The unfortunate story behind Mnet and SM Entertainment

Last night’s MAMA, hosted by Mnet, was certainly a feast for numerous Kpop fans out there. However, as enjoyable as it was, the event was (and still is) swamped with layers of controversy, with SM Entertainment’s boycott being the eye of the storm. Mnet and SME appear to be mortal enemies, but many still remember the fact that they used to be very friendly with each other. Exactly what made them become such bitter adversaries? Let’s examine the dispute between Mnet and SME.

What exactly is Mnet?
Mnet is a media company owned by CJ Media which focuses on music, media, entertainment and web content business. CJ Media is a part of CJ, a South Korean conglomerate that is one of the top five largest companies in the country. Mnet is involved in pretty much every aspect of the entertainment industry, ranging from album production, distribution, sales, management, television broadcasting, online media and many other businesses. With these expansion, Mnet has become a giant in music industry, with market share of 44% in album sales and over 20% in online music sales.
Mnet and CJ are also shareholders in major entertainment companies DSP Entertainment and YG Entertainment. Although they own no more than 20% of shares from each company, the fact that CJ is a conglomerate means the aforementioned companies are now affiliates of CJ. Smaller entertainment companies with famous names such as Shinwha, Kim Dong Ryul and Wheesung are “affiliates” of CJ as well. Similarly, 30% of JYP Entertainment is held by SK, another conglomerate that is one of top 5 largest companies in Korea, making JYP a faction with as much support as Mnet has.
How has SME and Mnet’s relationship developed over the years?
Before 2008, SME and Mnet were quite friendly. MKMF, now known as MAMA, featured numerous artists from SME which were given many awards. However, during 2008, Mnet proposed to SME that they would like to be the distributor of music produced by SME; in return, Mnet would receive certain percentage of profit from the sales. Mnet had already been distributing music of JYP, DSP and YG, and with the right to distribute SME’s music they would become undisputed leader in the industry. SME refused the offer as they had the ability to distribute their own music and did not feel the need to pay Mnet for a job that they could do themselves (SME’s stance against this was well known even prior to 2008 as evidenced here). Mnet undoubtedly held a grudge against SME for obstructing their dominance of the industry, and the friendship ended there.
CJ has also attempted hostile takeover of SME but failed. If they had been successful, CJ would have acquired control of Korean entertainment industry. These facts have not been well-publicized, until recent controversy involving SME and MAMA have brought the public’s attention to the relationship between the two parties. With SNSD’s Gee and MAMA, we have now witnessed the nature of their relationship.

How does MAMA play into this tense relationship between SME and Mnet?
One of the biggest controversies brought on by MAMA was the fact that the three members of TVXQ, Jaejoong, Yoochun and Junsu, made their appearance for acceptance of Best Representative of Asia Award. Although some may argue that SME’s outrage was uncalled for, and that the trio is free to do whatever they want, the choice to make an appearance at an Mnet event was deliberate and could not have been a spontaneous, wanton decision.

So what’s the significance behind TVXQ’s appearance?
Many have suspected that the three members were able to act in such bold manner against SME in recent months because they were being supported by an organization more powerful than SME. With their unabashed appearance at MAMA, it now appears that Mnet and CJ might be the ones that have the three members’ back. It is very possible that CJ and Mnet are backing the three members in order to win their fight against SME for dominance in the industry. If that is so, then TVXQ members have become mere pawns in a battle between two corporations.
SME, a company now known for its oppressive, big-corporate attitude towards its artists, is ironically under attack from one of the largest corporations in Korea. Both companies are profit-motivated organizations that are pursuing whatever action that generates more profit, so there is no good or bad in a situation like this. What is unfortunate, however, is that the artists have become the victims in this corporate power struggle. TVXQ, SNSD, and SHINee are all victims in this dispute between SME and CJ/Mnet; MAMA could merely have been the beginning of penance for these artists.

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