Twitter, through which contents are spread spontaneously; 3)
Consumers: The rapid spread of the popularity of K-pop can be attributed to fans who are typically tech-savvy
and eager to share information and opinions; and 4) Contents: K-pop stars display highly polished levels of
singing and dance and attractive looks. They attract fans and maintain their popularity by constantly trying to
release new songs and refining their style.

2012-03-30