The Economics Behind The Trendsetter of The Modern World – K-pop

When the word K-pop is mentioned, many would have thought that this is a newly found trend that is trying to find its way to settle into the music industry within these few years. The truth is, K-pop has been planting its seed deep into the world’s music industry since the 90s when the root has grown so deep that it is grasping onto the world’s economy without people noticing. K-pop originated in South Korea, with its name literally being Korean-pop, and has been one of South Korea’s soft power to promote the country’s cultural image. Within a short span of 10 years, K-pop quickly became one of the influences on the economy of not just South Korea but the whole of Asia.

With the formation and introduction of world-famous K-pop groups such as Big Bang, EXO, BTS and Blackpink, the world is presented with a completely new genre of music and style. This undoubtedly created hype all around the world, especially among the younger generations. Like all other music producers, K-Pop consists of many genre including hiphop, R&B, and ballad and all combined, K-Pop itself has become a genre in the whole music industry. This particular phenomenon is called “Hallyu” which translates to “Korean wave”. How does this “Hallyu” become one of the biggest influences on the world’s economy in such a short amount of time?

K-pop is a trendsetting phenomenon that depends on both cultural impact and economic growth, in particular those on the stock market and wider economy. Major K-pop companies are all

Merch of Boy Band Seventeen, K-pop group. Photograph by Olivia Lee Ruo Qi (sumber peribadi)

publicly traded such as HYBE Corporation f.k.a Big Hit Entertainment, SM Entertainment, YG Entertainment, and JYP Entertainment all have large market capitalizations which reach up to the world’s entertainment economy. Fans all over the world will buy merch from the idols or celebrities of their liking no matter the cost-effectiveness of the actual product. This phenomenon almost immediately caught merchants’ attention with the idea of implying the image of various famous K-pop idols to become ambassadors of their brands to increase the revenue and market range, which undoubtedly worked perfectly.

K-pop idols are not only music trendsetters but also global fashion and beauty influencers. From streetwear to luxury brands, idols like BTS and Blackpink shape consumer preferences with their large fanbase and impactful images. Their hairstyles, outfits, and makeup trends quickly spread worldwide, leading to increased demand for Korean beauty products and fashion. From the basics of their own company releasing various types of merch for fans to buy other than the albums to other industries such as skincare, cosmetics, clothing and even electronic products. Brands like Innisfree, Cuckoo, and LG have capitalized on this global trend, creating significant economic impacts not only in South Korea but the whole of Asia. K-pop fanbases drive powerful economies, inside and outside the music industry. Their dedication drives significant revenue through mass album purchases, streaming, and global demand for concert tickets. Fanbases fuel South Korea's economy by boosting exports of Korean goods, tourism, and cultural influence, and they've even impacted the stock values of entertainment companies.

Globally, they amplify brand partnerships and marketing power, making K-pop idols highly sought-after by companies. Fan armies also mobilize for social causes and charitable fundraising, demonstrating their power as economic and social forces globally. K-pop fan armies have extraordinary economic power in album sales, streaming activity, and brand promotion. For instance, BTS's album Map of the Soul: 7 sold over 4 million copies, ranking among the top-selling albums worldwide in 2020. Much of this was due to organized purchasing from fans. Similarly, BLACKPINK's The Album recorded over 1 million pre-orders, indicating the purchase power of fandoms. In merchandise, concert tickets, and Korean products, fanbases drive billions into the economy of South Korea, with international sales further increasing this amount. This loyalty to consumption extends further to even affect stock prices for firms like HYBE and points toward K-pop fanbases as active economic players on the world stage.

However, one key economic drawback with K-pop as an international phenomenon has to do with the financial burden placed on fans, who are frequently compelled to spend money in enormous sums on albums, concert tickets, merchandise, and fan events in support of their favored idols. Many fans organize bulk-buying to help raise chart rankings or achieve accomplishments for their idols, leading to tremendous spending that can affect personal finances. This could, in turn, hike up the prices since the demand for K-pop merchandise and events would increase, which might be cumbersome for some fans to keep up with. It may lead to severe pressure to spend money among younger fans, making them overspend or fall into debt, hence signaling an economic setback related to the rise in K-pop popularity worldwide.

Although these are exactly what brings K-pop to the rise in the world’s economy, ironically, they happened to be one of the most concerned factors as its downside. Fans have been advised not to get overwhelmed when purchasing anything related to their idols but this still remains a big controversy throughout the years when K-Pop flourished. The rise of K-pop as a global cultural phenomenon has turned it into a serious influencer of the world's economy: through fans' purchases, merchandise, and concert revenues, K-pop makes billions of dollars, advances South Korean exports, and invites global brand partnerships. The commitment of fanbases has made K-pop a driver in digital marketing, tourism, and even the stock market.

On the other hand, the influence of K-pop also brings up issues with regard to economics: a financial burden on fans and less diversity in global music markets. Ultimately, K-pop's unparalleled ability to drive both economic and cultural trends cement its position as one of the world's most dynamic influencers.