Understanding How Idols Go into Debt and How They Earn

Someone asked me if she should buy the CD or stream the music of BTS. I said, she should buy the cd if she wants them to earn more. It leads to the next question which us how much will BTS earn if she listens to their album on repeat the whole day. I said I don’t know but if she manages to play the song one million times, BTS will earn $600 divided to 7 members, that’s about $86 if we round it up, before taxes and assuming they get the standard industry rate. Assuming Big Hit is being generous, probably a hundred dollars each before taxes. This is me being really generous because idol contracts differ and there are multiple artists and multiple songwriters and producers in a song.

She looked at me like I was the dumbest person on Earth. She, along with many other fans think, that just because a song is being streamed over and over again, it will contribute to Idol earnings. It doesn’t. It’s not even loose change. This is most likely motivated by many idols stating that years and years after a successful career, they are instill in debt.

This is nothing unique, just as bad, but not unique.

10 years ago, TLC, the most successful girl group at the time made headlines when they announced they were deep in debt. They have sold 10 million albums but has nothing to show for it and it’s all thanks to greedy people behind them. They said they are overworked and, obviously, underpaid.

In Asia, this happens more often. Idol groups often talk about not getting actual paychecks even after barely sleeping, getting no vacation, having no rest, getting sick all because they are being thrown from one schedule to another.

The biggest blow up happened when three of the members of DBSK, the biggest boyband in Korea at the time, announced they wanted to nullify the contract with SM, the biggest music entertainment company in Korea because they claimed that they were taken advantage of. They were made to sign a 13-year contract and they are not getting enough shares of their earnings.

The media and netizens had a field day and they still do whenever an idol talks about their finances.

Idols’ debt starts way before debut. Almost every idol, with the exception of very few like Eunji, go through years of training under a management company but not everyone can train.

You first need to audition or get scouted

If you pass the audition, you may be offered a trainee contract.

That’s when you become an official trainee but it does not guarantee you will debut. But this is when the actual investment starts. Idols are trained in singing, dancing, acting, posing, self improvement, composing, rapping, etc. all these trainrrs, they don’t work for free. The company pays them.

Mock photo shoots are done, mock music videos, to make idols comfortable in front of the camera. The crew, photographer, directors are paid too.

A publicist or a marketing team is already hired to evoke the interest of fans. That’s why many groups already have a fan base the moment they are launched. Those marketing people are paid too.

All those “leaks of supposed photos of new trainees”, more often, they are calculated leaks to see which ones will get more response. Those leaks are perfectly time.

When reporters are invited for a press conference, the venue, food in that event, the organizing, those are expenses. Of course there’s the management and operation of the actual company. The sheer number of people working around these idols, even at their skeletal force, the managers, production assistant, stylist, and the people in the management company, they spend their time and brains strategizing for these idols too, all of them get paid.

If you are trying to compute, minimum wage in Korea is $7.37, I think, and a company actually spends three times one’s salary to maintain an employee. Skilled people like choreographers and producers, they don’t work with the idols full time but they get paid higher when they do projects.

For concerts, if a ticket average is $150 and the venue is 20,000 seats, not all that will go the company. First, you need to pay for the venue, stage design, manpower, and others. More commonly, companies look for sponsors. Black Pink’s concert was co-presented by Kia. that means Kia paid a certain amount to get their name out there. The local promoter is usually the one who talks to sponsors but not always. The promoter or local production company takes care of paying the bills and then splits the revenue with the management company.

Once a trainee is shortlisted. Another contract is given. At this stage, usually, they are already housed and everything they spend already gets paid for by the company, from food to groceries to bills. Depending on the company, they may or may not get an allowance, even if they don’t have any project yet.

If an idol trained for, let’s say, 3 years before debuting, that’s 3 years of the company investing on an idol.

When the preparation for the debut starts, even more expenses are incurred. Writing and producing the song, producing the albums, stylists, physical production of albums, stylists, conceptualizing, creating, shooting and editing the MV, posters, ads, marketing, and a whole lot more are expenses.

Once a group debut, even more they will earn via album sales, show appearances get minimal pay, if at all. Maybe if they get endorsements. And concerts, usually starts small.

If a group sells 10,000 copies of an album, that’s not pure income. You have to take out the actual production of the album itself, the store gets a cut, distributors, etc. For streaming, it’s even less.

Different streaming companies have different rates but Forbes published the rate of how much an artist gets paid for streaming.

If you have an average fanbase and did, maybe 2 concerts in Korea with each show grossing $1M, i’ll be generous and say. You need to pay for the venue, security stylists, stage, marketing, advertising, posters, brochures, clothes, food, promotion, taxes, a single show will be lucky to net $100,000.

After that promo, it’s not like the company will stop spending on the idol. They still need to pay rent, give the idol allowance, feed them, pay their bills, pay the staff working for the group. The company doesn’t stop spending.

Celebrities really earn on endorsements. A good deal can pay off the idol’s debt in one go but even after the debt is cleared, the company continues to spend on the idols.

The key is to try and earn as much as they can per every promotion or era. Let’s say BTS. one concert of 70,000 people in Rose Bowl if the average ticket price is $150, that’s $10.5 million per show on ticket sales alone.

I don’t know the cost of the stage and other expenses although I have an idea but I can’t say it here. Let’s just say it will not take half of that amount to pay for the venue and personnel.

But let’s not use BTS as an example, they are obviously an exemption. No one has been as successful as they are.

That’s why it takes time for companies to recuperate their expenses. If you’re an average idol band, you will most likely not see your earnings earlier than your 3rd year.

You may ask why someone like Jeon So Mi could be earning now as she declared. Well because she has no debt in YG. she trained under JYP. It was JYP who invested on her but for those who trained for years in company, they incur expenses.

Also take note that for every successful group, there are hundreds the company trains. Most get dropped, some continue training. All those expenses, those are admin expenses and must be recuperated. I know some will say that it is unfair that these be shouldered by the idols who debuted but it’s all part of the process, the business process.

It is obvious that some companies manage their artists better and have better pockets, more projects and artists to spread the cost but that’s another post. This is meant to give you an idea why idols get into debts.