Naver News: Learned from failure...” The secret of JYP’s management towards the ₩2 Trillion Market Cap success.
'Learned from failure', the secret of JYP management with a market cap of 2 trillion won
Totally reorganized into a horizontal 'label system' to increase profitability... Generational change such as 'Stray Kids' succeeded
10 years ago, JYP Entertainment (hereafter referred to as JYP ) had to be evaluated as 'a company that lost money even with the nation's first love Suzy'. It was the aftermath of the failure to advance into the United States, which was the longing of Park Jin-young's representative producer. That JYP has changed completely. Based on the closing price on March 24 , the market cap has surpassed KRW 2 trillion. JYP is the first company to exceed 2 trillion won in market capitalization, with the exception of Hive (market cap of about 9 trillion won) with BTS on its back among the Big 4 entertainment in Korea. Currently , the market caps of SM Entertainment (hereinafter referred to as SM ) and YG Entertainment (hereinafter referred to as YG ) are approximately 1.46 trillion won and 1 trillion won, respectively. 10 years after the bitter failure to advance into the US , what changes have occurred in JYP ? JYP 2020 and 2021 with an operating margin of 30 % for 3 years
In 2016, JYP had the lowest sales among Korea's Big 4 Entertainment. Hive's sales in 2020 and 2021 were 796.2 billion won and 1.25 trillion won, respectively , while SM recorded 578.9 billion won and 701.5 billion won, and YG recorded 255.2 billion won and 255.6 billion won, respectively. In contrast, JYP recorded 144.3 billion won and 193.8 billion won in sales , staying at the 100 billion won level. Still, JYP is currently considered as 'the best student in the entertainment industry in Korea'. Hyein Lee, an analyst at Yuanta Securities, explained, “Over the past three years , JYP ’s operating profit margin has been around 30 %, which is very high compared to its competitors.” As of 2021 , SM and YG 's operating margin was only 9.62 % and 14.2 %, respectively. JYP 's operating profit margin ( 29.8 %) was higher than that of Hive ( 15.1 %). It means that although sales are small, 'effective management' was carried out.
JYP has a unique organizational structure compared to Hive , SM, and YG . If general entertainment companies have a 'function-oriented' vertical organizational structure, JYP can be said to be a horizontal label system system centered on each artist. Artists belonging to JYP , such as Twice and Stray Kids, are divided into five divisions, and each division carries out marketing, planning, and management independently. In other words , within one company, JYP , 'five record companies' exist separately and together. 10 reasons why JYP had such an 'unusual organizational structure'It goes back to the time of 'entering the United States' several years ago. In fact, representative producer Park Jin-young said, "The most valuable thing I got from the United States was that I was able to know the internal structure of an American record label." Although JYP suffered a crisis due to its failure to advance into the United States, led by Wonder Girls, the challenge at the time became the foundation for building a more robust management system.
In the process of JYP 's change, CEO Park focused on building a company system that 'does not depend too much on one person, Jinyoung Park'.
The reorganization into a 'label system' can also be interpreted as a choice to reduce dependence on the representative producer. JYP has been trying this 'label system' since around 2016 . The first group that was born like that is TWICE. This organizational structure enabled close and efficient communication between the artist and the staff in charge. Above all, the process of producing content including music has been shortened. This is the reason why JYP 's singers have a shorter hiatus compared to other entertainment companies.
In terms of music, changes were also followed to reduce dependence on Park Jin-young. In 2008 , CEO Park established JYP Publishing, which includes lyricists, composers, and producers . At that time, entertainment companies with publishing in Korea wereJYP was the only one. JYP signed contracts with over 30 musicians and supported them to grow into talented lyricists and composers. 'Multiple Park Jin-young' has built a system to create songs for their artists. The competitiveness that JYP has gained through these changes is clear. Rather than relying on a single 'big star', it is about building a system that can increase profitability and growth potential by moving independently for each member of the group. Not only Twice, which is gradually expanding its fandom in the North American market, but also Stray Kids, who are said to be the representative players of 4th generation idols, recently climbed to the top of the Billboard chart, fulfilling JYP 's long-standing dream of entering the United States. ITZY , N-Mix, and NiziU , who are active mainly in Japan, are also cruising after TWICE . Analyst Hyein Lee said, “ JYP artists have been rapidly expanding their fandom even during the pandemic (worldwide epidemic of infectious diseases) when looking at the number of YouTube views that can confirm the size of the global fandom . IP , such as establishing a subsidiary JYP 360 ° for business
The monetization area will also become more active in the future.”
