Part 19. K-pop — The Industry That Designed Fandom

The Genealogy of Payment Habits — A Historical Hint Book for New-Content Business Models Volume 2 · Part 19

K-pop Does Not Sell Music

More than one hundred million albums sold in Korea in 2023, long after streaming services such as Melon and YouTube had become the center of listening. Global music-streaming subscriptions also exceeded six hundred million that year. Conventional industry wisdom said these trends could not coexist: streaming killed physical records. US CD sales fell 97 percent from 2000 to 2022. Korea moved in the opposite direction.

The reason is simple. K-pop fans do not buy albums in order to hear the music.

A K-pop album is a box containing photocards, a certificate carrying voting power, and a tool that expresses the relationship between artist and fandom as a number. It is no longer primarily a sound medium. Fans hear the sound on Melon or YouTube, while album purchases happen for other reasons.

This is the core of K-pop’s business model, unlike any other music industry. K-pop sells music, but the reason people pay is relationship, identity, and belonging.

Previous Habit-Spaces — Three Roots

K-pop did not invent this structure. It inherited and combined three earlier habit-spaces.

First, fan-club dues. Paying dues existed in Korea in the 1990s. The official “Club H.O.T.,” formed in 1997 for H.O.T., which debuted under SM Entertainment in 1996, had more than twenty thousand members paying annual dues of ₩20,000. Membership cards, priority concert booking, and a members-only album resembled a sports supporters’ club. People paid to belong to a group.

Second, sports-support culture. Baseball and football fans buy uniforms and light sticks and follow teams to away games. They cannot determine results, but supporting has meaning in itself. K-pop’s coordinated “all-out attacks” and streaming campaigns follow the same mobilization structure. Fans act collectively to make their team or artist number one.

Third, Japanese idol handshake events. Idol fan meetings and handshake culture existed in Japan from the 1980s. AKB48, formed in 2005, systematized it by including handshake-event entry with CD singles. In 2011, the press reported fans buying more than one hundred copies of “Heavy Rotation” to attend. Endless CD purchases became a social controversy, while the release reached number one on Oricon. The album functioned as a participation ticket, not a music medium. K-pop encountered and absorbed the model during its Japanese expansion in the mid-2000s.

K-pop’s business model landed at the intersection of these three habits.

Generations One through Four — What Each Inherited and Created

K-pop’s fandom model expanded by generation. Each inherited earlier payment habits and added a new space.

First generation, 1996–2002: H.O.T., Sechs Kies, S.E.S., and Fin.K.L led the era. H.O.T.’s first album, We Hate All Kinds of Violence (1996), set a domestic sales record. It performed at Olympic Park Gymnastics Arena in 1998 and drew about forty-five thousand people to Seoul Olympic Stadium in 1999. Rivalry between Sechs Kies and H.O.T. increased fandom cohesion, stimulating purchases and voting. Cassettes cost ₩3,500 and CDs ₩7,000–8,000, and multiple purchases were common. Parents often paid, but the structure was simple: music was the product, fans were buyers.

Second generation, 2003–2011: TVXQ, Super Junior, BigBang, Girls’ Generation, and SHINee opened two new spaces.

One was Japan. TVXQ debuted there in 2005, reached number two on Oricon’s weekly album chart with The Secret Code in 2009, and drew about 360,000 people to twenty-one tour dates. The Tokyo Dome finale made it the first Korean group to attract about one hundred thousand people across two days. Korean groups landed on Japan’s fan-club dues, handshake events, and fan-meeting tickets. TVXQ pioneered the Japanese fan-club model for Korean idols, strengthening the album as a right to participate.

The other was systematization by major agencies. From the mid-2000s, SM Entertainment formalized trainee systems, multiple album versions, and merchandise. Its revenue grew fivefold from about ₩40 billion in 2008 to ₩230 billion in 2013. The business model shifted from individual artists to agency-centered systems. BigBang’s ALIVE GALAXY TOUR (2012) reportedly generated about ₩78 billion, a large-scale world tour for a Korean act at the time.

