Details on the story behind KARA’s contracts

Further details regarding KARA’s decision to terminate their exclusive contracts with DSP Media have been revealed through TV Report, Park Gyuri’s mother, and representatives of DSP Media.

TV Report claimed that industry representatives were aware of the issues surrounding KARA and their agency since December 2010.  Representatives of DSP Media and Park Gyuri allege that the reason for the four members’ terminations was “eventually because of money.”

According to another industry representative, KARA brought in a total of $18 million USD in income from their Japanese promotions, but as of December 2010, the group was only paid $3,000 USD per person.

The members were also only paid for album sales for August and September of 2010, excluding CF and event appearances.  The girls are said to have been paid in a greater amount for their activities aside from album and digital sales, which are all going to be paid without problems.  The reason the girls are paid less for their album sales is said to be because of specific clauses in DSP’s contract with their Japanese distribution company.

Income made from the girls’ Japanese albums are calculated three months after its initial release, and 85% of the profits go to the distribution company, leaving DSP with the remaining 15%.   The representative mentioned that the numbers are similar for any Korean artist advancing into the Japanese market.

Especially with DSP Media’s CEO, Lee Hoyeon, currently hospitalized, all artists under the agency were ordered to be kept under tight control.   Around this time, another entertainment agency approached KARA and offered them to join their agency.  The agency went as far as to offer to pay the penalties the girls would have to deal with for breaching their contracts should they take the offer.

The representative was said to have met with one of the members’ mothers to present a contract with fairer terms and a promotion plan that would instantly earn KARA enough fame to rival that of SNSD’s popularity.

The representative first met with Gyuri’s mother, but discussions did not run smoothly.  In an interview with TV Report, her mother stated, “I could not betray DSP, who worked their hardest in creating who KARA is now.  I have no problems with the contracts, and I trust DSP.”

Representatives of DSP further added, “There were mothers that brought up problems, so we made sure to make all related documents as transparent as possible to them.  We used accountants that they chose, but in the end, they could not trust even that.”

Another representative also revealed that DSP Media met with KARA’s mothers on January 18th and almost reached a compromise to reform the income distribution regarding their Japanese albums.  The next day, KARA’s lawyers from Trademark announced their contract terminations.

Is there a possibility for them to reach a compromise?  The industry is already speculating them to be the ’second TVXQ‘ due to the complex underlying issues.

“There are definitely various problems with both parties, but the ultimate issue is the competition in trying to scout KARA, and money.  The reality of these disputes with TVXQ and KARA is quite disappointing,” said one representative.

DSP Media has reasoned that they have no option left but to take legal action, predicting yet another legal battle in the industry.

Source: SPN, TV Report via Nate