NewJeans Contract Termination Controversy: K-POP Independent Activities and Legal Issues

NewJeans Contract Termination

NewJeans' declaration of contract termination with its agency, ADOR, is sending shockwaves through the K-POP industry.

This controversy is attracting attention from multiple angles: the announcement of contract termination with ADOR, independent activities, and legal disputes.

This article will cover the full story of the NewJeans situation, the legal issues involved, and future prospects.

NewJeans' Contract Termination Announcement and Background

On November 28, 2024, NewJeans officially announced the termination of their exclusive contract with ADOR.

They justified the contract termination by claiming that ADOR and its parent company, HYBE, had received profits exceeding their investments.

NewJeans subsequently opened a social media account called ‘jeanzforfree’ to start communicating directly with fans for their independent activities.

The account gained 3.18 million followers immediately after its launch, attracting significant attention.

However, ADOR has taken legal action, claiming that the exclusive contract is still valid.

With the contract between NewJeans and ADOR set to expire on July 31, 2029, the legality of their unilateral termination announcement has become a central point of contention.

Legal Issues: Investment and Contract Termination

The contract between NewJeans and ADOR is not a simple loan agreement but has the nature of a capital investment contract.

Agencies invest significant funds in the debut and success of artists, expecting long-term profits in return.

Therefore, if NewJeans wants to terminate the contract before its expiration, they must pay damages according to the standard exclusive contract.

The legal community estimates that the damages NewJeans would have to pay could amount to 500 billion won.

This is because the damages should compensate for the profits ADOR could reasonably expect during the remaining contract period.

NewJeans reportedly received approximately 5 billion won per member in settlement in 2023 after their debut and global success, making this contract termination controversy a significant case in the industry.

NewJeans' Independent Activities and Future Prospects

NewJeans is actively pursuing independent activities, taking the lead in advertising contracts and fan interactions.

In particular, there is evidence suggesting that they have independently secured ambassador contracts with global luxury brands without ADOR’s involvement.

These actions are interpreted as NewJeans’ attempt to strengthen their brand value.

However, independent activities carried out before the resolution of the legal dispute carry risks.

If the court ruling favors ADOR, NewJeans is likely to face substantial damages.

Furthermore, their independent activities could affect future advertisers and partnerships.

Implications for the K-POP Industry

This situation raises crucial questions about the contractual structure and relationship between artists and agencies in the K-POP industry.

Significant capital investment and long contract durations have been considered mechanisms to reduce agency risk, but the NewJeans case has sparked discussions about how this structure can balance artists' rights.

On the other hand, if NewJeans' independent activities are successful, it could serve as a precedent for other artists.

However, if the legal dispute restricts NewJeans' activities, it will serve as a cautionary tale in redefining the relationship between artists and agencies.

Conclusion
NewJeans' declaration of contract termination and independent activities are sparking discussions about structural issues in the K-POP industry, and artists' rights and responsibilities.

The outcome of this controversy from legal and industrial perspectives is highly anticipated.

The conflict between NewJeans and ADOR will remain a significant case that will shape the future of K-POP, going beyond a simple contract dispute.
Source: Chosun Ilbo