2019 has been a bad year for YG Entertainment. In addition to Seungri‘s Burning Sun “scandal”, Yang Hyun-suk, Executive Producer, has also been embroiled in allegations concerning the mediation of prostitution, tax evasion and destruction of evidence. His brother, Yang Min-suk, CEO, has also been implicated in some of these allegations. Among other things, the company’s name has also been brought up for its alleged ties to (and illegal benefits derived from) the Park Geun-hye administration. All this, in addition to drug scandals (most recently, iKon‘s BI) and other controversies. With new information surfacing every few weeks, the list of controversies surrounding the company seems endless, and YG’s management is under fire.

YG’s stocks have been falling. In March, it was reported that shares fell as much as 25%. In response, YG — otherwise notorious for keeping its artists locked in the dungeon — has been pushing them forward in an effort to regain some credibility. Blackpink, Winner, Lee Hi all had comebacks in quick succession, with Sechskies’ Eun Ji-won soon to follow. Even upcoming boy group Treasure13 has been kept in the public eye through the regular release of photos.

A few dissatisfied voices amongst the vast global K-pop fandoms have suggested the unthinkable: a boycott of YG, and everything related to the company. While it was first mentioned as early as January 2019, substantial news came from South Korea only in May, when YG boy groups iKon and Winner faced some opposition prior to university performances. Both performances eventually went ahead as scheduled. Most notably, Mnet Gallery, a popular K-pop forum from DC Inside, has announced a boycott.

However, fans of YG’s groups have been quick to shoot down any suggestions of boycott. They point out that it is unfair to punish artists unrelated to the controversy, and that to hold them “guilty by association” is unjustifiable.

Those unfamiliar with K-pop (or fandoms in general) may be surprised to see fans so passionate about supporting YG’s artists. Within the realm of consumer boycotts however, the opposition fits neatly into academic theory. For any boycott to gain momentum, consumers must be able to easily replace the ‘product’ being boycotted, such they are not financially or psychologically inconvenienced in any way. In this case, the ‘product’ is not just music, it is music that is intrinsically tied to the people performing it i.e. YG’s artists. K-pop is particularly (in)famous for the loyalty and devotion of fans to their chosen idols. Given this, the requirement of easy replace-ability is a tall barrier, and a large scale boycott of YG will never come to be. But is there any merit to the idea?

First, to address the obvious counter-argument — why boycott only YG? If it is outrage we wish to express then given K-pop’s dark underbelly, should we boycott the entire K-pop industry, and not just YG? Conversely, does this mean that if we are not boycotting the other problematic companies, then we should not boycott YG?

This is a flawed argument as it implies that we should not take action against anything at all, just because we aren’t also taking action against something else. The question perhaps is not “against whom we act” but “what change we want to see.”. If one knows that an artist/company is problematic, would one knowingly wish to keeping supporting them? Or would one want to express their views, and hope that the company values consumer inputs and make appropriate changes? This is where boycotts come in, and have long been used as a tactic by consumers to express outrage.

Consumer boycotts take on all kinds of issues, including those of a larger scale such as the boycott of South African companies by the Anti-Apartheid Movement, or of British products during the Indian freedom struggle. On a smaller scale within the K-pop sphere, boycotts are common. In late 2018, Mamamoo’s fandom announced that they were going to boycott the girl group’s concerts in December. They would also not be buying any of the group’s merchandise. This was an attempt to force RBW to ease off the band’s packed schedule, and the threat worked. RBW postponed the concerts. YG themselves have faced similar threats, with Big Bang, Winner and iKon, which again were seemingly effective. There are also boycotts that seem deplorable, such as Korean E.L.F’s boycott of Super Junior‘s Sungmin. The group’s long-awaited comeback as a full group will proceed without him.

All of the successful examples quoted above draw upon the Korean fandoms, but what powers do international fans have? As it turns out, more than one would think. As the Korean market is over-saturated, K-pop companies are looking outside of South Korea, particularly to the United States and Japan. The Hallyu wave has even breached the previously impenetrable South Asian market. YG, in particular, has made an enormous effort to break into the US and is finally seeing some success with Black Pink, whose fans have pushed the group to the forefront of Korean artists there, perhaps second only to BTS. The global markets promise earnings far greater than anything earned in South Korea, and international fans should not underestimate their power.

It may be noted that while a lot of the discussion has been centered around YG’s artists and music, YG also has actors and models on its payroll, as well as a number of subsidiaries. A true boycott of everything YG would involve for instance, boycotting the projects of model-turned-actor Jang Ki-young, including the currently airing drama Search: WWW wherein he stars as the male lead. Jang is signed to YGKPlus, a YG subsidiary specializing in the management of models. Also on its payroll are rising actors Nam Joo-hyuk and Lee Sung-kyung. In the public eye, even within the world of South Korean entertainment, Jang, Nam and Lee are so far removed from the YG controversies that the very suggestion seems preposterous.

