Monday, December 27, 2010

Translation of the Contract - Profit Distribution (English)

I have translated the parts of the contract that deals with the profit distribution.

Here's the link to the post with the original contract in Korean.

You can download the original pdf document from Korean Central Court website: 
Click on the "09카합2869.pdf" to download. It contains the judgment from the temporary contract injunction and the contract.

As you can see, the distribution of the profits look pretty good, especially the profits TVXQ receives from Japanese activities where they got bulk of their profits.

Section 9. (Distribution of Profits - Albums


Distribution of Profits (Entertainer) For groups, divide the profits equally per number of members

Domestic Album & Packaged products (including Licensed Albums sold overseas)
This distributions only applies to regular Album & DVD
Secondary compilations (Live music, Best of albums, Omnibus Album, other compilations) are not included 
50001 to 100K
2% of Sales
 100K to 200K
3% of Sales
Over 200K
5% of Sales

Digital Wired/Wireless Downloads (Album, Songs)
For free downloads Online, only when there's income from advertisement
10% of Net Profit
On Line and wired/wireless Internet, Mp3, Digital files etc
10% of Net Profit 
Overseas Revenue
(Revenues in Japan produced via SM Japan)  
Performance Loyalty
(Albums made overseas) 
70% of Net Profit 
(Limited to the songs, lyrics, written by the Artists) 
70% of Net Profit 
Master Loyalty
*The whole amount of Master Loyalty is considered to be SM's revenue 
Not Applicable

- 19 -
Section 10. (Distribution of Profits - TV, Events, Commercials, Copyright etc)
Distribution of Profits (Entertainer) For groups, divide the profits equally per number of members
Overseas Revenue
CF(Commercials), Events, & Miscellaneous Activities
70% of Net Profit
Up front payment and/or down payments from various contracts
10% of actual amount received by SM
Commercials (Guarantees, Appearances Fees included), TV, Radio, Cable, Satellite, Magazines, Concerts, Events etc.)
Regular appearances
65% of Net Profit
Promotional/temporary guest appearances
Used for cost of promotion
Revenues from Internet Business (Mobile & any revenues from Internet)
10% of Net Profit
Photo Books using actual pictures of the Singers(Digital/Online income is considered Internet Business Revenue) - Photo Books are limited only to the products planned and produced for sales of the actual photos.
60% of Net Profit
Character products & Licensed products utilizing Photos (except for the picture books mentioned above), Brand, Brand Name, Intellectual properties - Accessories, Clothes, Shoes, Stationary, Toys etc.
10% of Net Profit


  1. Can you please clarify a few things?
    1) If an album sells less than 50k, how much do the artist get?
    2) What is meant by the 'Promotional/temporary guest appearance' where profits is used to cover the cost of promotion? Or rather, what confuses me even more are the 'Regular appearances'
    For example, if TVXQ holds a concert what is this listed under? And if they appear on a show such as Starking, what is this listed under?

  2. Also, one more thing. Regarding the photobooks, is it talking about the photo books packaged with special editions of their CDs? If so, does it mean that they keep 60% of the difference between the special and normal editions minus the cost of the photo books (and any other associated costs)?

  3. @ George

    1)If it sell less than 50K, then they get 0. I'm pretty sure the company gets 0 as well for the sales under 50K copies.

    2) Those are appearances for TV/Radio entertainment shows. That means they are only paid the if they are permanent cast of the show who gets to appear on the show every week as regular member. The appearance fees for guest appearances are much lower than the permanent cast's. It's a standard practice for Korean entertainers (Movie/TV actors, singers etc) to appear on those shows to promote their new releases or movies. That's what it means by promotional appearances. Basically, they play games or talk with the host about their new album to promote it.

    As for your last question, normally, the photo books are stand alone books with TVXQ's pictures. As for the photobooks packaged with CD's, I don't know how it's worked out since it's not clearly specified in the contract. I'm sure they negotiate some parts time to time behind the scenes.

  4. Thanks, but that just gave me more questions, sorry :P
    (I deleted my previous 2 posts cos I keep coming up with new questions and changing my existing questions.)

    1. In the "Commercials (Guarantees, Appearances Fees included), TV, Radio, Cable, Satellite, Magazines, Concerts, Events etc." section, for:

    Commercials and concerts, what is considered a regular appearance?
    Are concerts considered regular appearances for their duration?
    Same for any CFs that they do?

    2. Are the special and normal editions of the same album considered the same album?
    AKA to get paid for sales do they have to sell 50k altogether or 50k for each edition and get paid separately for each edition?

    Thanks for answering!

  5. @ George

    1. Regular appearances are for the TV & Radio shows.

    2. From what I've heard, they are treated as one. I understand u want to know if TVXQ will get paid for the album sales, but like I said in the post, in reality, it doesn't even matter because TVXQ makes bulk of money elsewhere.

  6. @ George

    Let me rephrase my answer to #2.

    TVXQ (or any artist including Western artists) are not supposed to make any money from album sales, that's just the reality. In today's music industry, albums are released as a promotional tool. Artists simply don't make any meaningful money with albums any more unless you sell multi million copies (with internet, u know it's impossible). They make money elsewhere, like tours/concerts, merchandise sales etc.

  7. Thank you very much for your enlightening post. I would like to commend you for pointing out the huge difference between SALES from PROFIT. I will be looking forward to more updates and explanations from you.

