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Opinion

BTS is peaking, but South Korea still playing the same old song

K-pop phenomenon is a microcosm of South Korea's broader economic challenges

| South Korea
Fun as they are, BTS have not invented anything new.   © Sipa/AP

William Pesek is an award-winning Tokyo-based journalist and author of "Japanization: What the World Can Learn from Japan's Lost Decades."

BTS -- the nickname of the insanely popular South Korea boyband set to take the investment world by storm -- is now more than an acronym for Bulletproof Boy Scouts. The cultural phenomenon has become Bigger Than Samsung.

South Koreans never really loved the Republic of Samsung label investors slapped on Asia's fourth-biggest economy. K-pop glitz and energy is much more like it for the nation's 50 million people. It is not just that BTS has joined the rarefied orbit of The Beatles and The Monkees in terms of Billboard hit tallies. It is the groove BTS is pumping into a COVID-19 battered economy.

The group's current smash "Dynamite" is, true to the title, already worth more than $1.4 billion. In late 2019, BTS was estimated to add an astounding $4.65 billion to the country's annual gross domestic product. That could prove conservative given the current valuation estimates for BTS's stock market debut this month.

Officially, Big Hit Entertainment, the groups' management label, is going public on Oct. 15. But this is really about the company's core seven-member product. And demand is epic with bids 1,000-times the number of shares on offer. The initial public offering has even attracted the interest of the Bank of Korea, which is watching how money markets handle the $85 billion worth of cash vying for Big Hit stock. The more intriguing question is what all this means for South Korea's aging economy.

The "BTS effect" has almost single-handedly boosted tourism, pre-coronavirus. It boosted exports of consumer goods as the band's "Army" snapped up BTS merchandise and improved Seoul's balance of payments. It added vigor to stock values of rival entertainment groups. It is promoting Korean cultural exports: movies, television dramas, literature and fashion.

Neighboring Japan is looking on with envy. Asia's No. 2 economy has a ginormous and proud music industry. Yet not since 1963 -- when Kyu Sakamoto had a smash hit with "Sukiyaki" -- has J-pop gone global with this kind of buzz. BTS is even outselling Japan's biggest boy and girl bands domestically.

In some ways, the BTS phenomenon is a microcosm of South Korea's broader economic challenges.

One is how K-pop is selling the idea of a vibrant youth culture scene in a rapidly-graying nation. The photogenic 20-something guys in BTS will, presumably, get older. Their sound might fall flat with fans as the K-pop machine that produced BTS dreams up even younger, hipper act. BTS members also face 18 months of obligatory military service.

Big Hit is, well, a one-hit wonder. BTS sales, according to the JoongAng Ilbo newspaper, accounted for more than 97% of sales in 2019. Kudos to Big Hit CEO Bang Si-hyuk for navigating COVID-19 so skillfully. The global BTS tour Bang had to cancel didn't stop his company from pivoting to video concerts and fan meet-and-greets via the company's Weverse platform.

A fan watches a video clip of BTS performance at her room in Seoul on Sept. 23: Kudos to Bang Si-hyuk for navigating COVID-19 so skillfully.   © Reuters

For Bang and BTS, this will be quite a payday. Bang will become a billionaire, while the seven band members could come away with nearly $8 million apiece. Whether investors do well in the long run depends on everything from BTS keeping its fans, to the pandemic ending and where technology takes us.

As with so many elements of modern music, this tale warrants a David Bowie sample. In 1997, the late musical innovator became a financial one, too. He raised $55 million with asset-backed securities tied to future royalty streams. Bowie made out big. Investors, not so much, after MP3 players turned the industry on its head. Big Hit is clearly riffing off Bowie's lessons.

The risk, though, is that all the glitz and pizazz of the K-pop boom distracts South Korea's leaders when the economic music comes to a stop. BTS nation, in other words, still has a Republic of Samsung problem to sort out amid COVID-19 risks.

Fun as they are, BTS have not invented anything new here. Talented as they are, their shtick is oh so familiar to fans of vintage U.S. boyband Backstreet Boys or Japan's Arashi and King & Prince.

And just as BTS is thriving by doing it better, Samsung Electronics is still largely eating out on Apple's inventions. The Galaxy line of smartphone and tablets are still solid and splashy. Samsung, though, has yet to wow the globe with a game-changing product. It is brilliant at flashy reinterpretations. Less so about the arguably more profitable art of disruption. Formulaic predictability is fine, but it is high time Korean Inc.'s giants surprised us.

That same is true of President Moon Jae-in's 40-plus months in office. He promised to produce a more creative economy to climb the global innovation charts.

Instead, Moon, like his predecessors, kept playing South Korea's greatest hits: using fancy footwork and spin to prod giants like Samsung to increase exports and domestic investments. By relying more on BOK rate cuts than structural reforms, Moon's policies have been more cosmetic than impactful.

BTS, and K-pop in general, is an enviable thing to have. The band and its peers are creating jobs, profits, export opportunities and joy at a dark moment. Yet Moon's government must resist the urge to conclude a boom in one industry, lively as it is, equals broader success. Moon's reform team is past due for some hits of its own.

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