With as busy as each have been and as long as their sagas have dragged on, it’s easy to forget that both Kris and Luhan are still involved in lawsuits against SM Entertainment. I haven’t bothered to cover a lot of it to this point because it’s typical lawyer back-and-forth, but during their third court date earlier today, the profit distribution numbers were brought up, and boy were they ugly.
The courts also questioned SM why the profit distribution between the company and the artists differed so vastly for domestic and overseas promotions, probing, “In the case of domestic [promotions], profits distribution [for the artists] are fixed at around 3~5% of sales while the net profits for songs are fixed at 10%, but distributions [for overseas promotions] are 50~60% of net profits. What’s the reason for such a big difference?” SM reportedly answered with, “We will look into it and submit [our findings] in writing.”
As I currently understand it, that 3-5% was to be split among the 12 members as well. A 97%/3% split is ridiculous because most other companies are reportedly much closer to the 50-60% split you see for overseas activities. Also, since a lot of EXO fans were wondering why SME weren’t utilizing the Chinese members in China more often where they were making a name for themselves at the time, the gigantic gap in distribution sorta helps answer that question.
I’m not a lawyer, so I’m not gonna pretend to know what’s legal and what’s not, but law aside, I find it quite the dumb piece of business to disincentivize your assets (which is what they are to companies) from enjoying their time at the company and making leaving all the more appealing. I mean, really, even if somebody like Kris loses this lawsuit, does he really lose? No, so it makes this whole ordeal worth it just to get out, and that’s never a situation you want to put yourself in as a brand or company.