In any case, studies show that consumer boycotts are successful about 25% of the time. It is not only difficult to coordinate boycotts among consumers, but there will also invariably be many free-riders. Free-riders are those who feel a boycott will be successful off of others’ efforts anyway, so they themselves need not sacrifice their consumption of the boycotted produced. Similarly, other consumers may think of themselves as a “small-agent” i.e. they may believe that their participation is too small to have any impact, and therefore may not participate. Further, is also true that those who are most able to hurt the target — firm’s profit — find it the hardest to do so, as they are giving up more than other casual consumers.

Chances of success increase with increased publicity and lack of publicity is not a problem with YG. In simple terms, this is because companies fear the effects of earning a bad reputation i.e any damage to its brand value. As noted earlier, YG’s shares have been falling, and consequently, its value has been decreasing. As a result, its owners i.e. investors and shareholders, need assurances that they will not lose the money they have put into the company. This is what drives the kind of large-scale change that may be needed with YG, if the many allegations against it are true. Sadly, it is not ethics or morality, but money that matters.

This is exemplified by SM Entertainment‘s recent announcement concerning a possible change in the policy regarding the payment of dividends to stakeholders. Recent news reports have highlighted suspicious internal payments to founder Lee Soo-man. SM is said to have transferred around 8.16 billion KRW ($6.82 million) over the last decade to a musical consulting service owned entirely by Lee. Investors contend that when compared to similar payments made by rivals YG and JYP Entertainment, Lee received at least 10 billion KRW ($8.46 million) more than is appropriate, each year, through the said consulting service. The announcement follows reports that two of the largest stakeholders (together holding 11.65% stake in the company) were calling for more transparent management. It is interesting to see that SM announced these possible policy changes only when the suspicious activity was highlighted by the press, and investors stepped in.

In the case of YG, the company is facing a real threat even without the boycott. In March, it was reported that more than 220 billion KRW ($193 million) of capital had evaporated since the Burning Sun scandal broke out in January. What’s more, analysts suggest that a 61 billion KRW ($54 million) investment deal is also at stake. The deal was signed in 2014 with LVMH (aka Louis Vuitton), a French multinational luxury goods brand. Through this deal, Great World Music Investment, a private equity fund owned by LVMH, became the second largest shareholder in YG after Yang Hyuk-suk himself, with nearly 10% of the company.

The investment matures on October 17, 2019, upon which LVMH has two options. It may stay with YG by converting the preferred shares into common shares; or it may opt out, by redeeming the invested money in the form of cash, with interest. It has been reported that if LVMH opts for the latter, YG will have to pay back 66.3 billion KRW ($56 million) in cash, leaving it in a massive pinch.

If stock prices remain low (according to analysts, below 43,574 KRW ($39)), LVMH may indeed choose to opt out. At the time of writing this article, YG’s stock price stood at 31,950 KRW ($27.02) on June 12, at 3.30 pm KST, well below the threshold predicted by analysts. In fact, despite having pushed forward a number of comebacks, YG’s stock price has plummeted by about 32% since the start of this year.

The effects of the low share price have begun to materialize already, not just in the increased frequency of artist comebacks. YG CEO Yang Min-suk faced a no-confidence vote in March when shareholders voted whether to replace the company’s CEO. He survived the vote, but as noted above, his troubles are far from over. Notably, the company appears to have now started taking strict action against artists caught in drug scandals. Within hours of the news of his alleged purchase of drugs in 2016 breaking out, YG announced they had terminated iKon’s leader BI’s contract despite his vast potential as a composer, producer and as iKon’s leader.

While boycotts may not show high success rates in general, a fan boycott amidst this storm would serve to solidify the threat of LVMH opting out, as well lead to a further drop in share price. Through this simplified analysis, it may be argued that at the moment, fans do indeed hold the power to pressure the company into taking visible, concrete steps that reassure not only investors and shareholder, but also satisfy consumers.

I won’t venture into what the desired changes entail. We simply don’t have enough information. Nevertheless, though the question of boycott is only an academic exercise, the suggestion does have its merits.

To conclude on a personal note, as a fan of YG’s boygroup Winner, I too find it hard to take such a strong stand. Not only is Kang Seung-yoon one of my K-pop biases, but their songs also occupy a central position on many of my playlists. My monsoon playlist is incomplete without “Raining”, my sad-days playlist, without “Have A Good Day” and “Fool”. My happy playlist cannot exist without “Air”. “The Door” from Prison Playbook is among the best OSTs I have heard, and Mino‘s “Fiancé” is in my Top 5 title tracks of 2018. Some of these songs (and others) have come to acquire meaning that makes them irreplaceable. In this way, I too am a statistic for studies looking at the effectiveness of consumer boycotts.

In the end, for each consumer, it boils down to individual choice based on moral grounds. It is a question worth considering: Do you want to be spending your money on YG, as the company is, today?

(Business Insider, Biz Enter, Dispatch, Forbes [1], [2], KBS News, Knowledge@Wharton, MarketWatch, Naver [1], [2], [3], [4], [5], Reddit, Research Gate, The Guardian, The Investor, The Korea Times. Images via: KBS, RBW, SM Entertainment, YG Entertainment)