SM Entertainment founder Lee Soo-man on the future of K-pop, running a business

It has been more than 3 years since Soo-man Lee founded SM Entertainment, one of Korea’s music management companies famous for bringing Hallyu to the world.

The entertainment company was originally founded in 1989 as SM Studio, Be one of the first companies to start the global Hallyu wave, better known as Hallyu.

But Lee’s music wasn’t always based on K-pop.

“I became a singer when I was 19. Even though I was famous, I realized that the audience was really quiet when I sang because I sang folk songs,” he told CNBC’s Chery Kang in an interview with CNBC Dialogue.

SM Entertainment’s Soo-man Lee (fourth from right) poses with K-pop supergroup SuperM.

Gabriel Olsen | Getty Images Entertainment | Getty Images

“But when foreign bands come [South Korea to] The show, they completely took over the stage and the fans went wild. When I go to a concert, it seems the fans are more enthusiastic than mine,” said Li, the company’s founding chairman.

The vision of K-pop was born

Lee says that’s when he started thinking about taking K-pop to the world.

“I learned a lot while studying in the US and thought it would be good to promote Korean songs and singers overseas. That’s the beginning [of SM Entertainment]”

Over the years, the 70-year-old man has formed a system he calls “cultural technology” – systematically recruiting and cultivating talents from casting, training, production, management and other aspects.

The system supports song production by SM Entertainment’s top K-pop groups such as Super Junior, Girls’ Generation and Red Velvet.

SM Entertainment represents K-pop stars such as boy group Super Junior.

Jung Sung Joon | Getty Images Entertainment | Getty Images

“Somewhere in my office there is a written ‘cultural technology’ manual,” he said, explaining that it combines culture and technology in a “logically formulaic” way.

“The manual will allow employees to learn and impart ‘know-how’ from it. Since I am an engineer, understand it logically. It lays out the formulas,” Lee said, sharing that he has a master’s degree in computer engineering.

“So, I can say I’m an engineer rather than an artist.”

We need to be world class and we’re looking at what’s missing and what kind of distinction we can make…

Li Xiuman

Founder of SM Entertainment

Even as SM Entertainment’s music continues to go global, Lee says it’s important to keep innovating and stay ahead of the competition in the music industry.

“We need to be world class and we’re looking at what’s missing compared to other music genres and what kind of differentiation we can make,” he told CNBC.

Lee worked with producers and songwriters from the UK and US on the backing tracks, track songs, kick drum and bass, which he adapted to suit Korean and Asian cultures.

As for the importance of China’s influence in the K-pop industry, Lee acknowledged that money will have a “powerful influence”, but said he still believes that the creativity that comes from production will be of “infinite value”.

Lee said mental health issues remain a focus for his company.

“‘Humility, kindness, making love’ is what we teach our talents and employees at SM…it’s much better now and management companies around the world are trying to learn.”

Lee also said his company “is connecting them with counselors and doctors so they can get help when they need it. We may not have the economies of scale that CNBC has, but we understand these things are very important.”

The future of K-pop

As for the future of K-pop, “I think the metaverse that everyone is talking about these days is the future,” Lee said.

SM Entertainment built a virtual world called SM Culture Universe and launched its first virtual girl band, Aespa, in 2020. The group consists of four real-life members — Karina, Winter, Ning Ning and Giselle — and corresponding virtual members.

SM Entertainment built a virtual world called SM Culture Universe and launched its first virtual world girl band, Aespa, in 2020.

Alexie Rosenfeld | Getty Images Entertainment | Getty Images

“SM Entertainment is doing ‘Play-2-Create’ … where people can discover their creativity and create in the metaverse. They realize, ‘Oh, I can create. I can create music. I can create dance.’ movement. I can make clothes. I can style artists.’”

To realize the “Play-2-Create” concept, the company partnered with metaverse companies such as The Sandbox earlier this year.

Players can create NFTs and games around “K-content” in SMTOWN LAND, a virtual land in The Sandbox under SM Entertainment. NFTs are non-fungible tokens, unique digital assets stored using blockchain technology, such as artwork and sports trading cards.

Lee believes any country can create something as successful as K-pop, but the Metaverse will be key.

“You can’t create a genre by copying K-pop. Everyone will see it as K-pop. Now, you need to show it in the metaverse.”

You don’t know what you’re going to look like when you don’t look in the mirror, even if you dance hard…

Li Xiuman

Founder of SM Entertainment

“I think we just need to make fans both producers and consumers. Let them create…Young people will get a huge creative satisfaction, and eventually create a huge amount of intellectual property and content.”

For aspiring K-pop artists someday, Lee has this piece of advice: “Self-assessment is very important.”

“If you don’t look in the mirror, you don’t know what you’re going to look like when you dance, even if you dance really hard…you only learn when you see and feel when you’re not doing well.”

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