EXO-CBX and SM clash over contract issues again

EXO-CBX (SM Entertainment)

SM Entertainment has denied a claim made by Chen, Baekhyun and Xiumin of boy band EXO that it is making an "unfair" demand regarding revenue from their individual activities.

Shortly after the trio, also known as EXO-CBX, held a press conference in Seoul on Monday to issue the claim, SM released a press statement saying that the trio was able to get a good distribution deal and suffered no damage from their contract signed with the K-pop powerhouse in June last year.

Last year, EXO-CBX notified SM of their intention to terminate their exclusive contracts due to the agency failing to provide proper accounting data. This led the artists to file an antitrust complaint with the Fair Trade Commission against the agency.

The conflict was temporarily subdued when EXO-CBX agreed to sign with SM for their group EXO activities only, allowing the three artists to be managed by INB100 for their individual activities.

INB100 is a label established by Baekhyun earlier this year.

“SM is failing to meet the terms of the agreement that guaranteed a 5.5 percent commission rate for album and music sales under INB100 and is instead demanding 10 percent of the artists’ revenue from their individual activities, albums, concerts and commercials,” said Lee Jae-hak, EXO-CBX’s legal representative, at the press conference.

Lee released a voice clip of SM Chief Artists & Repertoire Officer Lee Sung-soo promising Cha Ga-won, president of the holding company of INB100, a 5.5 percent distribution commission rate from distributor Kakao, SM’s major shareholder, for INB100.

SM demanded 10 percent of the artists’ revenue from their individual activities in return.

Normally, the distribution commission rate for non-Kakao affiliate labels is 15 to 20 percent.

Lee claimed that promise led to the agreement signed last year.

“When it became difficult to adjust the distribution commission rate, we did them a different favor of allowing Baekhyun’s solo album (prepared under SM since early 2023) to be released under INB100 and also paid the penalty for his solo concert in Japan that he canceled,” SM refuted.

SM claimed that last year the trio had been approached by Cha, who attempted to entice them to leave SM.

“It was after Cha approached our artists whom we had signed exclusive contracts with when EXO-CBX started to nitpick in order to invalidate the contract they had signed,” said SM.

The lawyer added that EXO-CBX sent a formal notice to SM in April concerning the breach of the promise, to which SM continues not to respond.

"Since the agreement is no longer meaningful, we will consider canceling it on the grounds of fraud or terminating it due to nonfulfillment of obligation. The trio will also consider filing complaints with the police and the state antitrust body regarding the agreement process,” said Lee.

Baekhyun addressed the dispute during his solo concert in Hong Kong on Monday.

“The reason why I established this agency (INB100) was to meet my fans more often. I don’t need INB100 to become a big label. I just hope to communicate closely with my fans in diverse ways. I just need my fans to know my genuine intention,” said Baekhyun.

By Hong Yoo(yoohong@heraldcorp.com)