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The first-day injunction hearing for HYBE and ADOR CEO, Min Hee-jin, took place at Seoul’s Central District Court on May 17, 2024. It revealed new information about the ongoing turmoil between the two companies.
For the unversed, Min Hee-jin accused HYBE Chairman and founder, Bang Si-hyuk, of album chart manipulation (sajaegi). Min Hee-jin stated that Bang Si-hyuk aka Bang PD suggested she should inflate NewJeans' album sales by 100,000 units to beat SM Entertainment's girl group Aespa's record.
She alleged that it caused friction between them as she rejected HYBE's proposal to purchase NewJeans' records in bulk. She also accused HYBE of innovative techniques for manipulating charts to get around pure sajaegi's unlawful status.
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Allegedly, HYBE would purchase albums in large quantities from stores in advance, to increase the first-week sales figures. Later, they would return them to the merchants but make agreements with the retailers for fan signs, which would use up the supply.
HYBE denies accusations of album pushing and submits alleged chat evidence of Min Hee-jin suggesting "Sajaegi"
South Korean media outlet Xports News reported that HYBE responded to the accusations with a detailed email stating that none of the corporation's affiliate labels engage in Sajaegi or chart manipulation in any capacity. The letter mentioned various instances when Min Hee-jin had allegedly raised questions about SEVENTEEN, TXT, ILLIT, and LE SSERAFIM's album sales.
In the letter, HYBE exposed the chats of Min Hee-jin and claimed that she was the one who had suggested increasing the album sales numbers of NewJeans. The company stated that it will reveal the album sales of each HYBE group to the public for transparency.
"HYBE's affiliated labels do not push out albums. This is something HYBE has already responded to ADOR several times, and it also appears several times in the SNS conversation records between HYBE CEO Ji-won Park and CEO Min. It is a fact." (as reported by Xports News and translation taken from Google Translate)
HYBE also mentioned:
"In order to respond to the issue raised this time, HYBE has conducted a thorough investigation of all albums sold last year, including whether there were any returns through push-out, and will transparently share the confirmed information."
Moreover, HYBE (parent company of ADOR) stated that they verified the transcript (KakaoTalk chats) of the discussion between ADOR Vice President and CEO Min Hee-jin. In that chat, they raised the subject of album sales inflation as a component of an action plan to take control of management powers.
The parent company reportedly disclosed the chats in court on May 17, 2024. It was about discussions where statements were used such as "Collect evidence to push + prepare for public opinion," "Whether the Fair Trade Commission investigates or not," and "All we need is a headline."
HYBE attested that its artists produced 17 new albums in 2023, selling 43.6 million copies in total (about 10 million of which were Kubo copies). Also, 140,000 records in total—70,000 for each of the previous two albums—were returned as a consequence of this inquiry. This represented 0.32% of all album sales. Given the excellent album sales at the time, there was an upward demand estimate.
Similarly, ADOR was optimistic about the state of the market when NewJeans' second EP Get Up was released. CEO Min Hee-jin had reportedly planned to make 3.5 million copies, but as of right now, there are an astounding 1.61 million albums still in stock. In the entertainment sector, it is impossible to fully escape the unpredictability of market demand.
HYBE further mentioned that ADOR and Universal Music Japan (UMJ) had purchased 90,000 NewJeans albums but later added 60,000 more to its inventory after a discussion with both HYBE and Min Hee-jin. After this, Min Hee-jin organized fan events for those 150,000 albums to be sold which can be allegedly termed as "album pushing" in this case. The parent company further stressed that:
"This type of activity is part of a sales promotion, but the argument that it is legitimate when New Jeans does it, and that it is an act of pushing album when done by other artists, is not persuasive."
HYBE reiterated in its statement that the contract being Universal Music Group (UMG) and its artist was attained after an arduous negotiation. The deal proved to be beneficial to all the artists and its affiliate labels because it gave them added exposure to international distributors with reduced fees and commissions. Moreover, the disclosed KakaoTalk chats by HYBE of Min Hee-jin revealed that she used expletives to allegedly address her employees and humiliate them.
HYBE added that it is inexplicable that ADOR would object to the strategic choices made by the parent corporation about new business. The company's new venture is implemented in line with its mid-to-long-term growth plan. Further adding that the current state of the HYBE is also the outcome of ongoing strategy development and investment in future readiness.
Stay tuned for more updates on the ongoing lawsuit - HYBE versus ADOR CEO Min Hee-jin - for alleged breach of trust and company takeover.
