South Korean group Crayon Pop

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At a rented theatre on a Saturday night in Seoul, 20 self-conscious young talents stand awkwardly, some of them in tears, in front of hundreds of cheering friends and relatives.

All have been working towards this moment for years, before passing through preliminary auditions staged by JYP Entertainment, one of South Korea’s biggest music production companies. Then came six weeks of intensive training for this climactic performance, after which only three are handed the bouquets that signify the offer of a training contract.

“I’ve been working so hard for five years, and now I’ve finally made it,” Kim Byung-kwan tells the audience, clutching the flowers and visibly overwhelmed after being named champion of the evening.

The stakes are high for these young hopefuls, who have the opportunity to become superstars not only in South Korea but across Asia, and increasingly beyond. Psy’s 2012 rap hit Gangnam Style — so popular that it recently forced YouTube to recalibrate its counting system for video views — is only one example of the growing clout of South Korean popular music, which hauled in revenues of Won4.4tn ($4.1bn) in 2013, according to the Korea Creative Content Agency.

With its slickly choreographed videos and addictively energetic sound, K-pop commands obsessive followings across Southeast Asia, China and Japan, and has established firm beachheads in Europe, the US and Latin America. Its international success, along with that of the country’s melodramatic soap operas, reflects the glamorous image of a country that has gone from one of Asia’s poorest states to one of its richest in two generations.

Most of the music profits from what has come to be known as the “Korean wave” are taken by a handful of huge production companies, often named after the initials of their former pop star founders. JYP, for example, was founded by Park Jin-young, a popular singer in 1990s South Korea.

The companies manage every step of the music-making process — recruiting singers as young as their early teens, and grooming and training them before forming groups from the most talented and marketing them around the world.

A browse through a JYP investor presentation shows how the industry has taken the concept of the manufactured band to a new level. One slide breaks down planned releases for the year ahead: one quarter will bring a single from the as yet unannounced “boy band I”, while the next will herald releases from “girl band” and “boy band II”.

The largest production company, SM Entertainment, alone made overseas revenues of about $100m last year, up from $8m in 2008, according to analyst estimates at KDB Daewoo Securities.

It has produced two iterations of one of its most popular boy bands: the six members of EXO-K sing in Korean, while their counterparts in EXO-M perform the same songs in Mandarin for the huge Chinese market.

The aspiring performers can be subject to tough training regimes and strict labour contracts, says Stella Kim, an early member of what has become South Korea’s most popular pop group, Girls’ Generation. In the days before a performance, dance and singing training would run from 10am till well after midnight.

When the time came for Ms Kim to turn professional at SM, her parents baulked at the 13-year contract she was of­fered in her teens, which would have banned her from working for any other entertainment company during that time and given SM all rights to her name and image, while placing swingeing limits on her share of the band’s earnings. “They said, ‘We can’t sign our daughter up to slavery,’” she recalls.

Despite changes aimed at boosting artists’ rights, controversy over the industry’s restrictive contracts continues. In November, the six members of boy band BAP sued its agency over their seven-year “slave contracts”, claiming each member had been paid only Won18m over two years, despite generating about Won10bn in revenue for the company.

“The whole training process becomes a kind of debt that you owe to the company,” says Mark Russell, author of two books on the industry, K-pop Now and Pop Goes Korea.

Meanwhile, one of the country’s most prominent plastic surgeons estimates privately that more than 90 per cent of K-pop hopefuls undergo cosmetic surgery, further claiming that trainees may be obliged to reimburse their agency for the cost if they are not chosen for a professional group.

The process of bringing new singers to the market has become ever more systematic, says Kim Hyung-kyu, head of talent at Cube Entertainment, an agen­cy behind some bands with huge followings across Asia, which has started holding shows in Brazil and Europe.

“Companies used to just select artists who were good, improve them a bit, and go to debut. Now we consider the de­mand first, which market to target, before we start working on the bands.”

In a five-strong band, Mr Kim says, one member should be fluent in English, with two Chinese-speakers and two Japanese speakers. One of Cube’s new bands includes a Thai singer, which it ex­pects to help the group crack that country’s lucrative music market. To motivate the trainees, seven hopefuls might be made to compete for five positions in a new band.

“Out of 10,000 people who audition, only 100 will become trainees, and out of 100, only 10 can become a popular singer. And out of those 10, only one will really be a star,” he says.

Competition is equally fierce among the agencies themselves, with a steady stream of fledgling companies springing up to challenge established names. Hwang Hyung-chang, a former advertising consultant, set up Chrome Entertainment in 2012 with an idea for a quirky five-piece girl group and just Won10m in the bank.

“I did as much as I could by myself — styling, shooting photos, cover designs,” Mr Hwang says in the recording studio of his agency, its name tattooed on his forearm.

The resultant band — Crayon Pop — shot to fame in 2013 with its single “Bar Bar Bar”, catching attention with their matching crash helmets and dance routine modelled on a piston engine. The band was invited to open concerts for Lady Gaga and Mr Hwang says Crayon Pop’s hit earned Chrome $2m in the year after its release, helping to fund recruitment of several new acts.

“In this industry, it’s not really about how much you have in the bank,” says Mr Hwang. “It’s about how long you’re able to survive.”

Additional reporting by Tae-jun Kang

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Further reading: Young dreams

South Korean children strive in their thousands to get noticed by the entertainment agencies.

At M Academy, a training centre in southern Seoul, the muffled sounds of singing practice leak from a row of practice rooms, each housing a fashionably dressed teenager dreaming of stardom. The training centre, which opened in November 2012, has 200 students, the youngest aged “nine or 10”, says Joh Jerryung, its manager.

Each student pays up to Won360,000 a month for weekly singing lessons, with dance classes costing a further Won200,000.

The school, which is owned by the chaebol business group CJ, is setting up schools in China, Singapore and Thailand to take advantage of K-pop’s cachet in those countries.

“Most of them have the dream of becoming a professional singer,” Mr Joh says. “It’s open to all, but they go through a level test. If someone’s a bad singer, we lower their expectations.”

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