Third generation, 2012–2018: EXO, BTS, Twice, and Blackpink led an era transformed by social media.

BTS topped Billboard’s Social 50 in 2017 based on Twitter mentions. YouTube, Twitter, and V Live enabled real-time fan communication. Earlier idols maintained distance and mystique; BTS posted rehearsal scenes, daily life, and thanks directly. “Dynamite” reached 101 million YouTube views in twenty-four hours in 2020, then the fastest hundred-million-view record. Fans gained a sense that they “knew” the artist. Supporting someone known this way felt less like consumption than encouragement.

Blackpink’s BORN PINK WORLD TOUR (2022–2023) drew about 1.81 million people according to YG Entertainment and reportedly earned about $330 million. Twice became the first Korean girl group to hold a solo concert at UBS Arena near New York in 2022. Photocards also became systematized: versioned albums, member-specific cards, and random insertion became standard.

Fourth generation, 2019–present: aespa, IVE, Le Sserafim, and NewJeans put universe marketing at the center. Each aespa member has an AI avatar, “ae-aespa,” within the SMCU. After “Next Level” in 2021, interpretation communities formed around the virtual space “KWANGYA.” Fans invested time and emotion not only in music but in tracking and interpreting the universe.

IVE’s “LOVE DIVE” (2022) recorded more than twenty-three million views in twenty-four hours and reached one million sales eight months after debut. NewJeans grew through the TikTok virality of “Hype Boy,” and its debut album sold 440,000 copies in its first week. Platform internalization also defines the generation. HYBE’s Weverse became the official communication channel for BTS, TXT, Seventeen, and others, keeping fan activity inside the platform.

Photocard Gacha — The Day an Album Became a Capsule Machine

BTS’s Map of the Soul: 7 (2020) sold about 3.37 million copies in its first week on Korea’s Hanteo Chart, then an all-time first-week record. Its contents explain the number.

The album came in four versions with different materials. Bonus photocards carried different member combinations by version and were random, so buyers did not know which member was inside before opening it.

This has the same psychology as inserting a coin without knowing which figure will emerge: gacha. Fans buy copies for a desired card, post successful pulls on social media, and trade unwanted cards. Bunjang and Joonggonara operate separate “poca” categories, and rare cards of popular members trade for tens or hundreds of thousands of won.

Seventeen’s Face the Sun (2022) came in five physical versions—Control, Shadow, Ray, Path, and Pioneer—plus special editions such as CARAT ver. With thirteen members, collecting every individual card theoretically requires at least sixty-five copies. Fans know that when buying. It is not the problem; it is the reason.

The album changed from a music medium into a collectible object. The reason to pay moved completely from hearing sound to obtaining a desired card or increasing the numerical evidence of support.

According to Circle Chart and the Korea Music Content Association, Korean album sales reached about seventy-four million in 2022 and exceeded one hundred million in 2023, more than double the roughly forty-two million of 2020. Album sales exploded while streaming subscriptions also grew. The trends are not contradictory; the purpose of buying changed.

Voting Rights — Buying an Album Becomes Electoral Participation

Voting is another reason to buy.

Major Korean music shows—including MBC’s Show! Music Core, KBS’s Music Bank, SBS’s Inkigayo, and Mnet’s M Countdown—combine digital performance, physical sales, broadcast scores, and fan votes to determine first place. Album sales directly affect the score.

For a fan, buying is a vote for the artist. The structure resembles audience voting in Mnet’s Produce series from 2016 to 2019: viewers used text votes to decide debut members. If a preferred person is to debut, I must vote; if an artist is to win, I must buy.

Fandoms call coordinated action “chonggong,” an all-out campaign. At specified dates and times, the whole fandom streams, buys, and votes. Like sports support, collective action is more effective than isolated action, making organization essential.

In 2019, producers of the Produce series were arrested for vote manipulation. The revelation exposed a trust problem inherent in fandom payment. If fans pay to vote but the vote is meaningless, what did they purchase? The case showed that trust is the foundation of the business model.

