SM 3.0

SM 3.0 is the latest business strategy and development plan of the South Korean entertainment company SM Entertainment. Announced in February 2023, it would focus on integrating various aspects of the company's operations, including music production, content creation, and global distribution, into a cohesive system. The plan would aim to expand the company's market presence and enhance its offerings to provide a more comprehensive experience for fans. The implementation of SM 3.0 would involve the development of an intellectual property (IP), business, overseas, and investment system, as well as a multi-production center and label system. These systems were designed to support the company's efforts to optimize its operations and increase its competitiveness in the entertainment industry, particularly in terms of producing content and expanding its market reach.

History

With the "success" of H.O.T., who debuted in 1996, SM Entertainment became a "pioneer" in the genre of K-pop, led by the company's founder Lee Soo-man, and considered SM 1.0 until 2010, when artists such as H.O.T., BoA, TVXQ, Super Junior, Girls' Generation, and Shinee debuted.[1] Until 2022, Lee made a significant contribution to SM as an executive producer through a contract with the company and created Exo, Red Velvet, NCT, and Aespa, with the company having several people with producing capabilities was described as SM 2.0.[2] Throughout that particular generation, the system was under the governance of the company's general manager Kim Young-min.[3] Additionally, Tak Young-jun stated that during the SM 1.0 and 2.0 systems, SM produced intellectual property (IP) of its artists under the sole leadership of the company's chief producer Lee.[4]

Development

In September 2022, Lee Soo-man stepped down from the company and only became a major shareholder of SM Entertainment because of the sentiments expressed by the minority shareholders for him to retire.[7] On February 3, 2023, SM announced the SM 3.0: IP Strategy - Multi 'Production Center/Label' System through its official YouTube channel and homepage.[8] The "strategic" vision of SM 3.0 was considered a "practical" plan for SM, which had declared to enhance shareholder value and improve governance after it terminated the production contract with Lee and commenced a reorganization of the members of the board of directors.[9] SM 3.0 would be promoted based on the intellectual property (IP), business, overseas, and investment system, which would be the future growth engine of the company.[10] The four strategies are detailed as follows:[11] SM also introduced a multi-production center or label system for producing "new, mega" IP crucial for SM 3.0 and will be promoted around the establishment of a multi-production center, multi-label, and music publishing subsidiary.

Production Center

As one of main plan of SM 3.0 to diversify artist management with multiple production centers instead of being managed by a single individual production team, previously led by Lee Soo-man, SM officially announced their 'Production Center' through their earnings release in the second quarter of 2023, which seen the label divide their artists into six production centers as;

Reception

Criticisms and internal strife

On February 6, 2023, it was reported that singer and actor Kim Min-jong, who worked for SM Entertainment for 17 years, sent an email to all SM employees on February 5 criticizing the company's announcement of SM 3.0, with the primary goal of ending Lee Soo-man's production.[34] In the entire email, he appealed that the executives, staff, and artists were "shocked" by the announcement of the two co-CEOs and that the statement was not the result of communicating with Lee but an "arbitrary" decision.[35] Kim claimed that contrary to what was announced, Lee Sung-soo and Tak Young-jun, who remarked that they were for Lee Soo-man and the SM family," cut off all contact with the Lee Soo-man and made "one-sided" announcements and farewells without any discussions with the insiders.[36] It was believed that Kim must have felt "betrayed" by the two representatives who had been with Lee for a long time and insisted that Lee's senses were needed for SM and had Lee's life to the company's founding and development should be treated with respect.[37]

References

Ha-na Choi. http://www.tvdaily.co.kr/read.php3?aid=16753961581666718010 TV Daily, February 3, 2023, retrieved February 5, 2023^
Hye-jin Cho. https://www.xportsnews.com/article/1683996 Xports News, February 3, 2023, retrieved February 5, 2023^
Jung-hyun Ryu. https://biz.sbs.co.kr/article/20000101473