EXO-CBX: SM Failed to Honor 5.5% Distribution Rate, Considering Fraud Charges

On June 10, INB100, the agency representing EXO’s Chen, Baekhyun, and Xiumin (hereinafter referred to as EXO-CBX or CBX), held a press conference at the Shilla Hotel in Seoul. INB100’s CEO Kim Dong-joon and Chairman Cha Ga-won, who co-founded ONE HUNDRED with singer MC Mong, hosted the event.

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Here, INB100 claims that SM Entertainment has misled the artists during negotiations related to EXO’s group activities.

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Attorney Lee Jae-hak from Law Firm Lin, representing INB100, stated, “Last year, negotiations between CBX and SM broke down, leading to legal actions including contract termination. Despite reaching a settlement, SM later went back on their promise to honor the 5.5% album distribution rate agreement. Instead, they demanded 10% of the revenue from the artists’ solo activities, such as album sales and advertisements. This is an unfair action. Therefore, we have requested that SM cease demanding 10% of the artists’ earnings, as they have failed to uphold their end of the agreement.”

INB100 asserted that CBX trusted SM’s promise regarding the distribution rate and agreed to the terms despite it not being explicitly mentioned in the contract. They claim to possess undeniable evidence of this agreement, including a recording of COO Lee Sung-soo discussing the terms during negotiations.

According to INB100, after signing the agreement, CBX retracted their complaints to the Fair Trade Commission and resolved other legal issues, believing SM would honor their commitments. 

“They even forfeited significant contract fees for new agreements. Baekhyun was of the position that he hoped that the rights and interests of other artists would be protected through his efforts. As a result, when he heard that SM had adjusted the terms of contracts with other artists, he thought it was rewarding and fruitful”, Lee Jae-hak stated.

Regarding the clause requiring CBX to pay 10% of their solo activity revenue to SM, Attorney Lee explained, “Among the provisions of the agreement, there is a provision that 10% of sales generated from CBX’s individual production activities will be paid as royalties. Even though SM failed to fulfill the distribution receipt rate, which was the condition of the agreement that it promised, SM continues to demand 10% of CBX’s earnings from their independent activities. This is unjust, especially since SM has no involvement in these activities. The 10% fee was only agreed upon because SM promised a lower distribution rate.”

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The attorney urged SM to acknowledge their failure to honor the agreed-upon distribution rate and to stop demanding 10% of CBX’s solo activity revenue. He also demanded immediate provision of detailed settlement records and evidence, which SM has yet to supply.

He concluded by stating, “CBX intends to review the settlement records related to their previous exclusive contract, as promised last year. If these demands are not met, we will actively consider legal action.”

Source: Naver