Fan Platforms — How to Keep a Fandom inside a Platform

Dedicated platforms expanded K-pop’s payment space.

Weverse, launched in 2019 by HYBE subsidiary Weverse Company, lets fans view posts, comment, buy merchandise, and stream paid content. It merged with Naver’s V Live in 2022. By 2023 it had roughly one hundred million cumulative downloads and ten million monthly active users. Its artists extend beyond HYBE groups such as Seventeen, TXT, GFriend, and ENHYPEN to CL, Justin Bieber, and Ariana Grande. The platform itself became a business model.

Bubble, launched in 2020 by SM-affiliated DearU, charges ₩4,500 a month for “messages” from a selected artist. Photos and short posts trigger subscriber push notifications, producing the feeling of a one-to-one conversation. It reached about 1.2 million subscribers in 2021. DearU listed on KOSDAQ that November, reaching a market capitalization near ₩800 billion soon after. The reason to pay is a sense of connection, not music.

Lysn, from SM Entertainment, used annual official fan-club dues for exclusive content and artist direct messages. Some functions moved to Weverse in 2023.

Universe, launched in 2021 by NCSoft subsidiary Klap, served eighty countries and recorded about six million downloads in 2022. It offered AI calls and personalized stories but failed to close the gap with rivals. It shut down in February 2023 and sold its main services and content to DearU.

These platforms collect the fandom’s existing payment spaces—albums, merchandise, concert and fan-meeting tickets, and streaming content—inside one app. As long as a platform holds the artist connection, fans have little reason to leave. Universe’s exit after two years shows how dependent the structure is on that connection.

Reverse Tribute — Fans Build the Market

K-pop has a payment space not designed by agencies. Fans created it voluntarily.

It is called “reverse tribute.” A traditional tribute is a gift or support sent from fan to artist. In practice, reverse tribute describes fans promoting an artist to other fans and the public. Birthday advertising is representative.

Fandoms buy subway billboards, bus wraps, and building displays for an artist’s birthday. One week on a Times Square billboard costs roughly $5,000–20,000, while one week of outdoor advertising in Gangnam costs about ₩2–5 million. Fandoms crowdfund the expense; the agency pays nothing.

There is also on-site support. Fans send catering trucks to filming or music-video sets. Trucks costing roughly ₩2–5 million per event may arrive by the dozens at shoots for major idols such as BTS and EXO, carrying food and supportive banners.

These acts occur outside the agency’s business model, yet increase recognition, strengthen cohesion, and ultimately support album and concert sales. Fans voluntarily bear marketing costs.

After BTS donated $1 million to Black Lives Matter in 2020, its fandom ARMY raised another $1 million within twenty-four hours under #MatchAMillion. Global media noticed K-pop fandom’s organization, showing that it can function not only as a consumer group but as an organized social actor.

Album Sales and the Trust Problem of the Business Model

Physical sales carry weight on Korean music shows and are counted with streaming on overseas charts such as Billboard. The number is treated as objective proof of popularity.

Questions arose over whether it reflected genuine fan spending. Organized bulk buying itself is not the issue. Allegations repeatedly claimed that agencies bought large quantities of their own inventory. In 2023, industry insiders alleged that some agencies inflated first-week sales by purchasing unsold stock. Confirmed facts were limited, but the allegation alone weakened trust in the metric.

If album sales are not a number representing fan support, the entire business model built upon it shakes. Fans buy to support an artist; if agency purchases already fill the total, fan payment becomes meaningless. Fandoms take pride and cohesion from “how many copies we bought.” If that number cannot be trusted, the basis of cohesion also weakens.

K-pop’s model therefore rests on trust: relational trust between fans and artists, and causal trust that payment truly affects the artist. Damage that trust and the reason to pay also shakes.

Paradoxically, the problem can make fandoms more organized. Achieving number one through pure fan purchasing without agency manipulation becomes a valued goal, strengthening coordinated-campaign culture.