    I have several questions though and I hope you don't mind answering them:

    1)how much do they get from concerts, fan meets, and from their own composition? and dvds like AABDSK and such, considered regular dvds?

    2)is 5% of album sales also applicable in overseas activities, like china, japan, thailand, etc?

    3) aside from 5% album sales, do they still get the 60% and 70% share from the total profit? (I really hope you'd understand that 'coz I don't know how to phrase that question right)

    4) is it true that the final judgement of the lawsuit will be given sometime this month? and if SM wins, JYJ has to stay or pay the fees for breaching the contract.

  8. @ liz

    Hi, let me answer your questions as best as I can

    1) 70%. I don't know about the DVD's.
    2) According to the contract, the CD sales only specifies domestic albums, so I don't know how overseas albums are paid. I can only judge from what I can see. It is possible that they have a separate contract with Avex for Japanese albums.

    3) Shares from the albums sales are calculated separately from the 60% profit.

    4) I highly doubt there will be a judgment this month. If SM wins, either of those can happen, or they can even be sent to another company per contract. There are many possibilities.

  9. thanks for answering! so that's 5% and 60%... sounds alot... especially when compared to how much SuJu gets.

    I really hope everything ends well...

  10. @ liz

    Yes, I was surprised how low SuJu's profit % was. I don't know too much about SuJu's contract so there may be something that we don't know about. I think SuJu was formed with sub-unit and individual activities in mind, so it is possible that they have separate contracts for those.

  11. Thanks for your translation.
    There are many wrong rumors spreading around international fandoms. So somehow it's easy to be confused although I don't believe in those stuffs.
    5%, 60% and 70% sound really good. I was afraid that those artists are paid too little.
    Can I ask you some question?
    1. I heard that idols earn the most through their endorsement. Is it right?
    2. Is there any chance you know about SNSD's contract?

    I'm kinda curious about SNSD because it seems like they attract Korea public more than any groups out there. I saw them everywhere when I visited Korea last time. It looks like SNSD is embraced or loved by Korea public. Look at the way SM promote them and their endorsements, they are kind of money maker. Compare SNSD with TVXQ, they are kind of similar in some points.

  12. @ piruru1804

    The contract of other artists are not public, so I do not know the details of SNSD's contract. I know SM changed all of their artist's contract per FTC standard, but that doesn't mean the details are identical, I'm guessing the profit distribution is different per group or even different between each members of the same group. TVXQ's contract was available to the public only because it was submitted to the court for the civil lawsuit.

    As for the source of income, I believe commercials, concerts, merchandise sales are big part of it, and there are picture books too. You can also be cast as a host of entertainment shows, radio DJ, or do acting on dramas or movies.

  13. Hi Precious,
    Love your blog and I got a lot of knowledge and information from it. I love predicting and calculating the sales. So, this contract details are very helpful.At least, I know that my boys (that includes JYJ eventhough I'm biased toward Homin in this lawsuit) kinda well-off compare to other artist or at least public in general in Asia.

    I cringed every time I imagined all the expenses paid by JYJ during the whole ordeal (lawyer, etc) and in producing their own products (the beginning, their rooms, etc).So, I believe that in the long term, financially, it's homin who get more profit even though they do have their own problem with those black campaign, etc

  14. @yayauw
    can you tell me what is Black Campaign?

  15. Hello Precious, can i ask a question?

    About the net profit, how the member know the amount of the net profit?

    Did SM reveal their financial report or else?

    Just curious, because from jyj's lyric in unnamed song, (im not saying those lyrics are fact) they kinda claimed that SM said there's no profit (negative).

    What if SM lied about the amount of the net profit?

    Btw, thank you so much for this blog, really enlighten me, i didn't even know the difference between main lawsuit & injunction before.

  16. @ slixe
    I didn't read the lyrics in detail, but didn't the song say that Yuchun got advanced payment from SM? If it doesn't say that, then he left that fact out on purpose. Yunchun got advanced pay from SM and that's why it was negative. Also, CJS only got paid through 2008. The real money should be from their 2009 earning which they still didn't get paid yet because CJS didn't go to SM to check all the paperwork. Everything I've said is from the court testimonies for the trial, and I am going to post about them in the future.

  17. @Precious Ow.. thank u for the explanation :)

    i just finished read all your blog post, and i really really appreciate what u did & the fact that u took your time (hard work) to translate, manage & provide all these facts about tvxq's case.

    Thank you so much~ i feel for the 1st time, i actually understanding what's happening. I'm always on yunho's side since i'm his bias, but never wanna jump into the conclusion about jyj too fast.

    I was actually crying when i read yunho's father statement. Can't help it >__<

    I'll definitely keep coming back to this site, since i feel that this is the only reliable site :)

    Oh btw, the "Roadmap to the Truth" is really helping. The 1st time i found this site, i was confused bout' which post i should read 1st. Good thing u provide "Roadmap to the Truth" ^^

  18. can i know they won't be paid for the album if it is less than 50 k or 500 k sales?

  19. @ hwee san

    They don't get paid for the sales less than 50K according to section 9.

  20. ok...thx^^ but why you said it's 500,000 sales in the 'lies about contract'?

  21. @ hwee san

    That was for the sales incentive that was paid when they record the next album. I actually need to update that article because I found new info regarding the album sales.

  22. so it means that they will still get their pay even the album sales is less than 500 k?

  23. @ hwee san
    Yes, for the profit calculated w/percentages, they get paid. For 500K over sales incentive on the next album, no.

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