In 2016, JYP had the lowest sales among Korea's Big 4 Entertainment. Hive's sales in 2020 and 2021 were 796.2 billion won and 1.25 trillion won, respectively , while SM recorded 578.9 billion won and 701.5 billion won, and YG recorded 255.2 billion won and 255.6 billion won, respectively. In contrast, JYP recorded 144.3 billion won and 193.8 billion won in sales , staying at the 100 billion won level. Still, JYP is currently considered as 'the best student in the entertainment industry in Korea'. Hyein Lee, an analyst at Yuanta Securities, explained, “Over the past three years , JYP ’s operating profit margin has been around 30 %, which is very high compared to its competitors.” As of 2021 , SM and YG 's operating margin was only 9.62 % and 14.2 %, respectively. JYP 's operating profit margin ( 29.8 %) was higher than that of Hive ( 15.1 %). It means that although sales are small, 'effective management' was carried out.
JYP has a unique organizational structure compared to Hive , SM, and YG . If general entertainment companies have a 'function-oriented' vertical organizational structure, JYP can be said to be a horizontal label system system centered on each artist. Artists belonging to JYP , such as Twice and Stray Kids, are divided into five divisions, and each division carries out marketing, planning, and management independently. In other words , within one company, JYP , 'five record companies' exist separately and together. 10 reasons why JYP had such an 'unusual organizational structure'It goes back to the time of 'entering the United States' several years ago. In fact, representative producer Park Jin-young said, "The most valuable thing I got from the United States was that I was able to know the internal structure of an American record label." Although JYP suffered a crisis due to its failure to advance into the United States, led by Wonder Girls, the challenge at the time became the foundation for building a more robust management system.
In the process of JYP 's change, CEO Park focused on building a company system that 'does not depend too much on one person, Jinyoung Park'.
The reorganization into a 'label system' can also be interpreted as a choice to reduce dependence on the representative producer. JYP has been trying this 'label system' since around 2016 . The first group that was born like that is TWICE. This organizational structure enabled close and efficient communication between the artist and the staff in charge. Above all, the process of producing content including music has been shortened. This is the reason why JYP 's singers have a shorter hiatus compared to other entertainment companies.
In terms of music, changes were also followed to reduce dependence on Park Jin-young. In 2008 , CEO Park established JYP Publishing, which includes lyricists, composers, and producers . At that time, entertainment companies with publishing in Korea wereJYP was the only one. JYP signed contracts with over 30 musicians and supported them to grow into talented lyricists and composers. 'Multiple Park Jin-young' has built a system to create songs for their artists. The competitiveness that JYP has gained through these changes is clear. Rather than relying on a single 'big star', it is about building a system that can increase profitability and growth potential by moving independently for each member of the group. Not only Twice, which is gradually expanding its fandom in the North American market, but also Stray Kids, who are said to be the representative players of 4th generation idols, recently climbed to the top of the Billboard chart, fulfilling JYP 's long-standing dream of entering the United States. ITZY , N-Mix, and NiziU , who are active mainly in Japan, are also cruising after TWICE . Analyst Hyein Lee said, “ JYP artists have been rapidly expanding their fandom even during the pandemic (worldwide epidemic of infectious diseases) when looking at the number of YouTube views that can confirm the size of the global fandom . IP , such as establishing a subsidiary JYP 360 ° for business
The monetization area will also become more active in the future.”