Special Field — Virtual-Idol Business Models

The K-pop fandom model has transferred to virtual idols.

VTubers are internet streamers who appear through animated avatars controlled by real people to create games, music, and talk content. Hololive, founded by COVER Corp in 2016, and Nijisanji, founded by ANYCOLOR in 2017, lead the industry. Hololive’s Gawr Gura debuted in 2020, became the largest English-language VTuber, and exceeded 4.4 million subscribers by 2023. Many VTubers appear among YouTube’s top-ten Super Chat earners. ANYCOLOR listed in Japan in 2022 under code 5032 and exceeded ¥100 billion in market capitalization at its peak that year.

Revenue resembles K-pop: YouTube Super Chats, channel memberships, merchandise, signed CDs and voice packs, and offline concerts. Fans invest emotion in avatar characters and feel connected to the real artist operating them.

Korea produced PLAVE, a five-member virtual K-pop group operated by real performers behind animated avatars, launched by VLAST in 2023. It makes music videos and appears on music shows. Its first-anniversary fan concert in 2024 sold out all roughly twelve thousand seats at Jamsil Indoor Stadium, and it operates Bubble direct messages.

Virtual idols could inherit K-pop because the earlier habit-spaces are the same: emotional investment in animated characters, purchasing game-character merchandise, and sending support during livestreams. Together these form the payment space of virtual-idol fandom.

Failure Case — Dreamcatcher’s Fragmented Payment Spaces

Dreamcatcher, launched in 2017 by Dreamcatcher Company and Kingdom Entertainment, is a rare rock-based K-pop girl group. Its nightmare-and-fantasy universe and combination of rock sound with idol performance built a strong Western fandom. In 2022 it exceeded roughly 3.5 million monthly Spotify listeners and ranked among Korean girl groups’ global streaming leaders. Its THE ROAD: Keep on Dreaming tour filled venues in Los Angeles and seven European capitals. Yet entry into Melon’s monthly top one hundred was rare, and it had not won first place on a Korean music show.

Its fandom’s payment spaces did not connect to Korea’s chart system.

Raising Korean sales requires concentrated purchases by Korean fans. Raising Melon and Genie requires Korean-user streams. Winning music shows requires domestic voting. Dreamcatcher’s overseas fans listened through Spotify and YouTube, with limited effect on Korean charts.

The group showed a paradox: sold-out overseas venues and no domestic music-show win could coexist. The space where fans paid—overseas streaming and concerts—was separate from the artist’s operating base of Korean charts and broadcasting.

This is a structural vulnerability of K-pop. Performance indicators concentrate on domestic payment spaces, so an artist with a global fandom can struggle at home. Dreamcatcher made the paradox especially clear.

As K-pop globalizes, fragmentation of payment spaces will appear more often.

This Part’s Hints — For Those Designing Fandom

Hint 1: Can your fans feel an identity?

Being a fan of a K-pop group becomes part of identity. Fandoms have names—ARMY, Blink, Carat—colors, and light sticks. Once identity forms, fans voluntarily create payment spaces even without agency design. Can the fans of your content have a group name and identity?

Hint 2: Can one payment carry several reasons?

A K-pop album offers three reasons in one transaction: photocards for collection, chart contribution as voting, and artist support as identity expression. Different fans prioritize different motives, but all converge on the same purchase. How many reasons can your paid product contain?

Hint 3: Design the payment spaces fans create instead of blocking them.

Reverse tribute, birthday ads, and support trucks were created by fans, not agencies. Agencies nevertheless shape the environment through official fan accounts, appropriate release of artist information, and artist responses to fan activity. K-pop’s history shows which creates more revenue: designing an environment where fans can build payment spaces, or stopping them.

The next part examines another axis of the music ecosystem: why live performance grows when streaming pays artists less, how labels and concert promoters divide revenue, and how music copyright became an investment product.

Kim Dongeun WhtDrgon@MEJE.kr 2026