A dynamite stock offering? Investors & fans can now buy shares in the K-pop powerhouse behind BTS
Investors are increasingly looking to the value of the group's massive fan following, says CedarBough Saeji
It was a good week for Big Hit Entertainment, the company behind boy band BTS, to launch a stock offering.
BTS became the first Korean band with songs in first and second on the Billboard Hot 100 with their latest single Savage Love pushing hit Dynamite down one spot.
After the initial public offering went live on Thursday, Big Hit's valuation hit nearly $8 billion US — a big bet on a company that makes the bulk of its money from the group of seven young men.
But it's not only the band that investors are banking on. They're also buying into the group's massive fan following, better known as the BTS Army.
CedarBough Saeji is a scholar of contemporary Korean culture and a deeply devoted K-pop fan. She spoke to Day 6 host Brent Bambury about what the IPO means for Big Hit, BTS — and their fans.
Here is part of their conversation.
Fans all over the world are clamouring for shares in Big Hit now…. What does it tell us about the BTS Army?
Back in 2008, the fans of the group Super Junior actually bought into SM Entertainment, and it gave them a seat at the table. They only were able to amass less than half a per cent of shares of the company. But through that, they were able to have their voice heard.
So now with fans buying into Big Hit, it's so much more meaningful to them than just owning an album. They actually have a seat at the table. They actually have a way to express their ideas about how Big Hit should be run going forward.
Share prices doubled in the first day of trading, and the company's value hit about $8 billion US. Besides the members of BTS, who else got rich this week?
[Big Hit's founder and co-CEO] Bang Si-hyuk obviously is the person who profited the most, and by all accounts he really deserves the credit and he deserves the payout. He had this vision and he made it happen with BTS.
The really beautiful thing with him sharing so much of the stock shares with the members of BTS, it demonstrates how he understands BTS's position within the company as the group that made this vision of his come to life.
But the cliché in the music business, especially when you talk about a manufactured group, or a boy band or a girl band, is that management exploits the artists…. Is there any evidence that the relationship between management and artists in this case has evolved beyond that cliché of exploitation?
There is no evidence that the members of BTS have ever felt exploited by Bang Si-hyuk. They seem to have a very close and even comfortable relationship with him where they refer to him in their songs. And so he clearly understands that it is the hard work of BTS that has allowed his company to do so well.
They are under contract with him until 2024, but the best way to ensure that they continue to be part of Big Hit is to have them directly connected to the success of the company. And those stock shares basically mean that if they leave Big Hit in 2024, that they are sacrificing some of their own potential investment in the company.
But if they did leave in 2024, would Big Hit still be an $8-billion company? Would they still be nearly as valuable as they are now that BTS is still with them?
I was thinking about this and I found out that in 2019, George Harrison, who has been dead for some time now, earned $9 million dollars, estimated.
That's the thing is, even if BTS is in the military, or even if they leave Big Hit, the catalogue of products that they've already created together with Big Hit Entertainment will stay with Big Hit Entertainment.
At some point in the next couple of years, all of the members of BTS are supposed to fulfil their mandatory military service. What do you think is going to happen? Do you think the Korean government will actually just put these boys in the army?
It's a very difficult issue, partially because in Korean culture, being an adult man includes having served your country in this way.
All of the members of BTS have their own feelings about going to the military and serving their country. So this is not just an issue where the government gets to decide, give them an exemption.
There is an argument out there that investors who are buying up stock in Big Hit are actually more interested in having access to the BTS Army than to Big Hit, BTS, or any of the other products. What is the value of the BTS Army, do you think, from an investor's perspective?
The members of the BTS Army are going to support BTS. Whatever the product is, they're going to buy it. They're going to download it. They're going to strategically get that song to the top of the charts. They're going to spread it around the world.
That level of love for the group has been demonstrated so well that I think many investors felt as long as this kind of army exists, this kind of investment is going to pay off.
Written by Jason Vermes. Produced by Pedro Sanchez. This Q&A was edited for length and clarity